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Taylor Wessing v Nixon Peabody judgment due" />Nixon Peabody and Taylor Wessing France (TWF) will this week learn the outcome of a court case resulting from botched merger talks between the firms.
The two firms agreed to seek summary judgment from the New York State Supreme Court, with judge Justice Kenneth Fisher expected to deliver his decision later this week.
The case centres on whether Nixon Peabody breached a clause in a non-disclosure agreement (NDA) when it hired 14 of TWF’s partners to set up its own Paris office, as first reported on TheLawyer.com (6 August).
Of particular interest will be the decision on the validity of the NDA, irrespective of its purported termination at a later date.
The NDA is governed by New York law and the case raises important issues on the tensions between the freedom of international firms to protect their commercial ;interests against the US bar’s strict ethical codes, which Nixon ;Peabody ;claims prohibit all restrictions on an attorney’s ability to practise.
Giving an example, one US litigation partner said that, under US law, even “agreements for partners to sit out on garden leave are invalid as against public policy” because they could prevent the public from freely choosing lawyers.
The case is questioning whether the New York bar’s ethical ;principles ;can prevent ;a ;commercial agreement between two international businesses – or even apply to the hiring of French lawyers.
The case is reminiscent of the 2002 Hong Kong case that followed White & Case’s hire of two Deacons partners. After aborted merger talks between the firms, Deacons alleged that the hires took place in violation of a five-year non-recruitment clause and that White & Case had encouraged a breach of the laterals’ partnership contracts. The case was ultimately settled before reaching court.
In practical terms the Nixon Peabody and Taylor Wessing case is unlikely to change either firm’s fortunes. The partners who have already resigned are unlikely to return to TWF whichever way the case goes.
They could take another eight associates with them in a worst-case scenario for TWF. And even if the firm wins its $5m (£2.85m) in claimed damages, it would still be forced to rebuild a decimated office.