Taylor Wessing, Nixon Peabody in ‘poaching’ row
11 August 2008
Taylor Wessing, Nixon Peabody in ‘poaching’ row" />Taylor Wessing France (TWF) and US firm Nixon Peabody are embroiled in a New York legal battle after the latter allegedly tried to poach up to 14 TWF partners following botched merger talks between the firms, as reported on TheLawyer.com (6 August).
The legal issues at stake are fairly straightforward: TWF claims its partners were poached in violation of a non-disclosure agreement (NDA) prohibiting the firms from hiring each other’s staff for two years.
The NDA was entered into last summer when TWF equity partners approached Nixon Peabody with plans for the entire Taylor Wessing Paris office, which operates as a distinct body from Taylor Wessing UK, to merge with the US firm.
Nixon Peabody claims that the NDA was void because ;TWF’s ;then managing partner Arnaud de Senilhes had terminated merger discussions by letter on 3 November 2007. In the letter de Senilhes purported to free both firms from “any obligations arising from our previous arrangements”.
TWF in turn contends that de Senilhes’ termination of the NDA was not binding – mainly because the Paris office’s equity partners were not aware of the content of the letter.
Taylor Wessing is an unusual outfit in many ways. Each local office operates as a separate legal entity and profits are channelled around the global network by ;complex ;contracts through so-called ‘valve partners’.
The Paris office was founded by five partners in 2003 and operates as
an incorporated société d’exercice libéral par actions simplifiées (Selas). Until de Senilhes resigned two weeks ago, the five founding partners were the only ones to share in the equity, each holding company shares in Selas de Senilhes Valsamidis Amsallem, Jonath Flaicher Associés – TWF’s legal entity.
The ;15 ;other ;TWF partners were all fixed-share non-equity partners who had been clamouring for inclusion in the equity for years.
From the court submissions, de Senilhes appears to have been the instigator of the rebellion. But his and the TWF equity partners’ original ;motives ;for secession to Nixon Peabody remain unclear – especially as they are understood to have approached at least one other US firm, including Squire Sanders & Dempsey.
De Senilhes claims he wanted to go transatlantic as he doubted the firm’s growth ability without a US presence. In particular, he says, he feared the Taylor Wessing network would disintegrate when the Legal Services Act comes into force in 2012, effectively allowing Taylor Wessing UK to seek outside investment or sell the firm.
After hearing about the merger talks in about October 2007, Taylor Wessing UK strenuously denied his claim and attempted to set the record straight with the TWF partners.
In the 3 November letter to Nixon Peabody, de Senilhes cited this as the main reason for terminating the merger negotiations, writing: “We indeed have received insurance [sic] from our foreign partners that the change in UK legislation would not impact our business model in a [sic] foreseeable future.”
De Senilhes says that after this point in time he “harboured absolutely no intention of leaving TWF or joining Nixon Peabody or any other law firm”.
Six months later de Senilhes said he was approached again by Nixon Peabody CEO ;and ;managing partner Richard Langan.
Although TWF’s equity partnership was finally opened up in April and
at least four fixed-share partners have been offered equity, of whom two have accepted, the question remains: even if TWF wins its case against Nixon Peabody, how much of the 55-fee-earner Paris office will be left to salvage?
Nixon Peabody claims that 13 partners have already signed up to join its ranks and that the only reason 11 of these have not yet resigned from TWF has been “out of concern and apprehension” that TWF will seek to prevent them from joining and would call on the Paris Bar Association to intervene.
Nevertheless, ;Taylor Wessing UK managing partner Michael Frawley says there are no hard feelings. “We’re hoping that, in the cold light of day, when they’re looking at what’s going on, despite the loyalty they may have to Arnaud [de Senilhes], they’ll realise that a better future for them lies with Taylor Wessing,” he said.
However, ;Nixon Peabody’s official statement reads: “Nixon Peabody looks forward to working with a team of partners from ;Taylor Wessing France as we expand our international presence to better serve our clients and seek new opportunities in Europe.”
Things look set to get messy