The $20bn (£11.32bn) Google flotation will net its law firm Wilson Sonsini Goodrich & Rosati up to $20m (£11.3m), and partners at the West Coast firm are hoping their initial investment could eventually realise between $50m (£28.3m) and $100m (£56.6m).
Wilson Sonsini took an equity investment in the world’s leading search engine when it advised Google prior to its launch in 1999. This will now net Wilson Sonsini the biggest windfall a law firm has had from such an investment, often made in lieu of fees.
A Wilson Sonsini team – led by legendary chairman and chief executive Larry Sonsini and corporate partner David Segre – will also advise Google on the initial public offering (IPO). Palo Alto-based corporate partner William Hinman of Simpson Thacher & Bartlett is advising underwriters Morgan Stanley and Credit Suisse First Boston.
Google’s Securities and Exchange Commission filing reveals Wilson Sonsini’s lucrative stake.
“Wilson [Sonsini] holds that stock because they were a very early-stage investor. When that one out of a thousand of those companies actually succeeds and goes public, then that’s an appropriate disclosure,” said one lawyer involved in the deal.
The practice of technology companies asking their law firms to take an equity interest, or the firms asking for an equity interest as part of their early compensation, was pioneered during the late 1990s dotcom boom.
The Venture Law Group (VLG) was launched with such a tactic in mind and made some early killings, including a huge payout from the $33.8m (£19.1m) IPO of Yahoo! in 1996. However, the investments were not enough to keep the firm afloat following the dotcom crash.
A $3m (£1.7m) windfall from VLG’s client PayPal, when it was acquired by eBay, could not save the ailing firm. VLG was forced to merge with Heller Ehrman White & McAuliffe in 2003.
Google’s flotation has been called “the most sought-after high-tech flotation since Netscape listed in 1995” – another of Sonsini’s lucrative clients.