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Boston’s Ropes & Gray has courted IP boutique Fish & Neave for years. And in mid-September, Fish & Neave spokesperson James Haggerty confirmed the two were again in “extremely preliminary merger talks.” But this time, Ropes might land the catch. Since 2003, 12 partners have left the 160-lawyer Fish & Neave to join expanding IP practices at Latham & Watkins, Kirkland & Ellis, Quinn Emanuel Urquhart Oliver & Hedges, King & Spalding, and Wilson Sonsini Goodrich & Rosati. At least 20 associates have left, too. Several IP boutiques have closed in recent years, including New York’s Pennie & Edmonds, Los Angeles’s Lyon & Lyon, and San Jose’s Skjerven Morrill. During the past year, a host of Fish lawyers have looked around, says Anna Tsirulik, managing director of Major, Hagen & Africa’s New York office. Is the 126-year-old firm (which counseled Thomas Edison) going the way of the phonograph? Reached before the merger talks became public, managing partner Jesse Jenner said no. “We are recognized in most quarters as being the leading IP firm, if not on everybody’s list of the top three or five,” he said. Jenner couldn’t be reached for comment on the Ropes & Gray talks, but in earlier interviews he conceded the firm would consider a merger. “We would be crazy not to consider anything that would enhance our practice,” he said. Ropes & Gray managing partner John Montgomery would say only that the firms had worked together on different IP matters in the past. “We have the greatest respect for them as a firm,” he says. The wave of departures at Fish & Neave began when senior partner John Nathan left for Paul, Weiss, Rifkind, Wharton and Garrison in 2003. In a 32-year tenure, Nathan had built a practice with prominent clients, such as The Gillette Company and Home Box Office, Inc. But as he saw more patent litigation going to general practice firms, he decided he needed support from a powerhouse litigation firm. Six months later, when Pennie & Edmonds combusted, many Fish & Neave partners got antsy. Latham & Watkins partner Steven Cherny, who left Fish in August after 12 years with the firm, says he worried that the end had come fast at Pennie, leaving many lawyers there with few options. He wanted to avoid that fate. After Pennie’s collapse, Fish associates began to jump ship. Cherny says that this “run-on-the-bank mentality” quickly became a self-fulfilling prophecy. Terry Kearney, who helped open Fish’s Palo Alto office in 1992 and left for Wilson Sonsini in 2004, places some blame on recruiters. When he worked at Fish, headhunters told him the Palo Alto office was closing, which he knew to be false: “Partners can access and digest the merits of these things, butassociates can’t do that as well.” Jenner lays the blame on his firm’s efforts to stay competitive. The firm doesn’t have a history of hiring laterals — it brought on its first in 2002. Through that process, it became clear that the firm’s unusual accounting model was a recruitment liability. Fish’s mixed cash flow/accrual accounting system charged expenses immediately and paid out income when it was received, months later. New hires would not get paid for nine months and would have to take a loan from the firm. (The same went for associates promoted to partner.) The firm decided to change, but it took a year. That lag motivated some partners. Because of the old system, departing partners would get paid for nine months after they left. Jenner says those already thinking of leavingsaw an “incentive.” The accounting modifications came with a gradual switch from a lockstep to merit-based partnership. “A number of the people who left,” says Jenner, “felt, rightly or wrongly, that they would do better compensation-wise by making a fresh start somewhere else.” (Jenner says departing partners’ clients only brought in 1 percent of firm revenue in 2003, which The Am Law 200 listed as $124.5 million in total.) Jenner says the firm plans to launch aggressive business tactics to seduce lateral partners. More significantly, Jenner says that Fish is open to expanding into different practice areas and geographic locations. And, of course, there’s always that Ropes merger.

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