An Equity Interest Sweetens Pot for a Legal Matchmaker.

IT may be difficult to think of lawyers as unsung heroes, but in the venture capital world, the legal eagles often spot promising situations on behalf of clients.

So it was recently with Leib Orlanski, veteran financial lawyer and now partner in the Century City-based offices of Kirkpatrick & Lockhardt. Last year, he met a consultant by the name of Hossein Pourmand, who runs the Venture Advisory Service in West Los Angeles, at a CalTech-MIT Forum in Pasadena. (Orlanski sits on the board of the forum.) Pourmand told Orlanski of an optical switch being developed by two physicists, Rubin Sandler and Robert Leiberman, of Torrance-based Intelligent Optical Systems Inc. Optical switches help download the light beams from fiber-optic cable to end users.

"The optical switch - the hardcore real advances in technology - not the Internet ideas, is what venture capitalists are willing to fund now," said Orlanski. "And I knew they needed some management. They (Rubin and Leiberman) were scientists."

So Orlanski the matchmaker went into his Rolodex and fished out the name Frank Dabbey, who is more than a little expert in the area of fiber optics. In fact, Dabbey, also with a doctorate in physics, had founded and sold Van Nuys-based Valley Lightwave Technologies Inc. in the 1990s. Orlanski had done the legal work on the deal for the maker of fiber-optic cable.

After Valley Lightwave, Dabbey founded ASC Silica Inc., a company that makes the machines that make fiber-optic cable. But the impressively credentialed Dabbey wasn't going to join an unknown startup willy-nilly. "You can't get a name like Dabbey unless you have some quality funding involved," explained Orlanski. "But we badly wanted him in a senior management position."

So Orlanski again went back into his lair and phone lists, and this time emerged with funding from the well-known venture outfits Smart Technology Ventures in Beverly Hills (David Nazarian's shop) and Torrance-based DynaFund Ventures. The two shops together chipped in $10 million with first round 'series A' financing, and Dabbey signed on.

The next step was limited production of the switches. "The goal is to develop samples and get them into customers' hands," Orlanski said.

The goal is also to move the company to an initial public offering or sale to a larger publicly held company, such as Nortel Networks Corp., within a few years, he said. "Either way is a good exit strategy (for venture investors) in a company like this, or even to go public and then sell out to a larger company."

The icing on the cake is that Orlanski's firm took an equity stake in Intelligent Optical Systems, and might see a handsome payday if the company ever goes public or is bought out. "Well, it is a small stake," said Orlanski. 'Let's see how it does."