THE CUTTING EDGE: FOCUS ON TECHNOLOGY : In Silicon Valley, Legal Eagles Are Flocking to the Net : Careers: Law firms are suffering a brain drain as scores of attorneys, lured by stock options, go to work for Internet companies.

Dozens of young lawyers want to be like Adam Wegner.

The 33-year-old attorney took a big gamble two years ago, leaving an ascendant career in a law office for a slot at Exodus Communications Inc. Months later, Wegner hit the jackpot when the host of corporate Web sites went public. The six-figure salary he received at Fenwick & West, one of Silicon Valley’s top law firms, has been eclipsed “more than fifteenfold.”

Wegner would not elaborate beyond saying that his earnings through stock options “rise and fall with the stock market.”

Stories such as Wegner’s are among the reasons scores of attorneys are ducking out of their law firms to join the payrolls of former clients. Some major firms say the brain drain is causing them--for the first time--to reject lucrative commercial opportunities.

“We’re being forced to turn away tens of millions of dollars in business,” said Tower Snow Jr., chairman of San Francisco-based Brobeck, Phleger & Harrison, which has lost at least two dozen associates to clients in the last year. “It’s become a huge problem. There’s so much demand and simply not enough talent to go around.”

Snow’s main competitor, Palo Alto-based Wilson Sonsini Goodrich & Rosati, is also hemorrhaging lawyers. A Bay Area legal newspaper recently reported that nearly 100 of the 325 associates who were with the firm last year had bolted for other opportunities.

Larry Sonsini, the firm’s chairman, said he could not provide any numbers but described his firm’s hiring situation as “a mixed bag. We’re pleased that we’re a platform, but we’re also [forced to hire] a lot more people.”

Each departure costs a law firm about $200,000 in recruiting and training costs, according to law firm managers. So some firms are fighting back. Shearman & Sterling, a large New York law firm, is trying to cut its high turnover rates by offering lawyers who stay at the firm for at least four years bonuses of $50,000 and mandatory paid sabbaticals. Other firms are trying to lure law school graduates by guaranteeing them a minimum $100,000 annual salary plus bonuses--even though they haven’t worked a day.

“If you have decent skills doing mergers and acquisitions, securities work or buying and selling of real property, this is a great time to be a lawyer,” said Hussam S. Hamadeh, who recently compiled “Guide to America’s Top 50 Law Firms” for VaultReports.com.

In the end, many law firms say they simply cannot quench young lawyers’ zeal to join the ranks of the freshly minted millionaires created by the booming Internet economy.

“The pressure is on,” said Martha Fay Africa, a partner with Major, Hagen & Africa, a legal recruiting firm in San Francisco. “Lawyers are daily telling themselves, ‘If I can’t make it in this economy, then there’s something wrong with me.’ They see it as a personal badge of failure if they aren’t getting rich quick now.”

Africa and others say the exodus was bound to happen. Lawyers who represent companies in various deals are no longer relied on exclusively for their legal expertise. In Silicon Valley, for example, attorneys play important roles in putting together key players in a start-up, securing early venture capital and ushering a company through its initial public offering.

For some lawyers, the decision to leave their law firms became easier when once-struggling clients began cashing in their stock options, becoming millionaires overnight.

Earlier this year, Mark Stevens, one of Silicon Valley’s top Internet lawyers, left Fenwick & West--and earnings of more than $1 million a year--for a vice president’s position at Excite@Home.

“I had made hundreds of people into multimillionaires,” said the 40-year-old Stevens, “so I figured if I was feeling jealous of people who were extremely successful, I should try to take the risk they did.”

Stevens’ compensation package, according to SEC records, now includes a $1-million loan, $200,000 annual salary and 250,000 stock options over a four-year period. The stock options alone are worth $9 million.

Exodus’ Wegner, who has two young children, said “the real attraction” of being an in-house lawyer is the reduction in work hours, a reprieve from hectic law firm life that often means 18-hour workdays.

But the money doesn’t hurt.

Exodus’ stock, which debuted at $15 a share in April 1998, now trades at $75. The stock split twice during the last year, meaning a $15 investment then is now worth about $300.

Bradley Handler, who also left a Silicon Valley law firm two years ago to join EBay Inc., says companies are trying to cut back on their legal bills by bringing their former attorneys in-house. The attorneys do a lot of the same work, Handler said, but at a cheaper rate.

“Companies are cutting out the middleman, the law firm,” the 32-year-old Handler said.

But Hamadeh said the demand for law firm services has increased, even though legal billing rates have increased by about 10% during the last year.

Just ask Armando Castro, a first-year partner at Brobeck. Castro, a Los Angeles native, has seen his responsibilities increase as several of his partners left for other jobs. Every week, Castro receives calls from headhunters asking if he is still happy at his job, which is expected to pay about $340,000 this year.

“I still haven’t received an offer or saw a position that I would rather have than what I’m doing,” Castro said. “Not yet.”