Today, Medearis has company. His firm, holding steady at 60 lawyers, merged in September with San Francisco powerhouse Heller Ehrman White & McAuliffe. Some industry observers pointed to the marriage as evidence that Silicon Valley law remains in the throes of contraction, but Medearis and his many years of Valley experience know better. He sees a recent rash of IPOs, a recovering Nasdaq, booming litigation work, and healthy corporate practices, and comes to a decidedly different conclusion: Tech is back.
"We're cautiously optimistic we've seen the bottom," says Matthew Sonsini, a partner at Wilson Sonsini Goodrich & Rosati, whose clients include Hewlett-Packard and Apple. "But we're still relatively lean given the strength of our client base." The firm went from 810 attorneys in 2001 to 620 by the end of 2002, but it's beefing up, with plans to hire 35 to 40 associates next summer (up from 32 in 2003). As for the Venture Law Group/Heller Ehrman merger, Heller chairman Barry Levin says the group plans to add "a handful" of attorneys over the next six months.
Much of the growth planned at firms throughout the market will be in corporate practices that were cut after the tech implosion. Tech companies are emerging from the downturn with new needs, according to Medearissome are facing antitrust and regulatory issues for the first time, others are feeling their way through expansion into other countries. Either way, they need lawyers. Many of Silicon Valley's top firms are anticipating more work in mergers and acquisitions, public offerings, and venture capital, the backbone of corporate legal work. All in all, says Medearis, "This is a terrific time for someone to get into technology law. Given the migration of people away from this practice area, there aren't enough young people moving up."
The anticipated uptick in tech law hiring is in part a ripple effect of the recovery in the equity market. After bottoming out below 1,200 in July 2002, the Nasdaq has been encouraged lately by companies investing in technology. IBM's $2.1 billion purchase of Rational Software, Yahoo!'s high-profile purchase of Internet commercial-search company Overture, and Barry Diller's efforts to bulk up his InterActive Corp. with brands like Expedia and Hotels.com have revved up M&A interest.
On the startup side, venture capitalists invested $4 billion in new companies in the second quarter of 2003, a 14 percent increase from the first quarter. After two years when tech newcomers were shunned by the public markets, companies like DVD software provider InterVideo, networking-equipment designer Netgear, and startup iPass, a virtual network operator, went public this summer and continued to trade above their offering prices. Biotech and life-science startups are also on the rise. "Those tech IPOs have loosened up a lot of money. Investors think there may finally be a market for these companies down the road," says Geoff Leonard, a partner in the Menlo Park office of Orrick, Herrington & Sutcliffe. "It's translating into more healthy, more vibrant legal work at the strongest level I've seen in a couple of years."
Other technology-related legal work is expected to remain strong as well. Intellectual property litigation and shareholder class actions have shored up many Silicon Valley firms. "If anything, the last two years have been boom years on the litigation side," says Eric Reifschneider, a partner at Cooley Godward in Palo Alto.
Any mention of hiring, however, carries a footnote of caution. "Three or four years ago, it was foolish to expect the irrational exuberance to continue indefinitely," says Reifschneider. "The question then was how steep the decline would be when it fell. The new question is how rapid the recovery will be."
