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Intellectual property specialist Knobbe, Martens, Olson & Bear has been on a high-profile winning streak this year, scoring four big victories in four months. The run started in March when the 162-lawyer firm based in Orange County, Calif., won a $134.5 million award for client Masimo Corp., whose medical device patents had been infringed. That same month, Knobbe Martens lawyers successfully defended Nobel Biocare in a dispute over dental implant patents. April brought victory for Ranbaxy Pharmaceuticals Inc. over GlaxoSmithKline in a fight over an antibiotic patent, and June ended with the overturning of a 2001 jury verdict against biomedical equipment manufacturer Beckman Coulter Inc. But aside from a few champagne toasts in the conference room, the firm has taken the victories in stride, chalking them up as proof that the 42-year-old firm deserves its reputation as one of the nation’s top IP shops. Knobbe Martens, like its elite peers, has succeeded due to the “breadth and depth of both technical and legal talent,” says Don Martens, a founding partner. He also credits a distinctive culture in which the firm, he says, operates as a family. The numbers demonstrate Knobbe Martens’ success. According to a study by IP Law & Business, a Recorder affiliate, Knobbe Martens trailed only Fish & Richardson as the firm involved in the most patent cases initiated last year. Knobbe Martens posted gross revenues of $84 million last year, up 8 percent from 2002, the first year it cracked the AmLaw 200 rankings of the nation’s top-grossing firms. Townsend and Townsend and Crew Chairman James Gilliland Jr., who often finds his Northern California-based firm vying with Knobbe Martens for bragging rights as the largest IP shop in the state, dubs its lawyers “worthy competitors.” That competition will be heating up as each is now moving into the other’s geographic stronghold. Knobbe Martens stands out, even among IP firms, for the unusually large number of its lawyers who have advanced degrees in scientific fields, says Peter Menell, executive director of the Berkeley Center for Law & Technology. The firm’s 66 partners hold graduate degrees in such fields as astronomy, polymer science, biochemistry and physics. Sean Johnston, vice president of intellectual property at client Genentech, credits scientific expertise for his company’s long relationship with the firm. “They have people there who understand the technology well, in addition to otherwise being good patent attorneys,” he says. Knobbe Martens partners, however, argue their firm is about more than science or law — it also represents a lifestyle based on cooperation and pride in keeping staff for their entire careers. “We try not to be a star-based firm,” says founding partner James Bear. “Obviously some lawyers will have cases and results that will get them more notoriety than others, but part of our culture is to look at the firm as a place where everybody is pulling their weight the best they can.” Roger Shang, who worked as an associate at the firm’s Orange County office for two years, says, “It has kind of a small-firm collegial atmosphere. It’s a pretty friendly environment.” Shang declined to say why he moved to the Redwood Shores, Calif., office of Weil, Gotshal & Manges. Knobbe Martens claims an unusually fast partner track — just five years. When the firm was smaller, a number of lawyers reached that milestone in three years. Of the 15 lawyers hired in 1998, eight are now partners. Yet, on average, Knobbe Martens partners earn less than many of their peers. The firm reported per-partner profits of $505,000 last year, well short of Townsend’s $604,651. At Knobbe Martens, promotions and compensation are determined through a broad process. During an annual meeting, all the partners have their say. That same group holds a meeting the second Wednesday of each month to discuss management issues. Unlike most firms, Knobbe Martens doesn’t “put the emphasis on billable hours,” adds Martens. Last year, its attorneys averaged 1,700 hours. “It’s really kind of the old-fashioned system here,” says John Sganga Jr. “We each have shares that are based in part on seniority and in part on performance. We don’t have a formula system, where we have certain expectations for hours, quotas and so forth. Basically our view is, we’re all pitching in together to bring the work in and get it done. It really is an egalitarian system and is based on the idea that everyone is here long-term.” By removing the need to bill hours, says Martens, the firm encourages attorneys to share work and so is better able to serve clients. Genentech’s Johnston says that he has worked with different lawyers depending on his needs. Sharing work also helps the firm, recruiter Larry Watanabe points out, because it makes it difficult for individual lawyers to take ownership of a client. It would be harder for attorneys to take the business with them should they wish to leave. “I don’t think you are going to find a lot of people at Knobbe who have controlling relationships,” he says. “The firm has done a very good job of institutionalizing their clients.” To make the unusual partner system work as the firm grows, partner Lynda Zadra-Symes says, prospective hires go through a “grueling” interview process designed to weed out those who don’t share the same outlook, and ensure the firm is hiring people who intend to stay. “In the entire 40-year history of the firm, we have never had a group of attorneys leave together, and we have never had what anybody would call a high-profile partner leave,” says Martens. Watanabe agrees. “The firm has been unusually stable,” says the recruiter. “They have lost some people here and there, but it has been very few and far between.” While partners admit to lucrative offers from other firms, most say the company culture has them hooked. “We all get headhunted,” says Zadra-Symes. But most choose to stay because “what we have is better than what we could have.” All the same, Knobbe Martens will soon lose two of its most prominent faces. Both Martens and Bear have quitting dates on the calendar, based in part on the firm’s policy of mandatory retirement at age 70. Martens will leave at the end of this year, and Bear will exit in 2006 as the last of the founding partners. Succession is “less of an issue” than at other firms, due to the existing partner participation in management, says Bear. And many of the recent high-profile wins have been spearheaded by a younger generation of lawyers, including partners Sganga, Darrell Olson and Joseph Re. Martens dismisses any suggestion that the firm is open to mergers or acquisition — or the closures faced by other IP specialists. Instead, he sees continued growth and independence, based in part on the company’s strong roster of overseas clients, who supply roughly 30 percent of its work, and a growing list of Fortune 500 companies such as The Boeing Co, Pacificare, Amazon.com and Apple Computer Inc., many referred from East Coast firms that cannot service the clients due to conflicts of interest. Martens puts no bounds on the firm’s growth. In addition to Orange County, it has offices in Los Angeles, San Diego, Riverside, San Luis Obispo and San Francisco. The Bay Area outpost is poised for rapid expansion, according to its head, partner Dale Hunt. Opened in 1998 with a single attorney, it now has nine lawyers. Martens and Bear express confidence that their namesake firm can retain its unique personality without their leadership. “Every recruit who comes here says, ‘When you get bigger, can you maintain that culture?’” says Martens. “If we’ve maintained it this long, I expect we’ll do it in the future.”

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