Fears that Taylor Wessing's U.K. arm was planning to tap outside investment under the U.K. Legal Services Act (LSA) prompted the firm's French arm to enter breakaway merger talks with U.S. practice Nixon Peabody, it has emerged.
Taylor Wessing managing partner Michael Frawley said Wednesday that the belief that its U.K. partnership was intent on using the LSA to gain outside capital led to its Paris office entering the merger talks, which are now at the heart of a high-stakes legal battle.
As exclusively revealed on Tuesday by The AmLaw Daily blog and showcased on Law.com, Taylor Wessing's Paris arm launched a claim in the U.S. courts alleging that Nixon Peabody had breached an agreement not to recruit its staff when the talks ended last year.
The talks, which had been initiated in July 2007 by Taylor Wessing's five Paris-based equity partners, ended after the firm's U.K. and German management learned of the discussions.
In an unusual move, senior Taylor Wessing lawyers made a presentation to its own Paris office in the autumn to convince them that there was no short-term strategy of pursuing a shake-up of its practice under the LSA.
The act, which comes into full force by 2012, is set to usher in radical liberalization of the U.K.'s legal services market, allowing law firms to tap outside capital and companies to acquire legal practices.
The Paris office ended the merger talks with Nixon Peabody in November in a letter from managing partner Arnaud de Senilhes. However, de Senilhes stepped down as managing partner after Taylor Wessing claimed that he had restarted merger talks and begun a bid to persuade a group of partners to move to the U.S. firm.
The move triggered a $5 million (2.6 million pound) claim from Taylor Wessing for damages, citing breach of contract and breach of fiduciary duty on the part of de Senilhes. Nixon Peabody contested the claim, arguing that the nonsolicitation terms were voided when the agreement was terminated last year.
The Anglo-German firm is now attempting to persuade a breakaway faction of Paris lawyers to remain with the firm, but concede that around 11 senior fee earners may depart.
Commenting on the matter, Frawley said: "We hope the remaining partners will remain loyal to us and stay. We do have a strong core of lawyers in the Paris office, which the firm will support, but rebuilding the practice [should they leave] would be difficult."
Taylor Wessing launched its Paris practice, which operates as a separate profit center and partnership, in 2003 after hiring a 30-lawyer team from the local arm of PricewaterhouseCoopers-tied legal practice Landwell.
For more news, commentary and analysis on the international legal market, visit LegalWeek.com.
