Craig E. Dauchy is a partner in Cooley LLP's business department, head of the venture capital practice group and a member of the firm's management committee. Dauchy specializes in representing venture capital and private equity partnerships. He has participated in the formation of venture capital and private equity funds and venture capital financings.
Q: How did you become a rainmaker?
A: I had the good fortune to become an associate at Cooley in 1975 at the dawn of the venture capital industry in the San Francisco Bay Area. I had two fantastic mentors in Jim Gaither, who had formed the first institutional venture capital fund on the West Coast, Sutter Hill Ventures, in 1970 and in Brad Jeffries. Jim and Brad formed many of the early funds, and they gave me the opportunity to work on most of them. I grabbed the opportunity because the work was so interesting. New technologies were changing the world, and I wanted to be part of it. And to my great fortune, both Jim and Brad were insistent that I work directly with the clients early in my career.
This led to extensive exposure to those who were investing in the Silicon Valley and the opportunity not only to form their funds but also to represent them in their financing transactions and often to be introduced to the companies they were investing in. Those introductions frequently led to representing the companies themselves, as there were very few law firms that were specializing at the time, like Cooley, in venture capital and emerging technology company work.
Two of the venture funds I represented in fund formation work — including Arscott Norton and Associates — actually insisted that the portfolio companies they invested in switch to me as company counsel once the investment was made. As a consequence of this pattern, I represented more than 15 venture firms and a dozen venture-backed companies when I made partner in 1981.
After making partner, I was made head of Cooley's venture capital group. This led to more exposure to venture capitalists who were forming funds and doing deals. As Silicon Valley exploded, so did my practice. Our fund formation practice grew to where we were forming 30 to 40 funds a year, and I had the good fortune to be involved in many of them.
This led, again, to more financing work and more company work, including initial public offerings, mergers and significant partnering transactions, plus more referrals from this client base. In sum, I was definitely at the right firm, with wonderful mentors, engaged in a new, exciting practice area called venture capital law that was mushrooming in growth.
Q: How do you stay a rainmaker?
A: Several factors have led to my practice remaining robust. First, I am in contact with my network as much as possible. Since most of my referrals come from existing clients, I reach out to them whenever I can.
Second, Cooley has been able to attract outstanding young partners and associates to support me throughout the years. Our clients these days are looking at the entire team, and we are able to show strength across the board. That team must deliver excellent advice and work product on the client's timetable.
Third, I have focused my practice more and more on fund service and less on company work in the past few years. I decided that I needed to be more specialized because that is what clients are looking for. This has become an important differentiator for our fund formation and services business.
Fourth, I am an active speaker, participating in around 10 events per year. These events are never gatherings of attorneys (with the exception of one event, where the attendees are all in-house counsel at venture firms). Rather, they are comprised of industry professionals, including venture capital fund partners, chief financial officers and chief operating officers. The events enable me and my partners to show the industry that we are the absolute best at what we do and that we are on top of not only legal developments but also the trends affecting the venture capital business. As a result of the foregoing, my practice and Cooley's fund formation practice have continued to grow. We now form between 55 and 60 funds a year.
Q: What advice would you give to an aspiring rainmaker?
A: This one is easy. Find an area of the law you are passionate about. Do not make it so narrow that there will be only a small market for it. Make certain your firm is the right platform for that area of the law or that you can push it to that place. Then find one or more mentors who can guide you and, hopefully, expose you to work in the area.
When exposed to a client, do your homework. Know their business. Try to find something in common with them on the personal side. And, above all else, do outstanding work in a timely manner, hopefully helping them solve a problem. If you solve their problem, they will come back to you, and, in my experience, they will tell their friends.
Q: Tell us a tale of landing a big client.
A: A prominent venture capital firm with more than $1 billion in capital needed to find new counsel in the spring of 2003. The firm, based in New York City but with a significant office in Silicon Valley, was losing its long-time outside counsel, who was retiring from a large Manhattan law firm after working with the venture firm for more than 15 years. Naturally, the incumbent firm hoped to keep the business.
Fortunately for Cooley, the venture firm asked a young partner, based in the Silicon Valley office, to run a process to assess options. Cooley was selected as one of five firms to be interviewed. Of the five firms chosen, two were based in New York and three were based in the Bay Area. We were asked to make a presentation in front of all eight partners (the East Coast-based partners traveled west for the interviews), plus all of the firm's investment professionals.
Two of us made the presentation, and we explained how we planned to provide multiple partner-level points of access to allow for greater service levels. We also outlined for the group exactly who would comprise the entire fund team — partners, associates, legal assistants. A key to the pitch was our emphasis on the breadth and depth of our venture practice — more than 200 fund formation clients (more than 250 today), more than 300 venture capital financings annually (400 today) and hundreds of venture capital funds formed. It was an important part of our story that the venture capital industry was a core focus of Cooley, not an afterthought in a larger business department.
I was later told that all of that impressed the group, but that at the end of the day, it was the client's perception that the problem-solving, practical approach to issues that we brought to the table was what won the client for us. In the pitch, we demonstrated our market fluency by commenting on several business terms that the client should consider modifying in their next fund formation. We have since formed several large funds for the client, as well as represented them in dozens of venture capital financings.
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