Is White a high-powered partner in a far-flung international corporate practice, or a rising star with a big Silicon Valley firm?
Neither. White is a principal in Menlo Park's eight-lawyer White & Lee. While technically a law firm, the attorneys at White & Lee have had success positioning themselves more as business consultants.
"What they've done is extract the essence of what start-ups need," explains executive consultant Alan Henricks, who does financial work for various Silicon Valley start-ups. Their work includes not only legal advice, but everything from refining business plans to structuring strategic investment to guiding young companies through the M&A or IPO process, he says.
"We take it from the business angle and fold the law in at the back end," says White, a structured finance specialist with a Harvard M.B.A. and a background as an international entrepreneur. "We look at what is the business, and what it will take to make it go."
The 2-year-old firm already boasts a list of 300 clients, including 3Ware, 3Com, Gigalabs Inc., Percon Inc., Sable Technologies Inc., ClearVox Communications Inc., OnTheGo Inc., Gizmo Gypsies, KnowWare, MediaLive Inc., Advanced Hardware Architectures, Dentech Inc., Clarify Inc. and Telkom.
The increased client traffic will push the firm into an adjacent 3,200 square feet by the end of the year.
Despite the downturn in the stock market, White & Lee is keeping busy. "The markets haven't put a damper on the birth of new ideas and technologies," says partner David Lee. Financings may require more strategy in the current market, and that's White & Lee's specialty.
Ahead of the Curve
Legal consultants say many companies are attracted to such blended service firms.
"I'd say they're slightly ahead of the curve," says Don Oppenheim, a principal at Altman Weil Inc.'s California office.
Oppenheim says the legal profession has struggled with the mixed service approach in the past. "About five years ago, the American Bar Association came out with a pronouncement against ancillary business," he says. It "put a damper on law firms providing one-stop shopping." Oppenheim says accounting firms have had no such squeamishness about expanding into adjacent industries, and that more law firms will have to follow this model eventually.
White & Lee's clients say they prefer the mix.
Scott Groff, senior vice president of the Dentech division of San Jose semiconductor company KLA-Tencor Inc., used the firm to negotiate the sale of his company. White worked like an investment banker, compiling valuation statistics, finding a tax opinion that contradicted the acquiring company's, fighting his acquirer's big guns: "Merrill Lynch!" says Groff. "Larry Sonsini!"
KLA's first offer for Dentech, a maker of image retrieval systems for the semiconductor industry, was $10 million. White & Lee held out for twice that amount, negotiating for more than a year. Groff sold Dentech to KLA-Tencor in June. "We settled on $18.5 million," he says. "You could say I'm happy."
David Smith, president of children's Internet portal MediaLive Inc., had a similar experience when White & Lee advised on its series-B round of financing and various co-development agreements.
"Lawyers have often killed deals we were putting together by 'over-legalese-ing' the whole thing, by squeezing all agreement out of a deal you've assembled. But White & Lee is the opposite of that."
Smith says White used his entrepreneurial experience to capture agreement. "In 10 minutes they unblocked an important negotiation for us that seemed insoluble," says Smith, "just by knowing what was important to this business."
Henricks says there's good reason the firm is popular with entrepreneurs. "You can call Gray Cary [Ware & Freidenrich], Fenwick [& West], or any of the big firms for advice on, say, the role of a board of directors, and they'll talk to you forever about it," says Henricks. "But as an entrepreneur, White & Lee will send you their 10-page memo on boards, targeted to a venture-backed start-up company, that distills the core information -- here are the state and federal issues to think about, this is what an audit committee should do."
Henricks was so impressed by White & Lee's board of directors memo, he says, "I had it bound over at Kinko's, and I carry it with me when I talk to new companies."
White & Lee has efficiently exploited the opportunity provided by the glut of legal work in Silicon Valley, which has caused many companies to weary of being put on hold by big firms swamped with business.
"They treat me like a big fish even though I know I'm a little tadpole," says Russell Jones, chief executive officer of ClearVox Communications Inc., makers of cellular phone headsets.
While many smaller firms offer incentives to help draw business from larger competitors, at least one White & Lee client says the firm offers more than gimmicks.
Among other things, the firm takes pains to make its lawyers accessible, right down to not charging for local phone calls or faxes.
Telkom's Tombetti says he believes that perk alone recasts the fundamental attorney-client relationship as more of a business partnership. "Most firms discourage you calling them -- they bill you for even a quick local call," he says. "White & Lee doesn't, and as a result you have a more open dialogue, so they know my business."
Cooley Refugees
White & Lee was formed when David Lee left his partnership at Cooley Godward in 1996 and joined forces with White, a former Cooley associate.
Although small, the firm is equipped to do big-league deals. "I incorporated Palm Computing," says Lee, "represented them in three rounds of financing, was lead counsel when they were acquired by U.S. Robotics, and since the merger with 3Com have done more work with them."
The name partners are complementary: White is the complex intellectual property deal maven. Lee oversees deals, but also makes sure the firm is well managed and running smoothly. The partners sit on a total of 10 boards of directors.
But as clients grow and multiply, the firm is, by necessity, growing as well. "Their ability to have very senior people like David and Mark working with small companies sets them apart," says Mark Tanoury, a partner in Cooley's Menlo Park office. "That's what clients want, and if they can continue to do that, they'll be successful."
The firm has sought out associates with business savvy. Gabrielle Walker, who came to the firm 18 months ago from Keesal, Young & Logan, says she likes that emphasis. "Here, they let you try new things," she says, like the practice in entertainment and multimedia law she has started.
The firm's preference for associates who have business or consulting experience has at times been a mixed blessing. "We had originally thought we could pay below market on associate salaries, because they'll get value down the road with our stock investment plan," says Lee.
"It's an incredible benefit," says Walker, "and it may be quite a little windfall down the road. But the lower salary didn't seem equitable to me, because I'm doing the work now, and need to be paid for it now. We went to the partners and said, 'Look, we should be paid market.'"
The partners learned the flip side of hiring good negotiators. "To get and keep good associates, we found you have to come pretty close to market," says Lee, "and we know their work makes us successful."
In the end, the partners agreed to market-comparable salaries. "You could tell they weren't thrilled," says Walker, "and we didn't get everything we wanted either, but they were willing, and fair. And that builds a lot of trust."
Lee says associates are expected to bill 2,000 hours annually and are bonused at 2,200. "And we recognize that it takes more than hours to make this firm," says Lee.
The workload is intense: Walker says she worked on three M&A last year, along with a slew of incorporations, trademark work, licensing contracts and general corporate. The firm rewards exceptional contributions: It sent associate Jeffrey Aronson and his girlfriend to Tahiti for a week this spring in recognition of his hard work.
Associates say they benefit from the firm's close work with clients. "I spent the last four to five months spending two days a week at one client's office, as their virtual GC," says Walker.
That client was Clarify Inc. When chief financial officer Jan Praisner joined the San Jose software maker in April, she found "a contracts department in disarray."
"I had hate mail from sales staff that we weren't meeting customers' needs in a timely enough manner," she says.
Rather than specifying tasks required to get the job done, Praisner simply gave White & Lee a general directive to clean things up. A team of attorneys dove in and "helped us take care of the backlog, and worked internally on process issues." Walker now spends a day each week at Clarify, helping to review and negotiate contracts. "They make me feel that whatever I have going is first and foremost," says Praisner.
So far, the risk of starting a new firm is paying off. The partners are happy guiding entrepreneurs and enabling new businesses to take off. "Every day we're doing something different," says White.
"What could be better," says Lee, "than helping creative people to achieve their dreams, and watching them become millionaires, and start new companies?"
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