- Associated Press - Thursday, July 19, 2012

SAN FRANCISCO (AP) - The Silicon Valley venture capital firm of Kleiner, Perkins, Caulfied & Byers has been generating buzz for decades, spotting early investment opportunities and making billions with companies like Google and Amazon. This summer, the attention is no different, but the reason for it is.

The firm, with a roster of senior partners including Al Gore and Colin Powell, is embroiled in a lawsuit that’s the talk of the valley, exchanging nasty accusations with a junior partner who accuses Kleiner of gender bias, sexual harassment and overall boorish behavior toward women.

The legal fight offers an inside peek at the firm’s jet-setting ways, internecine fights over board of director seats at “portfolio” companies and the cost of social snubs.

The lawsuit was filed by Ellen Pao, a 42-year-old Harvard Law School graduate who joined the firm in 2005.

Pao accuses Kleiner of blocking her and other women from advancement and lucrative positions she claims are reserved for men. The firm has proclaimed its innocence and alleges Pao “twisted facts and events in an attempt to create legal claims where none exists.”

Pao still works at the firm, which calls itself one of the most “progressive” companies in Silicon Valley in its hiring practices. Kleiner says that one-quarter of its senior partners are women.

Since Pao filed the lawsuit in May in San Francisco Superior Court, the tech world has been abuzz. Tech web sites have closely covered the case, even live blogging routine hearings.

In larger context, Pao’s suit highlights an oft-heard claim that, despite progress, it’s difficult for women to break through in Silicon Valley’s male-dominated culture. When Google executive Marissa Mayer was named Monday as the new CEO of Yahoo, the story was widely depicted as a testing of the valley’s renowned glass ceiling.

“This is a garden variety sex harassment case,” said Stanford University law professor Deborah Rhode, a sexual harassment legal expert. “It got the buzz because this is such a male dominated culture and it’s such a large firm” with a good reputation.

Kleiner opened its doors in Menlo Park in 1972, when few independent investment firms existed. Its rise mirrored that of Silicon Valley’s. The firm’s early investments in some of the computer industry’s biggest names propelled it to prominence. There were few if any women at the top of the firm’s organization chart for most of its history, a reflection of the all-male culture that was prevalent when Silicon Valley emerged.

Kleiner has hired high-priced employment attorney Lynn Hermle to do battle with Pao’s equally high-profile attorney, Alan Exelrod, who in 1998 won a $7 million sexual harassment judgment from what then was the world’s largest law firm, Baker & McKenzie.

Hermle’s first line of defense is an attempt to move the lawsuit from the public glare of open court to the closed doors of arbitration, where private judges render confidential decisions. Judge Harold Kahn will hear Kleiner’s arguments for arbitration on Friday.

Regardless of what happens next, damage already is done.

“The last several days have been a difficult time for me and my partners at Kleiner Perkins Caufield & Byers, a firm I’m proud to have been a part of for 32 years,” senior partner John Doerr said in a recent Web message to the firm’s employees. “It is not easy to stand by as false allegations are asserted against the firm, especially because legal constraints prevent us from responding fully at this time.”

The firm’s senior partners and lawyers are refusing to discuss the case with the media, referring reporters to its publicly accessible court filings. Similarly, Pao and her attorney claim they aren’t seeking media attention and are also declining to comment.

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