A fine romance
5 August 2002
8 April 2014
28 April 2014
17 April 2014
6 March 2014
3 April 2014
Taylor Joynson Garrett (TJG) did not have Wessing in its sights. After years of enjoying a close relationship with fellow intellectual property (IP) powerhouse Gaedertz, there seemed no need to woo other German firms. But that was before TJG was beaten into third place by Norton Rose and Eversheds in the Gaedertz partnership vote in the summer of 2000.
It was well over a year later when patent litigator Richard Price picked up the phone. Might Sabine Rojahn, one of the leading IP partners at the firm and a longstanding referral contact of Price's, be interested in a chat, by any chance? Price had good reason to act quickly. He had heard that arch-rival technology firm Bird & Bird was already in serious talks with Wessing, hoping to consummate their longstanding referral relationship. Price was on the plane to Munich the next day with corporate partner David Kent.
"The partners were very welcoming," remembers Price. "And after a very short time, it became clear that we were highly compatible. We all felt a little foolish that we hadn't found each other before."
Andreas Meissner, the managing partner in Hamburg, confirms how fate had kept the suitors apart. "Although we had a similar line of business, we'd never had contact with one another. We swapped IP work with Bird & Bird; they did it with Gaedertz."
Hardly a minute goes by without partners from both firms mentioning their sector focus: technology firms built around a strong IP and IT practice, which allows corporate and full service to the new economy. That it is now the mantra of the newly merged Taylor Wessing will come as no surprise to anyone in the City. Ever since the mid-1990s, TJG has been held as the best example of a well-managed, highly focused practice with profitability running well beyond its major competitors (last year at e715,000 (£452,400) per partner in The Lawyer 100).
Wessing has taken a more tortuous route. Only five years ago, most outsiders would have thought of the firm as a heavyweight corporate practice in Düsseldorf - advisers to Ruhr Valley heavy industry - with a heterogeneous collection of secondary offices. According to one Düsseldorf source, these other offices did not turn over as much together as the all-powerful headquarters on the Rhine.
It still seems to pain some Wessing partners that much of the credit for the transformation into a technology-focused firm can be ascribed to former managing partner Wolfgang von Meibom, who left with a group of Düsseldorf partners to go to Andersen Luther in May 2001. He is a figure who retains a ghostly presence at this wedding, not least since the plot has thickened by his setting up of Bird & Bird in Germany. It is almost as if the ghost of Hamlet's father has ended up backing Fortinbras.
But those same partners are keen to point out that, ironically, the completion of the von Meibom project could only really occur with his departure. "Wessing became a unified firm only when the dominance of Düsseldorf disappeared," says one lawyer with an intimate knowledge of the firm. "It was testament to the success of the changes at Wessing that the vast majority of partners at all the offices saw the merger offer from Andersen [supported by von Meibom] as a hostile takeover."
"The change in management led to a different atmosphere within the firm," points out Wolfgang Rehmann, the designated managing partner for Germany in the merged firm and an archetype of the younger, more inclusive and consensus-orientated management. Together with Meissner, he signifies the new culture at Wessing: guiding the ship in tandem from outside Düsseldorf; Rehmann the refined Munich lawyer with an English accent, straight out of Oxford; his Hamburg partner Meissner, meanwhile, more outgoing, happy to gesticulate passionately in order to make a point. Rehmann emphasises with force: "Despite all the arguments, Wessing as a firm was never really seriously in danger."
Learning to love itself
The ructions surrounding the departure of a group of Düsseldorf partners - which led the firm to set up an executive committee to plan for the future - did, however, have a profound effect on the firm. It was one that in the end led to the merger with TJG. Von Meibom had led the move for Wessing to merge with Andersen Luther, the then well-placed and rapidly developing legal arm of the accountancy firm. The strong resistance to such a move within the partnership was not just seen as revolt against a takeover, but also, in the words of one Wessing lawyer, "the payback for years of heavyhanded management".
