Fenwick & West LLP

views updated

Fenwick & West LLP

Two Palo Alto Square
Palo Alto, California 94306
U.S.A.
Telephone: (650) 494-0600
Fax: (650) 494-1417
Web site: http://www.fenwick.com

Limited Liability Partnership
Founded: 1972
Employees: 500
Sales: $100 million (1999 est.)
NAIC: 54111 Offices of Lawyers

Although Fenwick & West LLP provides legal services for a variety of clients, its practice focuses on serving high-technology companies. “Lawyering for the Information Age” is the self-described motto of this Silicon Valley-based law firm. It helps firms get started, obtain venture capital, go public, acquire or be acquired, deal with tax and antitrust issues, handle litigation, and protect their interests involving trademarks, patents, and other intellectual property issues. Having celebrated its 25th anniversary in 1997, Fenwick & West is a young but very fast growing law firm, a reflection of its clients. In the late 1990s it represented Apple Computers, Intel Corporation, Sun Microsystems, Cisco Corporation, Amazon.com, AirTouch, Corel Corporation, Silicon Graphics, Xerox Corporation, the American Electronics Association, and many other major clients. Whether providing counsel to hardware, software, electronic commerce, or other types of firms, Fenwick & West attorneys in Palo Alto, San Francisco, and Washington, D.C. serve clients in the United States and many other nations.

Origin and Early Practice in the 1970s

While a student at the Vanderbilt University School of Law, William Fenwick began working with computers to help support his family and in 1968 wrote his dissertation called “Automation and the Law.” In New York City he represented such large corporations as Pan American Airways and American Smelting.

In 1972 Fenwick teamed up with Henry West and two other attorneys to form a new partnership in Palo Alto, California, where they set up office on one floor of a ten-story building in Palo Alto Square. The new firm decided to move to Palo Alto after surveying the prospects for new high-tech firms in that area and also in Florida and Chapel Hill, North Carolina.

The new firm’s first big client was Pioneer Electronics, which provided about 85 percent of the new partnership’s work in its first four years. “Pioneer was really the angel for our firm,” said Fenwick in a July 6,1999 interview in the Recorder. “They had us involved in litigation in 26 to 28 states. We were involved in mergers and acquisitions.”

In 1976, when his law firm employed about 15 lawyers, Fenwick was approached by two young men, Steve Jobs and Steve Wozniak, seeking advice on incorporating to sell a computer kit called Apple I. Jobs and Wozniak knew a sister of one of Fenwick’s partners. In the 1999 interview, Fenwick recalled that, “I got the Apple situation simply because my partners’ friends thought that if you knew a little bit about computers that you were an oddity as a lawyer.”

Fenwick had read about home computers (later called personal computers), but he initially thought the two “pretty scruffy looking” men probably could not do what they desired. Because he thought they did not have money, Fenwick did not charge Jobs and Wozniac to incorporate Apple Computers, a move that launched the personal computer revolution.

German physicist Hans Queisser wrote about the significance of those events. “With a good dose of courage, the Apple Computer Company took the lead.... Public demand was so great that Apple could scarcely keep up. The big firms soon jumped on the bandwagon of personal computers.... Wozniak and Jobs became millionaires and symbols of high-tech success. The computer had finally shed its aura of inapproachability and of government centralization and control. This change in attitude was important, for in the early days, computers were still thought of in George Orwell’s Big Brother imagery....”

Fenwick & West’s early history also included spending most of a week with 19-year-old Bill Gates to help him get a license for the Microsoft Basic computer language and helping IBM get licensing for VisiCalc, the first spreadsheet designed for the IBM Personal Computer.

From its origins in the 1970s, Fenwick & West tended to have an egalitarian corporate culture. Instead of a hierarchical structure found in other firms, the attorneys created a more open and informal firm with values similar to those found in many computer and other high-tech companies. Such values and also questioning of or skepticism toward establishment authority were part and parcel of America’s hippy movement or counterculture. In other words, the rise of Silicon Valley was influenced by its proximity to the University of California at Berkeley, the home of the free speech movement and campus radicals. Dr. Thomas Parke Hughes, a prominent historian of science and professor emeritus at the University of Pennsylvania, made the same point about the similar qualities of the counterculture and high-tech computer firms.

Developments in the 1980s

The decade began with Apple Computers in 1980 choosing Wilson Sonsini Goodrich, another Palo Alto law firm, for its IPO, a decision that was very disappointing for William Fenwick. At the time, Wilson Sonsini already had completed a few IPOs, while Fenwick & West had no IPOs to its record. In the years to come, Apple continued to rely on both Wilson Sonsini and Fenwick & West for many of their legal needs.

In 1981 the partnership hired Gary Reback, a 1974 Stanford Law School graduate who became one of the firm’s leading intellectual property and antitrust lawyers in the 1980s.

In 1984 the firm represented XMR Inc. when it was acquired by Amoco. Other clients in the 1980s included Forte Communications when it was acquired in 1987 by Digital Communications, Qronos Technology when it was acquired by IBM in 1989, and Nevada Western Supply when Thomas & Betts acquired it for $20 million in 1988.

One year after ECAD, later renamed Cadence Design Systems Inc., was formed in 1983, it hired Fenwick & West as outside counsel. By 1991 the law firm had assisted Cadence in acquiring eight companies, including San Jose’s Valid Logic Systems Inc. in a deal worth $200 million.

Beginning in 1987, Fenwick & West represented Symantec Corporation as it acquired 19 firms by 1996, including the acquisition of Delrina Corporation in 1995 for $450 million.

