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By JILL ESTERBROOKS, Special to the Daily Transcript
Tuesday, September 10, 2002
"Attorneys and law firms focusing on the technology sector have experienced a significant decline in transactional work," said Paul Kreutz, a senior business partner with the law firm Gray Cary Ware & Freidenrich LLP.
"A number of transactions requiring legal services -- primarily equity financing, both public and private, and M&A matters -- have either been canceled or are on hold," he said. "This has forced the investors in these companies to marshal their funds to support such companies rather than make new investments in other companies."
According to Kreutz, many venture capitalists have been engaged in triage activities to determine which of their portfolio companies should survive and which should go out of business. "As a result of this, many of the larger law firms nationwide have undertaken a reduction in force, a phenomenon virtually unheard of prior to 9/11," he said.
Law firm consolidation is occurring, said Kreutz. Regional firms are becoming national firms and some national firms are becoming international firms.
"Law firms that have a diversified practice of litigation, intellectual property, employment, real estate and the like, which balances against their historically strong corporate practices, will survive this downturn," he said. "The other firms will disappear or combine with larger firms. Those firms with strong bankruptcy practices are benefiting from the adverse economic environment. Further, employment attorneys are busy because of all the reduction in force."
Homeland security will create new market opportunities for technology companies, according to Kreutz, whose firm focuses on emerging technology clients. "There will be greater emphasis on technology to defend against the new threats but there will also be a greater concern that technology will enable terrorists to be more effective in carrying out their destructive acts.
"All of us, lawyers and nonlawyers, will be more vigilant as we go about our daily lives and take note of experiences or information that seem unusual and odd," Kreutz said. We will also live with some erosion of our personal liberties as the government takes actions to combat new threats."
Esterbrooks is a free-lance writer based in San Diego.
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