Johnson claims that the idea for VLG came to him in a dream in early 1993. For months he had been frustrated in his efforts to set up a Wilson, Sonsini satellite office on Sand Hill Road. He'd been worried, too, by turnover and growth at the firm, which in his time had expanded from 10 to roughly 250 lawyers. That growth--accompanied by expansion and maturation of the companies on Wilson, Sonsini's client roster--had diluted the firm's focus on the early-stage companies that were Johnson's passion. His dream seemed to spell out a clear solution to it all.
When he had been a computer programmer for Burroughs Corp. in Pasadena, Calif., in 1970, Johnson typically would not hammer out a single line of code until he had a clear picture of an entire program laid out in his mind. Now, he says, he awakened from a deep sleep with a complete vision for a new business in his head. Before any of the details faded, he got out of bed and, still in his pajamas, wrote down everything. By dawn he had filled 15 pages.
Within a few months of committing his plan to paper, Johnson quit Wilson, Sonsini. As commander of a 15-person group that concentrated on serving emerging companies, Johnson had long been an independent player. Still, he suspects that some of his colleagues thought he was nuts. He was, after all, forfeiting his post at one of the valley's most powerful and influential institutions, as well as a $1-million-plus annual pay package, to start something brand-new--under the logo of an acorn.
The dream seemed to have set in motion something Johnson could not turn back. "I went to sleep on a Friday evening with no idea of leaving the firm and woke with the reasons fully formed in my mind," he explained in his resignation. "I was skeptical at first, but the conclusion now seems inevitable."
Johnson designed for his new firm a brand-new business model, based on the framework of a venture-backed start-up. The name as much as said so. Rather than trumpeting the names of its founding partners, as the appellation of virtually every other law firm in the country does, the moniker Venture Law Group evoked the nature of the practice. "At first we weren't even sure if it was legal," Johnson recalls. (Since VLG's inception, more than a dozen firms have latched on to the VLG trend, among them Enterprise Law Group, Genesis Law Group, Commerce Law Group, and Technology Law Group.)
Johnson, who firmly believes that there is value in innovation simply for the sake of innovation, championed a marketing campaign that features frequent giveaways of coffee cups, tote bags, and fleeces emblazoned with the VLG logo--"Ã la Hard Rock Cafe," he jokes. He has bucked law-business norms in more profound ways as well, giving everyone--from the most junior secretaries to the most senior partners--a slice of the firm's profits. In addition, VLG has flattened the traditional pyramidal law-firm model of staffing, in which a cadre of newer lawyers works under the supervision of a few senior ones. Instead, VLG promises its clients that its big-name senior partners--lawyers like Johnson and his partners Joshua Pickus and Jim Brock--will be deeply involved in servicing the business.
As an extension of that principle, VLG has elected to limit its lawyers to advising only 15 to 20 companies at a time (whereas at other law firms, individual partners may count 30 to 50 companies as clients). "We have far fewer companies per attorney than our competitors," Johnson acknowledges. "We prefer to concentrate on companies where we can provide business advice as well as legal advice. We like to be in the trenches."
It's not surprising, then, that VLG turns away as much work as it takes on. On a recent day, for example, Johnson rejected a video-postproduction business. "It didn't sound like it had enough new technology to have a lot of interest for us," he explains. "We want to brand VLG as the law firm you want to be with if you're the next Yahoo!"
Rather than taking on all of the work that comes through the door and growing to accommodate increased demand, VLG has instituted procedures for screening incoming assignments and is trying to resist expanding beyond 75 lawyers. The firm accepts only what it deems to be the most exciting, cutting-edge slice of the market. "We're like a cork floating along on top of a river of venture capital. Wherever the river goes, we go," Johnson explains. "When biotechnology companies are hot, we're biotech lawyers. Lately, telecommunications and software companies have been hot, so we're information-technology lawyers."
VLG partner Joshua Pickus jumped at the chance to represent WebTV Networks Inc.--which was acquired by Microsoft in 1997 for $425 million--even though WebTV was beyond the start-up stage when VLG came on board. When WebTV had approached VLG to handle the work, WebTV was already recognized as hot in Silicon Valley. The fact that WebTV had chosen to switch to VLG as new counsel said lots of good things to valley insiders. VLG's burgeoning reputation also played a role in developing the firm's ongoing relationships with Oracle and Intel.
Still, VLG has tailored its approach to appeal specifically to entrepreneurs who don't have a lot of cash to spend on fees. Fledgling ventures can count on VLG to devote substantial time--anywhere from a few weeks to a few months--to developing a business plan and a financing strategy, at no cost to the client until the client receives its financing. Yahoo! founder Jerry Yang points out that his company was not billed by VLG until after it had received its first round of venture funding. It was the same for Financial Engines. The upside for VLG comes as its lawyers help their clients through the ensuing barrage of deals and other transactions that typically accompany a vibrant start-up--work that VLG does charge up front for. The key, Johnson explains, is volume. Not volume of clients, but volume of work for a handful of clients who will come to rely heavily on VLG as their companies come to life.
"When we actually get down to doing substantive legal work as opposed to business counseling, then the meter goes on," Johnson explains. No matter how big or how small the company, VLG lawyers expect to be treated not as mere peripheral legal advisers but as true team players. "We want companies to treat us as real partners," Johnson says. "Real business partners in building up a business."
