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A group of Fulbright & Jaworski partners in London have negotiated a reverse lock-in that ringfences them against Norton Rose’s UK business for two years from the firms’ merger next month, The Lawyer has learnt.
At least two City partners will remain members of the legacy Fulbright LLP headquartered in the US and go on secondment to Norton Rose’s UK arm, enabling them to work with Norton Rose’s London team without being exposed to its financial performance or remuneration system.
The partners covered by the arrangement include litigators Chris Warren-Smith and Melanie Ryan, who joined the Houston firm from Barlow Lyde & Gilbert (now Clyde & Co) in 2007 and 2008 respectively.
The two-year secondment allows the partners time to seek a position elsewhere or decide to opt in to the UK LLP, but it is unclear whether the deal can be extended or cut short. They will still move into Norton Rose’s More London Riverside headquarters, but the situation contrasts with the original plan confirmed by global CEO Peter Martyr that would have seen all of Fulbright’s London partners transfer to the UK LLP (19 November 2012).
The primary rationale for the special deal is understood to be the benefits of remaining on Fulbright’s pay system, which largely generates higher partner remuneration than Norton Rose’s.
Fulbright’s average profit per partner in 2012 was $780,000 (£502,000), according to US legal publication The American Lawyer. Norton Rose’s average profit per partner in 2011/12 was estimated at £420,000, while earnings per partner stood at £384,685.
The arrangement is also seen as a way of holding on to big billers whom the firm might otherwise risk losing to rivals.
A source close to the firms said: “It’s like getting married with a pre-nup - which a lot of people do. Those with business are the ones that you just don’t want to be losing.”
A Norton Rose spokeperson said in a statement: “Transfers of teams from one law firm to another typically generate a number of individual partnership and tax issues which inevitably take time to address. The transfer process of the Fulbright London team to Norton Rose London is no different in this respect.”
Meanwhile, Norton Rose has scrapped an original plan to offload its Middle East offices into the US LLP when the 3 June merger goes live (18 January 2013). Bases in the region are now set to remain under ownership of their legacy firms’ LLP, meaning the group will operate two offices in Dubai that will be part of different LLPs and in separate locations.
Fulbright’s office in the emirate is in Festival City and not the offshore Dubai International Financial Centre (DIFC), where Norton Rose is based. Firms practising in the DIFC are required to obtain an offshore licence.
The spokesperson added: “In the Middle East, we have already indicated that there are a number of complex licensing issues to address in connection with our two offices in Dubai. Until such time that we have resolved these issues to our satisfaction, we will, from a regulatory point of view, operate as two technically separate practices, but in practice will work together as one regional team in the Middle East.”