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The pressures of being a mid-size intellectual property firm in a market of tiny boutiques and general practice Goliaths helped push Atlanta-based Jones & Askew toward its upcoming union with Kilpatrick Stockton, also of Atlanta. That’s according to two former partners and one other IP lawyer, who say the intellectual property market has changed so dramatically that 30 to 50 lawyer firms — Jones & Askew’s size — may find it tough to survive. In recent years, large out-of-town intellectual property boutiques have come to Atlanta. Also, general practice firms have aggressively built their IP and patent practices — particularly Kilpatrick Stockton; Alston & Bird; and Morris, and King & Spalding, all based in Atlanta; and D.C.-based Smith, Gambrell & Russell. Jones & Askew, to some extent, was a victim of having the right talent at a time when general practice firms and big IP boutiques increased their lawyer cherry-picking to a full-fledged harvest. Former partner Dale Lischer, who now practices with Smith, Gambrell, says losing partners and associates was certainly part of Jones & Askew’s motivation to join Kilpatrick Stockton. Jones & Askew had 54 lawyers in April 1999, he says. It has 30 now. Lischer says the “drumbeat of the general practice firms,” rather than infighting or other issues, depleted Jones & Askew. “They were making such good offers that people were listening.” From Jones & Askew’s perspective, he says, “probably there’s also a strong motivation that maybe the time had come that the general practice firms were going to have the field anyway.” As far as IP shops go, “The only people who were going to survive were going to be the mega-boutiques.” Jones & Askew founder Anthony B. Askew says his firm’s motivation was to gain broader access to services for its clients, and that the firm could have survived on its own. WHO WILL SURVIVE But Lischer gives examples of who he thinks will survive: big boutiques including Washington-based Finnegan, Henderson, Farabow, Garrett & Dunner and Minnesota-based Merchant & Gould. Both have offices here. Finnegan, Henderson has hired four Jones & Askew associates; Merchant & Gould came to Atlanta by hiring former Jones & Askew partner Christopher J. Leonard and two associates. An Atlanta intellectual property lawyer who requested anonymity says Jones & Askew’s size made it “one of the most vulnerable of all” because it was too big to operate on a shoestring budget, yet still had to match big firm salaries to stay competitive. Big firms succeed, the lawyer says, because they can offer litigation along with their patent prosecution work. Small firms –he specifically cites the four-lawyer Gardner & Groff — succeed because they handle litigation on a budget or on a contingent fee basis. They also can keep patent prosecution costs low. KEY LOSSES Another factor pushing Jones & Askew toward finding a larger firm was its loss of lawyers in hot practice areas such as electrical engineering, or “double-e,” as it is known, says a former Jones & Askew partner who asked not to be named. “My feeling is that in the last few months, they have lost the core of their practice and with that, they were left with few alternatives other than to merge with a firm that could help to manage their client base,” says the ex-partner. The ex-partner says Jeffrey E. Young and Gregory T. Gronholm were the core of the firm’s mechanical engineering practice, and both partners now are at Alston & Bird. The firm also lost the core of its electrical engineering practice, with at least six double-e lawyers heading to other firms. Partners who left include Lischer, W. Scott Petty and Holmes J. Hawkins III, both at King & Spalding now; and John R. Harris, now at Morris, Manning. The only double-e lawyer left is partner Brenda O. Holmes. STILL STRONG IN BIOTECH As a result, the lawyers from Jones & Askew that are joining Kilpatrick Stockton are primarily biotechnology lawyers. Of the 10 partners, seven are in the biotech or biomedical field, two are mechanical engineers, and one is an electrical engineer. Biotech is the practice area that Kilpatrick Stockton’s William H. Brewster, chairman of his firm’s intellectual property group, cited as being very attractive to his firm. But, according to Lischer, “the bloom is certainly off” biotech work. Five or six years ago, biotech work was hot but has cooled as more biotech Ph.Ds went to law school, and as the initial public offering market slowed. But, he adds, “Kilpatrick Stockton has been trying to do a biotech deal forever.” And, he says, having biotech expertise is an essential element of a full-fledged IP practice. Brewster and Askew both said the union of their lawyers would increase cross-selling and the services they could offer to clients. The union should be successful, according to Lischer, Hawkins and the ex-Jones & Askew partner who asked not to be named. “J&A was a first-rate firm and I think Kilpatrick Stockton is a first-rate firm,” the ex-partner says, adding that the two should form a strong practice. Hawkins describes his former firm’s culture and that of Kilpatrick Stockton as compatible. Jones & Askew is “very relaxed and friendly. It has a very entrepreneurial feel to it, in that attorneys are given substantial freedom to manage their own practices.” Kilpatrick Stockton, he says, has successfully built an intellectual property practice in locations remote from its Atlanta headquarters, including North Carolina and the Washington area. “I think that bodes well for Jones & Askew lawyers, that they won’t have to conform to a particular style.” Also, partner pay appears to be compatible. In 1999, Kilpatrick Stockton’s equity partners earned about $369,000 on average. Brewster said Jones & Askew’s partner compensation was “in the range” of his firm’s. Askew declined to discuss partner pay. Hawkins says partners’ compensation is “comparable” at the two firms. “Both culturally and financially, I think the numbers made sense,” he says. “I’m confident the deal wouldn’t have gone through if the numbers hadn’t worked.”

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