The Firms

June 16, 2008 12:01 AM

Ballard Spahr Acquires Atlanta IP Boutique

Posted by Nate Raymond

Ballard Spahr Andrews & Ingersoll will announce today that it is acquiring Atlanta-based intellectual property boutique Needle & Rosenberg.

The merger, approved Thursday, ends for Philadelphia-based Ballard Spahr what had become a 15-year search for an IP group, says chairman Arthur Makadon. Needle & Rosenberg has 26 lawyers and seven other professionals. Of those lawyers, seven will join as partner. Not part of the deal is Needle's one-lawyer San Diego office. "We stay away from single-person offices," Makadon says.

The merger will bring Ballard Spahr's head count to about 600 and will put revenues at more than $300 million, Makadon says. In 2007, the firm posted $280 million in revenues and profits per partner of $545,000.

Needle & Rosenberg is just the latest IP boutique to disappear via merger with a general practice firm. Jones Day acquired most of Pennie & Edmunds in 2003, while Ropes & Gray grabbed Fish & Neave in 2005.

Like its boutique brethren, Needle & Rosenberg has a storied past. Founded in 1983, its biggest claim to fame came in the 1980s, when it represented Original Appalachian Artworks, Inc., manufacturers of the  Cabbage Patch Kids dolls, in a high-profile trademark and copyright suit against Topps Chewing Gum Inc., the makers of the Garbage Pail Kids parody stickers and trading cards. The suit resulted in a $7 million settlement and a permanent injunction against Topps. A profile of the firm and Bill Needle in sibling publication Fulton County Daily Report last summer noted that a framed copy of the initial complaint for copyright and trade dress infringement hangs in the firm's lobby with a plaque that reads, "This brung us to the dance."

Since then, the firm has struggled under competition from larger general practice firms, such as Atlanta-based King & Spalding, that built up their own IP groups. With more law firms seeking their services, patent attorneys now command high-end salaries that Needle & Rosenberg struggled to cover.

"While we were able to meet that competition for a significant amount of time by offering a different lifestyle, after a while that difference caught up [with us]," says name partner William Needle.

The work also shifted. Automatic referrals dwindled as clients began to approach the firm only when there was a conflict, Needle says. "We saw no need to merge, we were doing fine," he says. "But then the economic reality started to rear its ugly head [these] last couple years."

Ballard's business and litigation groups have been pushing the firm to establish a patent prosecution and litigation capability for more than a decade, Makadon says. He estimates the firm has interviewed more than 100 individual lawyers, as well as whole practice groups and even law firms; none of them were a match, though. "If we're going to get into this area we’ve got to do it in a big way, and that means in a first-class way," Makadon says.

Hildebrandt International played matchmaker. Needle & Rosenberg had hired Hildebrandt to compile a blunt assessment about the firm from clients, while Ballard Spahr was using Hildebrandt to develop a strategic plan that included acquiring an IP firm. Hildebrandt consultants in the Philadelphia and Atlanta branches started talking about getting the two firms together. "It was sort of serendipitous," Needle says. Makadon flew to Atlanta in March to size up the possibility.

Needle & Rosenberg looked at a few other firms inside and outside of Atlanta after the meeting. On June 6, the Atlanta Business Chronicle speculated that Dechert and Nixon Peabody were two possible suitors. But lawyers at the IP shop liked the idea that, by joining Ballard, they would not have to combine with an already existing patent practice.

And while the firm is now part of Ballard Spahr, it won't be changing its name immediately. For the next six months to a year, it will be called "The Needle & Rosenberg Intellectual Property Practice of Ballard Spahr."

"We have never gone into the South, so [Ballard Spahr] is an unfamiliar name," Makadon says.

Ropes & Gray followed a similar strategy when it acquired Fish & Neave in 2005. It shuttled the Fish name last year.

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