Major Growth in the 1990s

In October 1991 Fenwick & West lost Gary L. Reback, described in the September 9, 1994 San Francisco Daily Journal as “one of its principal rainmakers,” when he joined Wilson Sonsini. With the leader of its intellectual property practice gone, Fenwick & West turned to David L. Hayes, who had earned electrical engineering degrees before graduating from Harvard Law School in 1984.

In 1991 the firm’s IP practice brought in $3.6 million, 13 percent of firm revenues. Under Hayes’s leadership, in 1993 the IP practice accounted for $8.5 million. “The IP practice has exploded,” said William Fenwick in the San Francisco Daily Journal. “We have one of the largest software patent groups in the U.S. and maybe in the world. The licensing group has grown, and the copyright group is very well respected.”

Redwood City-based Excite Inc. chose Fenwick & West as its outside counsel when it was incorporated in 1994. It retained the law firm as it grew and needed help with employee issues, stock matters, acquisitions, and then being acquired in May 1999 by @Home for $7.2 billion. Excite’s general counsel Chris Vail praised Fenwick & West for quickly serving any client needs. In the Business Journal of February 26, 1999, Vail also said, “They have absorbed the entrepreneurial spirit their clients have.”

In addition to such new clients, Fenwick & West continued to represent some long-term clients, especially Apple Computers. For example, in the summer of 1996 the law firm assisted Apple as it tried to reverse its poor financial record by closing a plant in Elk Grove near Sacramento and challenging the Internal Revenue Service’s tax assessments.

Serving both long-term such as Apple and new start-ups like Excite helped Fenwick & West prosper in the 1990s. It worked on 22 acquisitions worth about $670 million in 1993. That increased to 52 acquisitions valued at approximately $4.3 billion in 1997, 71 acquisitions valued at over $27 billion in 1999, and 25 acquisitions in 2000 worth more than $38 billion.

Some of Fenwick & West’s larger transactions in the 1990s included representing Intuit Inc. in 1993 when it acquired ChipSoft Inc. for $280 million; Cooper & Chyan Technology, Inc. when it was acquired by Cadence Design Systems in 1997; and VERITAS Software Corporation when it acquired Open Vision Technologies for $375 million in 1997. The law firm also represented Intuit when Microsoft failed to buy it in a deal projected at more than $1 billion.

The law firm’s financial success, however, did not prevent the loss of some of its attorneys, especially since its high-tech clients sometimes offered stock options and the chance to make much more money. A good example was Fenwick & West partner Mark Stevens, a 15-year veteran at the law firm before he accepted Excite’s offer to become its vice-president of business affairs. “The most significant issue is losing good lawyers to clients,” said Fenwick & West Chairman Gordon Davidson in the Business Journal of February 26, 1999.

Company Perspectives:

Fenwick & West is a leading “Silicon Valley” law firm which has represented hundreds of growth-oriented companies from inception. Many of these have become major public companies. It also represents institutional investors and venture capital firms, and has been a leader in structuring new financing vehicles for start-up companies.

Fenwick & West’s litigators helped their clients win intellectual property cases in the 1990s. In 1996 the firm represented ReSource/Phoenix, Inc. when it was sued by Gemisys Corporation. On March 18,1999 the U.S. District Court dismissed all of Gemisys’ copyright infringement and trade secret charges. The law firm in 1999 also gained a favorable ruling for its client Scenix Semiconductor, Inc. in its ongoing patent infringement battle with Microchip Technology.

In addition to high tech firms, Fenwick & West in 1998 and 1999 represented biotechnology, biomedical, and pharmaceutical companies such as Baxter International, Foundation Health Systems, Medical Science Systems, Origin Medsystems, and Mountain View Pharmaceuticals. Other major clients during that time included American Airlines, Andersen Consulting Group, Chrysler Corporation, Fannie Mae, and Harrah’s Entertainment.

One of the new challenges faced by law firms in the 1990s was the growing demand that legal documents be written in plain English instead of the convoluted legalese characterized by long paragraphs and legal jargon. The U.S. Securities and Exchange Commission on October 1, 1998 began requiring that plain English be used in all forms submitted for IPOs, other stock offerings, mergers, and acquisitions. Moreover, that agency actually enforced the new rules, much to the chagrin of some attorneys.

Although all companies were subject to the new regulations, one SEC official said Internet and high-tech firms were more scrutinized for plain English compliance. “They have a hard time stepping back and taking on the vocabulary of a retired teacher in Iowa when they work in Silicon Valley,” said Shelley Parratt in the Asian Wall Street Journal of July 6, 1999. Thus when Fenwick & West helped its client MarketWatch.com go public in 1999, the SEC required that its IPO statements had to be revised twice to comply with the plain English rules.

In 1997 Fenwick & West celebrated its 25th anniversary at San Jose’s Tech Museum of Innovation, a most appropriate setting since William Fenwick was one of the museum’s original directors and later was replaced by one of the other partners.

The National Law Journal in its annual listing of the largest U.S. firms ranked Fenwick & West as number 200 in 1997 based on its 164 attorneys. In 1998 the firm moved to number 171. By 2000 it had expanded to over 250 lawyers, partly because of a booming economy, and was one of the fastest growing law firms in California, not to mention the nation. Although Fenwick & West faced numerous competitors, including several other law firms and also the Big Six accounting firms that hired more tax attorneys, it seemed well prepared for its future challenges.

Principal Operating Units

Intellectual Property; Corporate; Litigation; Tax; Employment and Labor Law; International Transactions.

Principal Competitors

Wilson Sonsini Goodrich & Rosati; Brobeck Phleger & Harrison; Morrison & Foerster; Cooley Godward Castro Huddleson & Tatum; Gray Cary Ware & Freidenrich; Pillsbury Madison & Sutro; Townsend and Townsend Khourie and Crew.