Need to Meet: Hopkinson and Schwartzman, partners, Cooley LLP

One of Ron Hopkinson’s first clients was Carlyle Group, working on its 1992 acquisition of LTV Corp’s aerospace business. “I kind of grew up with that from a very young age,” he said, “at least as a lawyer.”

Now the big buyout shops “find themselves sometimes at a disadvantage,” Hopkinson, a partner at Cooley LLP, said. “Traditional private equity firms, old longtime firms that everybody knows about, are moving very heavily into tech.”

Not only does this require a new level of industry expertise, it also opens up different kinds of deals, in which founders may, for instance, want to retain significant stakes in their companies.

“Deals that wouldn’t have been done even five, 10 years ago are being done, but not just your venture and growth-equity firms” — by mainstream PE firms as well. “They have to go in there and win the trust of the founders, and it’s much more of a partnership,” he says. For a law firm, “what’s really, really important is to be able to offer these private equity firms knowledge of the target’s business.”

This is Cooley’s selling point. The firm has deep roots in Silicon Valley: Founded in San Francisco in 1920, it advised on the formation of National Semiconductor, an early chip company, and in 1958 formed Draper, Gaither and Anderson, the first VC limited partnership on the West Coast.

Hopkinson joined Cooley in May, along with Eric Schwartzman. The two were formerly partners at Latham & Watkins; Hopkinson left for Cadwalader, Wickersham & Taft, where he was head of the PE group, and Schwartzman went to Weil, Gotshal & Manges’s Silicon Valley office.

They said they were attracted to Cooley for its large client base and the business know-how of its lawyers, which can add a dimension beyond the transactional to the PE practice.

“They have 5,000 company clients,” Hopkinson said, “everything from startups to large companies where Cooley does day-to-day work.” They intend to leverage the resulting experience, during and after dealmaking.

Schwartzman, based in Palo Alto, said the software space, where some very large PE deals have been done, requires “almost like a quasi-legal consulting type of arrangement. It’s a specialized business to understand where the real growth opportunities are, where the potential concerns are.”

“The private equity folks are not just betting on businesses within proven industries; they’re betting on industries,” Schwartzman explained. “As things move to a software component, whatever used to be done in the physical world might be done online or through [software as a service].”

He mentioned a firm that bought a publisher of car owner’s manuals; The opportunity is in digitizing that information so it can be accessed via onboard computer or smartphone.

“That’s a whole new industry born out of what used to be the boring owner’s manual in your glove compartment,” he said. “Who knows if that will play out and be successful, but I suspect it will be.”

Action Item: Contact Ron Hopkinson at +1 212-479-6735  or rhopkinson@cooley.com; and Eric Schwartzman at +1 650-843-5297 or eschwartzman@cooley.com.