Wednesday, June 18, 2008

When Lawyers Get Liquidity

I've made no secret of the fact that I think lawyers cannot and should not take equity in the companies (Large and small) they counsel, unless they willing to step aside as company counsel. One exception to this rule arises if lawyers create the company themselves. Case in point:

Last week, FTI Consulting announced that it is acquiring Attenex Corp, a Seattle-based eDiscovery software provider for approximately $88 million in cash. Attenex was originally incubated by Seattle law firm Preston Gates & Ellis, which developed the software to manage its own complex litigation files. (What complex litigation? You should know that the Gates in the firm title refers to Bill Gates' father.)

Attenex was spun out of the firm about 2 and 1/2 years ago with $5 million in venture funding. Preston Gates merged with Kirkpatrick and Lockhart just last year. Assuming that the Preston Gates former partners wrote their merger agreement correctly, the former firm members are now receiving one last hefty payoff from their efforts.

THIS is how you do it.