The Firms

September 5, 2008 6:17 PM

Nixon/Taylor Wessing Partner-Stealing Case Comes to a Head

Posted by Zach Lowe

Here's a tip: If you're an equity partner at one firm and you're in semi-secret talks to take several partners with you to another firm, don't leave evidence of the talks lying around on a printer.

That's how an equity partner at Taylor Wessing's 55-lawyer French subsidiary says he found out about managing partner Arnaud de Senilhes's plans to take a dozen nonequity partners to Nixon Peabody, according to court documents filed Friday in New York trial court.

Taylor Wessing is suing Nixon for $5 million, claiming Nixon's hiring of a dozen Taylor partners violated an agreement the two firms struck in July 2007, in which they vowed not to recruit from each other if merger talks, then just starting, fell apart. (Those talks did eventually fall apart last November.) Nixon filed its own suit complaining that Taylor's move to stop the partners from moving violated their freedom to work where they wanted.

The Am Law Daily broke the story last month and has reported on it since.

The case will come to a head Monday, when a trial judge in Monroe County decides between dueling motions for summary judgment.

Dreier name partner Marc Dreier is representing Taylor's disgruntled equity partners. A team from the Wolford Law Firm and Patterson Belknap Webb & Tyler is representing Nixon Peabody.

A barrage of court filings Friday shed light on why the merger talks failed and ultimately drove Taylor Wessing apart. We've known from the beginning that Taylor's French wing initially sought a merger because of fears that its parent firm in the U.K. would seek private investment once British law changes to allow it in 2012. (Download Nixon's motion; download Taylor Wessing's motion.)

We've also known that money was among the reasons the merger talks collapsed. Nixon's attorneys balked at certain requests the Taylor partners made for retirement plans and other perks, court records show. In a declaration filed last month, Gilles Amsallem, one of five equity partners in Taylor Wessing's Paris office, says the merger collapsed when "it became clear Nixon was not prepared to provide us with the sort of financial terms we were seeking." (Download the declaration.)

When the talks ended, de Senilhes sent a letter to Nixon officially quashing the merger and voiding all prior agreements. The case will turn on whether that letter voided the two-year ban on recruiting.

Just two months ago Amsallem found the documents in the printer allegedly showing de Senilhes was still talking with Nixon, according to the new declaration filed Friday. They were from a PowerPoint presentation apparently intended for Nixon's management committee. The slides had pictures and bios of Taylor nonequity partners, some of whom told Amsallem they did not know they were being shopped as potential candidates to join Nixon.

Indeed, the nonequity partners had rebelled against the merger talks when they heard about them after first being kept in the dark, several court documents show. They simply didn't want to work for an American firm, citing the much-despised billable hours system.

The irony? A dozen of those partners have since agreed to work for Nixon. Why? Apparently, they were concerned Taylor Wessing was simply falling apart because of dissension surrounding the failed merger talks, new filings show.

"Taylor Wessing's equity partners created a series of 'repeated crises' that resulted in an irrevocable loss of trust between equity and nonequity partners," according to a motion Nixon's side filed Friday. "In 2007, the relationship slid into a downward spiral from which it never recovered, as equity partners engaged in merger talks without informing nonequity partners and appeared ready to sacrifice the interests of nonequity partners for the equity partners' own selfish reasons."

Ouch. The issue now is whether those nonequity folks should be able to accompany de Senilhes to Nixon. Taylor Wessing says they shouldn't, based on the two-year ban on recruiting the firms agreed to at the outset of talks.

Nixon says that agreement is unenforceable because it infringes on the right of attorneys to switch jobs. Nixon also says the ban ceased to exist the moment de Senilhes ended merger talks.

That adds one more key twist: Just how much power does a managing partner like de Senilhes have? Nixon claims his signature on the letter was enough to void the agreement as it applied to every lawyer at the firm. Taylor's side argues no managing partner has that kind of power--especially if some nonequity partners were never told about the two-year agreement in the first place.

Either way, the entire case is a study on how not to conduct merger talks. Monday should be interesting.

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