Well-Known Securities Law Firm Merges With Outsider

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Known to a generation of Los Angeles dealmakers, the name Freshman, Marantz, Orlanski, Cooper & Klein was taken off the door of the Beverly Hills law firm last week as part of a merger and replaced by Kirkpatrick & Lockhart LLP.

Not to worry, says Leib Orlanski, the peripatetic partner of Freshman Marantz and head of the 17-lawyer outfit’s securities practice since 1983.

“Everything will stay the same. We have autonomy, even our phone number will stay. We will just have a fabulous connection to a major firm,” he said.

Pittsburgh-based Kirkpatrick & Lockhart is a national law firm, with 560 attorneys in multiple offices. It was ranked as one of the top five firms nationwide in IPO work in 1998 by the New York Law Journal. But for Orlanski, it was Kirkpatrick & Lockhart’s patent law strength that sealed the deal.

“They are particularly strong in intellectual property rights all the areas that securities lawyers are getting into more and more,” said Orlanski.

As dot-coms proliferate, something as simple as an idea or elements of business plans are in fact patentable, said Orlanski. “We are calling upon intellectual property lawyers constantly,” he said. “Clients need to confirm that they have patentable ideas and investors do, too.”

Also, securities markets, which were somewhat regional back in the early 1980s, are now national in scope, pushing law firms to follow suit. The regional brokerages have been merged into coast-to-coast empires, and venture funds invest such large pots of money usually by industry not region that flying cross-country to eyeball deals is second nature.

Obviously, e-mails and faxes render state lines and time zones less meaningful. And dot-coms, which have dominated the initial public offering market for the past several years, by their very nature are national companies.

Freshman Marantz was the law firm of the underwriter or issuer on 60 IPOs in the 1990s. Today, the IPO niche is obviously a dot-com business.

Still, people want to talk to their lawyers in person. “Kirkpatrick & Lockhart has been doing a lot of West Coast deals, and they have been flying people out. Now we become their Los Angeles office,” said Orlanski.

But what about taking the name “Orlanski” from the masthead? “Believe me, that’s the least of my concerns,” said Orlanski, 58, who earned his law degree in 1968 after studying at USC. “In fact, I have been working weekends and nights to get another round of venture capital raised for a client, not worrying about the nameplate.”

Last week, Orlanski inked documents raising $16 million in second-round financing for Cushopper.com from well-known venture outfits J.H. Whitney & Co. in Stamford, Conn., and Beverly Hills-based Smart Technology Ventures. Cushopper.com has exclusive rights to sell wares and services to 100 credit unions by linking to their Web sites.

Can Take a Punch

So the Internet stocks have been knocked down, and once more the overall market is wobbly, causing broad indexes to sink in the 10 percent range in January. Are individual investors finally going weak in the knees?

Stockbrokers say no, and perhaps therein lies another pillar of this market’s resilience.

“The rank-and-file investor has become accustomed to volatility,” said Harry Baxter, branch manager at Schoff & Baxter, which houses 28 stockbrokers in Century City. “It has been one step back, two steps forward.”

Even if investors are weary of Internet gyrations, they don’t run for the corner, said Baxter. “Investors don’t tend to sell Amazon.com to buy a Treasury bond. They usually roll into another sector.”

Sean Rodriguez, a stockbroker with Wedbush Morgan downtown, concurred.

“This is the third or fourth time (a stiff correction) has happened in the past 18 months. And each time it comes back more explosively than before,” said Rodriguez. “I have some clients heavy into Internet stocks, whose portfolios swing back and forth by 30 percent in a month. They don’t seem to mind.”

For such clients, Rodriguez tries to tamp down their tendency to go too heavily on margin.

John Marrone, managing director with the Cruttenden Roth brokerage in West Los Angeles, said that with certain Internet infrastructure stocks so promising, investors aren’t diving for the canvas. “It’s going to take a lot more than this to shake people out,” Marrone said. “Investors still believe the Internet is the place to be, whether it’s broadband services or companies that make better batteries for handheld (Web-connected) devices.”

Less Drive-Time

Thirteen years ago, Tom Turney was weary of driving to downtown Los Angeles from Hermosa Beach to work for Hambrecht & Quist. Independent-minded anyway, he founded private investment bank NewCap Partners Inc. in the decidedly un-hip confines of Century Boulevard near LAX. “Office space was cheap then, and the commute was great,” said Turney. “Still true today.”

The low-key Turney doesn’t have to put on airs: From two founders and a small office, his firm has grown to now include 10 professionals and branches in Orange County and Silicon Valley. In addition to brokering deals linking investors to promising companies or mergers NewCap Partners is putting up its own cash to make certain transactions happen.

In what may be regarded as heresy in the new millennium, Turney said he is cool to Web businesses, at least with his own money. “Everybody is on the dot-com bandwagon. But there is probably more high-tech manufacturing going on in Southern California than ever before,” he said. “These companies don’t have the huge upside of a dot-com that attracts the venture capitalists, but they are great little businesses that make money every year.”

NewCap will put $1 million to $2 million of its own dough into a company it likes, said Turney, usually in concert with other investors, and often takes a board seat. “Many of our deals are too small or unusual for others to look at. That’s fine with me,” said Turney. “We like unfashionable investments.”

Contributing Columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. He can be reached at [email protected].

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