Taylor Wessing, Nixon Peabody in ‘poaching’ row

Court fight in New York throws light on Taylor Wessing’s complex international partnership structure

<a class=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

Timeline of events

Summer 2007: Three out of five of TWF’s equity partners (managing partner Arnaud de Senilhes, Gilles Amsallem and Alain de Foucaud) approach Nixon Peabody to discuss a potential merger.
31 July 2007: ­Non-disclosure agreement (NDA) between TWF and Nixon Peabody.
September/October 2007: Taylor Wessing UK, Germany and the rest of the network become aware of TWF’s merger talks and intervene.
3 November 2007: De ­Senilhes aborts merger talks with Nixon Peabody by letter, which purported to free the parties from the NDA terms.
November 2007: Four TWF non-equity partners resign – Frédéric Guy, Arnaud Bertrand, Francois Verdot and Antonia Raccat – with the latter two joining Salans.
April 2008: TWF’s corporate structure and tight equity opens up amid ­disagreements between de Senilhes and the TWF equity partners over how many fixed-share partners are to join the equity.
3 May 2008: Nixon Peabody CEO and managing partner Richard Langan asks de Senilhes to meet for lunch.
Mid-May 2008: At lunch with Langan, de Senilhes communicates his intention to join Nixon Peabody with a majority of TWF’s partners.
18 June 2008: Christian ­Valsamidis replaces de ­Senilhes as managing ­partner of TWF.
24 July 2008: Nixon Peabody offers jobs to de Senilhes, non-equity ­partner Olivier de Chazaux and 12 unidentified TWF non-equity partners.
25 July 2008: TWF’s ­Valsamidis sends a letter to Nixon Peabody to assert that the poaching of TWF ­partners would violate the NDA; de Senilhes resigns from TWF after mediation before the Paris bar concerning the terms of his departure.
29 July 2008: Nixon Peabody commences ­proceedings against TWF, represented by US firms The Wolford Law Firm and ­Patterson Belknap Webb & Tyler, seeking at least $1m (£512,777) in damages in
the Supreme Court in Rochester, New York State
– the location of Nixon Peabody’s headquarters.
1 August 2008: TWF ­commences proceedings against Nixon Peabody through US firm Dreier in the New York City Supreme Court for at least $5m (£2.6m).
5 August 2008: Nixon Peabody applies for a joint trial, accusing TWF of “forum shopping” and ­“litigation gamesmanship” by bringing the claim in New York City.