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Manatt, Phelps & Phillips has launched a division to counsel clients on business opportunities associated with digital media based in Los Angeles’ "Silicon Beach." Moreover, the firm has hired an entrepreneur to run its own venture capital fund, which will invest in emerging technology companies.

Manatt on Wednesday announced the new venture, Manatt Digital Media, and the hiring of Peter Csathy as chief executive officer of Manatt Digital Media Ventures. Csathy most recently was chief executive of online video firm Sorenson Media, where he remains a board member.

"What’s really cool to me joining this firm is that we have hundreds of people with deep expertise," Csathy said. "They’re primarily focused on the legal side, but relationships run deep. And frequently they provide business advisory services in any event. Now we’re formalizing it and structuring it."

Manatt is the latest law firm seeking to tap into the emerging tech and startup sector in "Silicon Beach," a hub spanning Venice and Santa Monica, Calif., according to legal consultant Peter Zeughauser of the Zeughauser Group in Newport Beach. Many of the tech companies are producing software and apps for mobile phones, including games. The region also features public companies including video game maker Activision Blizzard Inc. and Google Inc.

"This Silicon Beach thing is really trying to reignite and gentrify the L.A. market," he said. "It’s been a very tough market in L.A., particularly for the out-of-town firms for 10 years, and this is one of the first indications that life has returned to the legal industry in L.A."

Law firms have been lured by the region’s startups, venture capitalists and private equity funds, Zeughauser said.

In July, Silicon Valley stalwart Cooley LLP of Palo Alto, Calif., opened an office in Santa Monica with David Hernand, former co-chairman of the media, entertainment and technology practice at Gibson, Dunn & Crutcher; venture capital attorneys David Young and C. Christopher Shoff of DLA Piper; and Jennifer Massey, formerly of entertainment boutique Morris Yorn Barnes Levine Krintzman Rubenstein & Kohner.

Another Silicon Valley firm, Wilson Sonsini Goodrich & Rosati, also of Palo Alto, opened its first Los Angeles office in April in downtown, grabbing a team of IP litigators from Sidley Austin headed by Edward Poplawski.

And on February 4, Atlanta-based Kilpatrick Townsend & Stockton opened an office in Beverly Hills, Calif., to advise entrepreneurial clients including those in entertainment, the Internet and new media, on intellectual property and litigation. The firm hired Larry McFarland and Dennis Wilson, name partners of Keats McFarland & Wilson, to launch the office.

Manatt’s new group will be led by T. Hale Boggs, a Los Angeles partner in the capital markets, corporate finance and venture capital practices who launched the firm’s Palo Alto office in 1998. He would help establish Manatt’s San Francisco office in 2007.

"It’s been pretty remarkable what’s happened here in Santa Monica, Venice and West L.A. in the last 18 to 24 months," Boggs said. "It reminds me of when I opened our Palo Alto office in 1998. It feels very similar to how Silicon Valley felt in ’96 and ’97—a large collection of entrepreneurial people working collaboratively around a theme. There it was kind of the advent of the software industry and moving to the dot-coms. Here, it’s really around this industry of digital media."

The firm plans to focus on startup companies, with and without financing; the financiers of those companies, including venture capitalists and angel investors; the Hollywood studios and record labels; and large companies advertising on new media platforms. In addition to Boggs, Manatt Digital Media will include New York partner Linda Goldstein, chairwoman of the advertising, marketing and media practice.

The firm’s clients already include BMG Rights Management GmbH, INGrooves Fontana, BOOM! Entertainment and DirecTV.

Csathy has had a 25-year career launching startups. In addition to Sorenson Media, he has led SightSpeed, a social video chat company that was sold to Logitech in 2008, and online audio player Musicmatch Inc., which Yahoo! acquired in 2004.

Manatt Digital Media will make investments through the Manatt Venture Fund, an early-stage venture fund that has invested nearly $14 million in 90 companies including Pinterest, Etsy and Idealab. The fund, established in 1990, makes direct investments; works with investors including private equity and venture capital funds; and purchases limited partnership interests in those funds.

Boggs said allocations from the firm’s profits, and the individual profits of certain accredited partners, will replenish the fund. Manatt will invest both in firm clients and the portfolio companies of the venture capital funds it represents.

Contact Amanda Bronstad at abronstad@alm.com.

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