By Brenda Sandburg
The Recorder
June 7, 2001

ONE OF THE LUCKY ONES: Unlike many ex-dot-commers, Peter Astiz was able to return to his old firm, Gray Cary, after a 20-month stint in-house. Photo: Shelley Eades

Peter Astiz is one of the lucky few.

His dot-com job as the top lawyer at Emusic.com Inc. wasn't necessarily everything he hoped it would be. So after 20 months he returned to the fold at his old firm, Gray Cary Ware & Freidenrich.

"It's a comfortable decision on both sides," Astiz said.

But unlike a lot of the lawyers who jumped to in-house jobs at dot-coms, Astiz is a partner who can drum up new business and was chairman of Gray Cary's corporate securities group before going to Emusic.

For most out-of-work in-house lawyers these days, returning to the firm fold is proving difficult, if not impossible.

"There are droves of people trained by Silicon Valley or San Francisco firms who went in-house and now are having a hard time finding a job," said Kimberly Fullerton, managing partner of the recruiting firm Major Hagen & Africa. "Associates, particularly from the classes of 1996, 1997 and 1998, who left their firms are calling us and saying they can't get back in."

While recruiters can't quantify how many attorneys are in this predicament, they say it's a substantial number. "They probably represent 50 percent of my applicant pool now," said recruiter Avis Caravello. "I don't ever recall a time when so many accomplished people were out of work.

"Eight months ago these candidates would have had a gajillion offers," Caravello added. "They were stars making a lot of money."

But their stars have faded considerably. Most firms have virtually stopped hiring corporate attorneys, in-house positions are scarce and former dot-commers carry the stigma of having worked at a failed start-up that offered potential riches but little training.

Then there's a question of how motivated ex-dot-commers are about firm life. Many of them are openly reluctant to go back after the freedom and exhilarating pace of a start-up. And a number of them burned their bridges when they left their firms.

"There is a certain element of 'good riddance' to this," said a senior partner at one Silicon Valley firm, who spoke on condition of anonymity. "Associates were less than graceful in their exit. They said 'thanks for the training. I know you'll plead to have me back if I deign to come back someday.' "

Others say they are willing to take high-quality attorneys back -- provided they have the appropriate attitude.

"If they left because of essential incompatibilities with large firm life, we don't want to be a temporary port in the storm," said Fenwick & West hiring partner John Steele. "But if they're coming back with a mature view of what firm life is about we have no problem taking them back."

THE DOT-COM EXPERIENCE

Michael Sands, a sixth-year litigation associate, is one of the attorneys who returned from the dot-com storm.

Sands left Fenwick last April to become an associate general counsel at AllAdvantage.com, a company that paid its subscribers to view advertising while surfing the Internet. As a member of the company's six-attorney staff, Sands handled everything from managing the company's IP portfolio to government relations.

The meteoric rise of the company was followed by an equally precipitous fall, Sands said. Formed in March 1999, the company had 700 employees operating in 23 countries at its peak in May 2000. "By December 2000, it was gone," Sands said.

After being laid off, Sands said he considered an in-house position at an established company. But, he said, "unless you're a general counsel, you tend to be pigeonholed into a position," such as overseeing contracts. He opted to go back to firm life, which he said, offers "relative security, a relatively high income and reasonable variety."

Gray Cary's Astiz also found that a firm could offer more interesting work. When he initially joined Emusic as executive president and general counsel, Astiz said he was able to focus on transactional work. He oversaw Emusic's acquisition of seven companies. But when the capital markets turned he took on a broader management role as chief operating officer. While he enjoyed the role, he said he wanted to go back to doing transactions.

"In-house, there are periods where you can learn a lot and be an active participant," Astiz said. "When things slow down and there is not as much cash, you deal with things that are not as engaging as putting things together."

But while some attorneys found dot-coms offered less variety and stability than firms, others became addicted to the exciting pace of dot-com life.

"A lot of people when they got into a company got hooked," said a former general counsel and ex-big firm partner. "It's fun and interesting to be part of an enterprise that wants to fundamentally transform some market or some technology. Once you've gotten the bug of having that in your legal career, it's hard to step back and do anything else."

The attorney, who spoke on condition of anonymity because he's looking for a job, predicted that some people may start their own shops, operating as outsource general counsel.

However, he said less experienced attorneys may have a difficult time selling themselves.

"If an attorney spent three years at Wilson doing M&A work," he said, "how can they coach someone through a nasty piece of litigation or strategize a patent call? It's a big problem for a crop of associates that were green when they left their firm."

SCRAMBLING FOR JOBS

And firms aren't necessarily thrilled about the prospect of hiring lawyers who would rather be somewhere else. Recruiters say that many attorneys would rather hold out for another in-house position than return to firm life.

"Seventy-five percent of candidates coming out of a troubled start-up would prefer to remain in-house," said recruiter W. Jon Escher, of Palo Alto's Solutus Legal Search.

"Generally, lawyers are happier in-house," said recruiter Scott Dubin. But there's "not enough in-house work to go around because of the contraction so they're looking for work at firms."

The competition for in-house positions is fierce. "Last year when we did an in-house search we would be happy if we came up with four solid candidates," Fullerton said. "This year we can get up to 20 to 25 candidates."

While there are no statistics on the number of attorneys on the job market, the lineup of failed Internet companies may give some indication.

Webmergers.com, a San Francisco company that tracks the demise of dot-coms, reported that at least 55 Internet companies folded in April, bringing the total number of such company shutdowns to at least 435 since January 2000.

But Major, Hagen's Fullerton said the numbers are probably even higher. Non-tech lawyers who work in industries that serve dot-coms have also been hit hard by the downturn in the technology sector.

Ironically, Fullerton said that some of her clients are reluctant to hire attorneys who had short stints at dot-coms. Companies may believe, Fullerton said, that attorneys who serve as the sole legal counsel at a dot-com did not receive any training.

While lawyers would take a firm job in lieu of an in-house post, the number of firm openings has plummeted. At Gray Cary, for example, the number of new hires dropped from 167 last year to about 30 this year.

Nevertheless, Richard Yankwich, chairman of the firm's recruiting committee, said the firm would be "more than happy to talk to anybody" interested in coming back.

Wilson Sonsini Goodrich & Rosati partner Issac Vaughn said his firm has gotten resumes from attorneys that left for in-house positions. "But to call it a flood, I'm not so sure," he said.

Vaughn, formerly in charge of hiring corporate laterals, cited four associates and one partner who have returned to Wilson in the past year, two of whom are now based in the firm's Salt Lake City office.

But a partner at another Silicon Valley firm said such homecomings are rare.

Many firms became highly leveraged when the market was red-hot, he said. "Now none but the superstars have a clear path back."