DLA’s international TMT tie-up goes where no team has gone before

A three-way global merger and a DWS team will give DLA a formidable TMT practice. By Steve Hoare

“When this is put together, we’ll create the dominant global TMT practice.”

Mimicking his managing partner’s bullish message to clients (“You’ll never be able to outgrow us,” said Nigel Knowles recently), DLA’s head of technology, media and telecoms (TMT) Julian Stait is not shy in trumpeting the potential fruits of his firm’s three-way merger with US firms Piper Rudnick and Gray Cary Ware & Freidenrich. It is easy to mock DLA’s bombast, but you can’t fault its ambition.

While DLA’s TMT team has had an enviable record in recent years, and Piper Rudnick has some distinguished technology lawyers, the DLA-Piper merger did not quite get the TMT juices flowing. But when you add in Gray Cary’s West Coast presence and the recently acquired media and IP team from Denton Wilde Sapte (DWS), Stait might just have a point.

The DWS crew brings around 30 lawyers to DLA’s 95-strong UK TMT/IP team. DLA has another 50 TMT/IP lawyers outside the UK. A combined Gray Cary and Piper will have around 80 patent litigators, 50 other patent lawyers, 45 lawyers doing soft IP work and 45 IT lawyers. That’s 230 TMT/IP lawyers in the US. Before you even start to talk about corporate lawyers for technology companies, the combined force of the four TMT/IP teams will bring around 400 TMT/IP lawyers to the firm across the globe.

For sheer size there are few firms that can match that haul. But as one partner from a rival firm points out: “Size doesn’t necessarily buy you quality.”

The DWS team certainly provides quality and Gray Cary was a big attraction for it. While the team may well have signed up with DLA anyway, the fact that it only really considered US firms as an alternative option tells a story. “The inability to have a US tie-up, or even the inability to sometimes bill in dollars, has hindered growth,” one of the DWS defectors tells The Lawyer.

In broad terms, the DWS team is split between IP and media. The most lucrative IP work is patent litigation, and DLA and DWS have had barely a sniff of it. Bird & Bird, Bristows and Taylor Wessing have been particularly diligent in building up their US connections and, as a result, they dominate the UK patents courts.

With the addition of Gray Cary, DLA has immediate access to around 200 patent lawyers, including respected names such as Karl Limbach, Gerald Sekimura, Ronald Yin and future DLA-Piper head of IP and co-head of global TMT John Alcock. “It gives us some IP muscle internationally,” said the DWS partner.

It gives DLA access to clients such as Agilent, Hewlett-Packard, Intel and Samsung. Likewise, Alcock hopes to profit when DLA’s clients run into patent disputes in the US. “It won’t always be shoulder to shoulder on the same cases. It’s more likely that some corporate guy from DLA will come to us when his client needs help,” says Alcock.

This theory has eerie echoes of the statements made when Clifford Chance made its bold move into California two and a half years ago. When Tower Snow and his Brobeck Phleger & Harrison refugees joined Clifford Chance, the argument was that this team got Clifford Chance into the boardrooms of West Coast companies such as Cisco and Intel. That never quite happened, as the West Coast operation became mired in a class action and failed to bulk up beyond its base in securities litigation.

Gray Cary was often compared to the now defunct Brobeck. Gray Cary did have a more cuddly image than Brobeck and some of its more aggressive West Coast competitors, but following the post-dotcom nightmare the cuddly image has disappeared as the firm shed partners and associates and began crying out for a merger partner.

With that objective achieved, one should note that Gray Cary’s profits are on the way up again. It is also timely to remind ourselves of the firm’s excellent pre-dotcom reputation. The firm is neatly split into two teams – transactions and litigation. It has the breadth of practice that Clifford Chance never had. What it lacks is media lawyers. And this again represents an opportunity for the DWS team.

Most of the team’s media work comes from the studios in Los Angeles. The top US media firms, such as O’Melveny & Myers, are either loved or loathed by each of the studios, while mention of Piper or Gray Cary would probably just raise a disinterested shrug. “That gives us scope,” says a DWS/DLA partner. “We’ll start using the media muscle we have here to establish a base in the US.”

This will take investment, and during negotiations DLA confirmed that it was prepared to bring more media muscle to Piper’s Los Angeles office. Ultimately, the success of all these teams will depend on the investment made in integrating them all.

Since the demise of Clifford Chance’s West Coast operations and the departures from its London office, perhaps the only firm that can match a DLA-Pipers-Gray Cary TMT team is Baker & McKenzie (B&M).

“It’s taken a very long time to bed [our TMT] organisation into place. I’d encourage anyone doing this to concentrate on the soft things as much as the hard things. And the soft things don’t come cheap,” says B&M TMT head Harry Small. “We spend millions bringing partners in our various member firms together and bringing associates together, which a bean-counter might not deem necessary.”

B&M’s technology and telecoms practices might have the edge on DLA-Piper’s at the moment. Despite DLA’s apparent focus on public sector IT, it has good private sector contacts in both these practice areas and global coverage will benefit both tech and telecoms.

Large-scale outsourcing deals are becoming ever more global to justify the cost savings of transactions that can be controversial. It is significant that US firms Latham & Watkins and Milbank Tweed Hadley & McCloy have secured the most eye-catching lateral IT hires of late in securing the services of Andrew Moyle and Lawrence Jacobs respectively.

So if it’s all so good, what hope is there for the rest of the TMT market? Well, DLA’s headhunters may come knocking anytime soon; and if they don’t, my advice is to watch, admire, and hope that it turns out like Clifford Chance.