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Ten months after sweeping into California and setting up shop with a slew of Brobeck, Phleger & Harrison lawyers, Morgan, Lewis & Bockius is set to make another major acquisition. Partners are voting today on whether to hire the approximately 31 lawyers in Pennie & Edmonds’ Palo Alto office. “At this point, I’m confident [the vote] will go well,” said Thomas Kellerman, managing partner of Morgan, Lewis’ Silicon Valley office. “I’m hopeful we will have a significant number joining us in Palo Alto.” Kellerman could not say whether the firm would be hiring lawyers from Pennie’s other offices. The 172-lawyer intellectual property firm has four attorneys in San Diego and about 19 in Washington, D.C., with the remainder in its New York headquarters. For Philadelphia-based Morgan, Lewis the acquisition is an opportunity to build on the remnants of Brobeck. Morgan, Lewis hired 153 lawyers from Brobeck after the firm disbanded in February. Brobeck unraveled immediately after merger discussions with Morgan, Lewis broke down. Since then, Morgan, Lewis has hired three partners in the Bay Area, two of whom are former Brobeck lawyers. Kellerman, who joined the firm in May, was previously managing partner of Brobeck Hale and Dorr, a European joint venture between Brobeck and Boston’s Hale and Dorr. And on Monday, Rahul Kapoor, a former Brobeck associate, rejoined his colleagues as a partner after a 10-month stint as counsel at O’Melveny & Myers. “Starting with 150-plus lawyers in California was a great start,” Kellerman said. Now the firm locally “wants to complement its strengths on the East Coast.” He said Morgan, Lewis is focused on three industries in Northern California: technology, life sciences and financial services and securities. The acquisition of Pennie lawyers would give Morgan, Lewis a patent group in the Bay Area. Kellerman said the firm’s 65 patent lawyers are all based on the East Coast. Pennie has been looking for a merger partner for the past two years, talking first with Jones Day and then with Cooley Godward. The firm recently resumed discussions with Jones Day. But other firms also began courting Pennie as well. A source close to Pennie said the firm’s patent prosecution lawyers might fit better at Morgan, Lewis since Jones Day has a heavy litigation focus that could overshadow lawyers focused on patent prosecution and counseling. Recruiters said conflicts between the two have also been a major stumbling block. “Ultimately what you run into with a group this large are conflicts,” said recruiter Lawrence Watanabe. “That’s what’s happening.” Watanabe said the other offices are still in play. “There’s a question as to who will really get what,” he said. “It’s not close to a done deal.” R. Todd Johnson, managing partner of Jones Day’s Menlo Park office, said he could not say whether the firm is in discussions with Pennie. “There are lots of firms preying on these guys,” Johnson said. IP firms are highly sought after by general-practice firms. In the past three years a string of patent firms have either shut down or merged with a larger firm, including Limbach & Limbach, Lyon & Lyon and Flehr Hohbach Test Albritton & Herbert. “There isn’t a patent firm out there that someone hasn’t thought about acquiring,” said Katharine Patterson, of Patterson Davis Consulting. Patterson said a variety of economic and business forces have changed the way IP is practiced. “Clients want a team of lawyers that can address how to appraise IP assets for maximum value,” she said, which can include cross-licensing transactions, technology transfer or litigation. IP firms like Finnegan, Henderson, Farabow, Garrett & Dunner with areas of expertise will survive, Patterson said. “The species may not be endangered, but there are fewer animals in the forest,” she said.

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