* Wilson Sonsini at center of insider trading case
* Law firm trusted by many companies across Silicon Valley
* Firm has survived controversies such as HP board spying
By Nadia Damouni
NEW YORK, April 6 Larry Sonsini's Wikipedia
entry is only one paragraph long even though the top corporate
lawyer has presided over more technology deals than anyone else
in Silicon Valley.
Sonsini keeps a determinedly low profile but several times
in the past five years, his firm, Wilson Sonsini Goodrich &
Rosati PC, has hit the headlines for the wrong reasons. The
latest puts it at the center of one of the largest U.S. insider
trading cases ever.
U.S. prosecutors on Wednesday accused a former Wilson
Sonsini lawyer, Matthew Kluger, of leaking confidential
information about multi-billion dollar tech deals that the firm
worked on, in news that stunned dealmakers across the country.
Wilson Sonsini hasn't been accused of wrongdoing, and
industry bankers and lawyers say it could have happened to any
firm. Indeed, Kluger had also worked at Cravath Swaine & Moore
LLP and Skadden, Arps, Slate, Meagher & Flom LLP during his
17-year practice, according to prosecutors. [ID:nN06204005]
But the case is a black mark for a successful firm that has
nevertheless been dogged by previous controversy: Sonsini was
hauled before Congress about his firm's role in Hewlett-Packard
Co's (HPQ.N) boardroom spying tactics, and many Wilson Sonsini
clients got caught up in the options backdating scandal in
"It is a reputational issue for them, and they have had
several of these things. Wilson needs to be careful," said an
M&A lawyer familiar with the firm, who spoke on condition of
The Palo Alto, California-based Wilson Sonsini is ranked as
the number one law firm in high technology M&A transactions,
with over $325 billion worth of deals since 2000, according to
Thomson Reuters data. (r.reuters.com/tap88r)
Its clientele include nearly all the top U.S. tech
companies, and the powerful firm has presided over such
landmark deals as HP's $25 billion purchase of Compaq in 2001.
Ironically, Kluger is accused of leaking details on Oracle
Corp's ORCL.O takeover of Sun Microsystems Inc, HP's purchase
of 3Com Corp and Intel Corp's (INTC.O) purchase of McAfee Inc
-- all very high-profile deals that the firm was working on.
However, senior tech bankers and lawyers say Wilson Sonsini
will likely remain the go-to firm in the Valley, pointing to
examples of other practices that have survived insider trading
"Sonsini will go out to clients and say 'look there is a
bad guy, we found out about him and fired him on the spot. This
isn't the sort of stuff we tolerate here," said an industry
banker who did not want to be identified because he does
business with the law firm.
Sonsini, 70, is crowned "King of the Valley" as he often
rubs shoulders with the likes of Apple Inc's (AAPL.O) Steve
Jobs and Google Inc's (GOOG.O) Sergey Brin and Larry Page.
In an interview with Reuters last month, Sonsini described
how he built his empire by getting involved with companies at
early or even start-up stages, thus winning client loyalty.
His M&A team develops deep relationships by advising
clients on numerous matters, whether or not a deal is in
process. They act like general counsels, advising on capital
raising, licensing deals, and even security litigations.
"There are firms that do venture work, there are firms that
represent public companies, there are firms that do just
billion dollar transactions. No one has consciously built a
firm or a practice to serve the enterprise in each stage
group," said Sonsini, chairman of the firm.
The father of three and grandfather of seven is normally up
at 5 a.m. California time to talk to east coast clients, before
heading into the office to deal with local issues. He is very
hands-on with clients, and was integral in creating the firm's
model of the lawyer being a critical adviser and trusted
confidante, tech bankers say.
"He is not just the guy who gets the contract done but the
guy who influences the decision that is made ... they occupy a
position of trust in a board room," said a tech banker.
This position of trust means that Wilson Sonsini is privy
to many important decisions in the technology world, from
initial public offerings to transformational M&A deals.
One of the firm's M&A lawyers, Marty Korman, told Reuters
last month that a member of his team often gets invited into
the board rooms of their clients.
"We are often the ones designing the decision-making
process," he said. "We are not just deal jockeys that are
brought in to do a deal."
Wilson Sonsini said on Wednesday it was shocked by the
insider trading case against its former employee, and would
cooperate with the investigation. It declined further comment.
The firm has about 600 lawyers across the United States,
Hong Kong and Shanghai. In addition to Sonsini and Korman,
other lawyers who spearhead the M&A practice include Mike
Ringler, Rob Ishii, Bob Sanchez, Larry Chu, and Todd Cleary.
Deal advisers say M&A transactions typically involve so
many people -- from players directly in the deal to others at
the firms who become privy to confidential information -- it's
near impossible to track down or prevent insider trading.
"You can never design a system that is full-proof, there is
always some element of trust involved. Law firms have a lot of
confidential information and a lot of it is inside
information," said the first M&A lawyer. [ID:nN06276648]
(Editing by Tiffany Wu and Bernard Orr)