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Citing an increase in conflicts, Akin Gump Strauss Hauer & Feld and the bulk of its Philadelphia intellectual property group will be parting ways. The move was first reported on The Legal’s blog Wednesday. Ronald L. Panitch brought his 28-attorney intellectual property boutique, Panitch Schwarze Jacobs & Nadel, to Akin Gump in 1999, and they will be leaving on Jan. 1 to form Panitch Schwarze Belisario & Nadel. The group will remain in its offices at One Commerce Square and expects to continue a “strong working and referral relationship” with Akin Gump. Partners Panitch, Bill Schwarze, Martin Belisario, John Jamieson and Al Nadel, along with the bulk of the Philadelphia intellectual property associates, counsel, agents and staff, will comprise the new boutique. Clark Jablon will be a partner at the new firm, according to a statement from Akin Gump. “The decision was the right one for Akin Gump and the right one for the Philadelphia IP transactional practice. The relationship offers the best of both worlds by eliminating exponentially increasing client conflict issues,” R. Bruce McLean, chairman of Akin Gump, said in a statement. There are 33 attorneys in Akin Gump’s Philadelphia office and two patent agents. Panitch said he hopes that the agents and all of the 22 attorneys who focus on intellectual property matters will be joining the new firm, but that has not yet been decided. Panitch said there were always problems with conflicts since his firm merged, and it was “an increasing source of concern. “The boutiques can often have more clients than the firms that they join,” he said. If Panitch Schwarze attorneys were representing a client only on maintaining a patent, the firm couldn’t enter into litigation that involved the client, Panitch said. “We had more clients than Akin Gump had, [at] a factor by several times more,” he said. The two firms do anticipate having a strong referral network after they formally split. Panitch said the group would remain in its same office and probably just close off the connecting stairwell between the intellectual property floor and the litigation floor and use the elevator to visit instead. If all of the intellectual property transactional practice joins the new Panitch Schwarze, Akin Gump will be left with 11 attorneys in the Philadelphia office, all with a focus on litigation. Of the 28 Panitch Schwarze lawyers to make the move to Akin Gump, 10 still remain at the firm. Lynda Calderone joined Akin Gump with Panitch Schwarze and then left in 2005 to head up Flaster Greenberg’s intellectual property practice. She said the Philadelphia office of Akin Gump had some turnover shortly after the merger, but then it was stable for a long time. Despite it being geographically set apart, Calderone said Akin Gump was very supportive of the Philadelphia office. The litigation group was “very much held in high esteem,” she said. The office would be fine in its space and workload with just keeping the litigation group, or it could try to build out again, she said. Michael Coleman of Coleman Nourian said he always views Akin Gump, DLA Piper and Greenberg Traurig in the same light in terms of the largest out-of-town firms entering the Philadelphia market. Whereas DLA Piper and Greenberg Traurig have been clear about their strategic plans for the city, Akin Gump has flirted with the idea of expansion into other practice areas and then retracted, he said. The departure of Akin Gump’s intellectual property group, Calderone said, was most likely an integration issue, which includes conflicts of interest. While this merger lasted longer than most in the intellectual property arena, she said Panitch Schwarze never had to move office space, but just changed the name on the door. “Psychologically, that practice was always a cohesive practice that acted as its own entity,” Calderone said. That can affect the ability to cross-market and feel integrated within a firm, she said. Calderone said she doubts the new Panitch Schwarze would adopt the same business model as the old one, because that is what contributed to its merger in the first place. She said the group probably learned a lot from Akin Gump about running a large firm. Panitch would probably agree. He had touted in August 2006 the positives of merging with a larger, general services firm, citing the ability to pay for top talent and to keep work in-house. While those problems will still exist when the firm turns back to the boutique model, Panitch said they are more prepared. “It’s a concern,” he said. “We’re in discussions on where we want to be in the market.” He said they would have to position themselves differently in the marketplace to attract top talent. Panitch said his experience at Akin Gump made him poised to handle the challenges of running a boutique again. “[I'm] an old war horse who thought that a dollar spent on recruiting was a wasted dollar,” he said. That isn’t the case anymore. Panitch said he now sees the benefits of recruiting on campuses and having summer associate programs. “You can’t say the IP thing didn’t work,” Coleman said, adding that Panitch was able to rise to leadership of the intellectual property practice at Akin Gump. When the group decided it was time to leave Akin Gump, there was never a discussion of joining another large firm, Panitch said. “Why go from the frying pan into the fire?” he questioned. Marketing consultant Stacy West Clark has worked with a number of firms that have spun off from large firms, and one of her clients’ biggest concerns is the ability to compete for the top-level clients. “They can win the work, but they have to work harder,” she said. Despite the extra effort, West Clark said the current market is the best time she has seen in 20 years for boutique firms to gain those clients because companies are looking for legal expertise at affordable rates. The three ways a boutique firm can become successful among its large-firm competitors is to have an attorney who is one of the best in the field, become active in the legal and industry groups related to the firm’s clients and promote the firm to the public, she said. While the opportunity is ripe, West Clark said intellectual property boutiques struggle against the “500-pound gorillas” like Woodcock Washburn or large firms with intellectual property practices. It is often more difficult for the smaller intellectual property boutiques to compete in terms of marketing dollars, she said. More and more of the smaller boutiques are trying to focus on marketing than ever before, however. Because fees aren’t as much of an issue in the intellectual property arena, many clients would just go to the largest firm, West Clark said. The new Panitch Schwarze may have an easier time, given that it’s not a start-up, Coleman said. “This firm has come full-circle, so they have lived on both sides of the aisle,” he said. “The franchise has been retained after all these years. They were just d/b/a Akin Gump.”

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