Other Wessing figures are more circumspect. "The only way to change the firm then was to force through integration. In the end, we should all be grateful to von Meibom," commented one source. The tiff ended with von Meibom taking a group of IP, corporate and antitrust lawyers to Andersen; and it is this group that is now setting up in Düsseldorf for Bird & Bird.
Rehmann recalls: "After the Andersen events, we had a good look at our strategy. We looked at the market and who would fit that strategy and whether we wanted a merger or just a cooperation." The decision for merger in principle was taken in the autumn - a strategic U-turn nursed into being by Alan Hodgart at consultancy Hildebrandt International, who is credited by one London lawyer as having "shown Wessing what they were capable of".
The decision for merger in principle was highly significant, because it not only signalled the departure from reliance on referral work, it was also the logical conclusion of a strategic emphasis on technology. "Cooperations models have not survived in the market. They're not stable and cannot be communicated to clients as a strategy. Any partner firm can be replaced; that's the essence of their instability," comments Rehmann.
Despite some Frankfurt lawyers' personal contacts with US firms, some of the US alternatives for merger were dismissed relatively quickly as wishful thinking. At one memorable meeting in Frankfurt, according to a lawyer no longer at the firm: "One partner made a passionate plea that Simpson Thacher & Bartlett should be considered as a potential partner. I don't think many IP lawyers really knew who it was." Rehmann and Meissner are (albeit with a smile) more dismissive. "That was never seriously discussed," says Rehmann.
Although US firms in general were not dismissed as quickly, the emergence of candidates such as TJG demonstrated how less complicated a UK merger could be. "We had relations to so many US firms that we'd have had to merge with a huge partner in order to make up for the loss of referral work," points out Meissner. "And that would have been the end of our culture."
TJG's approach was, by contrast, resolutely European as far as expansion was concerned. With its own strong US-inbound business in corporate, it was not interested in a US merger either. Price estimates that his firm acts for one-sixth of all West Coast technology firms in their European dealings - more than any other firm in London. This is a trend that was bolstered last year by the recruitment of US specialist Daniel Rosenberg from Berwin Leighton Paisner. The firm's relations to a number of huge IP law firms throughout the US were also too important to give up.
"We were committed to being a European law firm," insists Price. "And we knew that we had to be in Germany from the beginning. There was no point fiddling around the edges. And unlike most other full-service firms, Wessing has a good patents practice."
End of empire
Besides the practice fit, Wessing lawyers repeat time and again that, right from the beginning, their worst fears were allayed. "Our first thought was, of course, 'yet another Anglo-Saxon'," says one partner. "But we were also curious. What do they actually do? It was then, when we started talking, that we realised they weren't old imperialists after all."
Wessing partners point out with some pride that the negotiating process was handled by the management in a very different style from that of its predecessors. "Workshops were put into place very early on, where partners discussed together what they wanted from a merger," remembers Meissner. "For example, in November a third of all partners were involved - all the departments, the practice group leaders and their deputies. That's what set the tone."
This method was carried on into the negotiations with TJG. "There were only really serious discussions from October," continues Meissner. "Right from the beginning, there was more of an atmosphere of a workshop than real negotiations."
"We felt we were a group looking for a common solution," concludes Rehmann. Contacts on partner level were extensive - something which leads Meissner to become particularly effusive, breaking into English: "These weren't Rottweiler negotiations. It was about building a family."
By April it was all over. Rehmann is particularly quick to give the whole partnership the credit for the swift result. "It showed how professional Wessing has become and how much the structures have changed. There was a different attitude in the partnership which made it much more open to new solutions," he says.
The end of the beginning
All participants are keen not to display any complacency after the successful merger votes. "The major concern now is making sure we invest the time in order to achieve full integration and make use of the opportunities presented by the merger," states Price.
With a merit-orientated equity shareout, some Wessing partners admit quietly that no matter how generous the all-powerful remuneration committee is to those who take on management responsibility and sacrifice fee-earning, the demands of integrating two firms in a cross-border merger are substantial for individual lawyers - and never before addressed in either firm. But Meissner points out that the negotiating process demonstrated that, in his view, the partners are ready to put in the effort. "It was Bernhard Kloft in Hamburg who did much of the drafting," he says. "He opened up a TJG file on our system so that the project was given the same priority as client work."
Although such a determined attitude is a condition, if not a guarantee, of success, it is surprising that the negotiations did not produce a more pronounced focus on how to measure the progress of the merger. Indeed, throughout the merger process, as the managing partners seem proud to insist, there was little emphasis on defining financial yardsticks - be it turnover or profitability - for the future. "We looked at what we could do together, but not separately," says Price. "The respective practice groups had to put together business cases: which clients relationships could be developed, which industry portfolio could be improved But the business plan was not figure-driven."
"Of course, we swapped a lot of figures. Everybody knew that both firms were profitable enough," says Meissner. According to one source, Wessing had a turnover of around e70m (£44.3m) last year, with average profits per partner of just under e400,000 (£253,000). But the Wessing culture - partner-driven, full-service, multi-office - the maintenance of which was vital to the German lawyers, does not react well to billing targets. As one observer says: "It is sometimes counterproductive to have too stiff targets. Turkeys don't get motivated by Christmas."
As such, the much-talked-about new brotherhood at Wessing is based on the wish of the firm to allow its lawyers the freedom to earn less. This point was so important that the only really hard negotiations with TJG were focused on the exact calibration of the remuneration, a point emphasised by one of the managing partners involuntarily rolling his eyes at the memory of the talks. "Profits in Germany do not have to be identical to London. We can't force through the same rates. There is complete understanding on this."
The fact that some other firms in Germany merged with London counterparts in order to overcome precisely this difference in productivity leaves the Wessing partners cold. Any talk of re-engineering the practice in order to move into more lucrative cross-border transactional work and make profits more even across the firm is immediately quashed. And for two reasons.
"The merger is the first step to a real European law firm," says Rehmann hopefully. "Partners will be in groups unified across the firm. Profit share will be calculated according to local circumstances and differing markets. It's a system that we'll be able to use across Europe." Indeed, such a system is vital to the firm's chances of finding a suitable partner in the other key jurisdictions - in particular France.
The other reason is less obvious. The plans for growth in the German offices of Taylor Wessing are reliant on laterals in key areas. "And the good young people don't want to disappear into some M&A leviathan," asserts Meissner. In other words, the technology orientation of the firm is not simply an astute strategic move into an attractive niche; it is the best way of making a full-service firm sexy in the 21st century - or so Wessing partners hope.
But here the newest married couple on the block has perhaps an advantage over some of its competitors in retaining the passion of the first few weeks. It does not lie in the profit share, the integrated management teams or the recruitment strategy. It lies in its clients. Among TJG's long list of trademark holders, US investors, biotech firms and venture capitalists, one name stands out. TJG recently acted for Lilly ICOS in its successful action in the UK Patents Court, seeking revocation of Pfizer's patent for use of 'cGMP Phosphodiesterase inhibitors'. To you and me, that's Viagra. n
Aled Griffiths is editor of German legal magazine JuVe
|Keep it real|
All parties involved with Taylor Wessing are adamant that there will not be a rush into new cities or into third countries. But there is a considerable amount of work to be done in Germany. Although very few Wessing partners regret the events of last year, the departures in Düsseldorf have left the office under-resourced. "We want laterals in Düsseldorf for IP; media and entertainment is to be built up in Berlin; Munich and Hamburg, on the other hand, only need to grow their corporate practices organically," says the Wessing managing partner in Hamburg, Andreas Meissner. Düsseldorf Partner Dietrich Max points out that "in a year, Düsseldorf will be as big as it was before the departures".