Pinsent Masons is being sued by Spanish firm Ramon & Cajal over allegations that it breached a number of agreements by hiring a team of its partners and associates to open an office in Madrid earlier this year following unsuccessful merger talks between the two firms.
Documents filed at London’s High Court detail the Spanish firm’s claim against London-based Pinsent Masons, which also names as defendants the firm’s senior partner Richard Foley, telecommunications, media and technology head Clive Seddon and Madrid office leader and former Ramon & Cajal board member Diego Lozano.
According to the claim, Pinsent Masons and Ramon & Cajal engaged in merger talks between October and December 2016, culminating in a merger offer made to the Spanish firm on Dec. 19, 2016. Ramon & Cajal equity partners rejected the offer by a majority vote on Dec. 21.
Managing partner Francisco Pala communicated the decision to Pinsent Masons’ Foley the following day and asked him to consider an alliance between the two firms instead, according to the document.
The claim states that between January and May 2017, Pinsent Masons agreed to hire five Ramon & Cajal partners, all seven of its full-time corporate associates and two banking associates. It also states that Pinsent Masons tried to hire Ramon & Cajal banking partner Cristina Vidal in Madrid, but she rebuffed approaches by the British firm, which has offices in Europe, the Middle East, Africa and the Asia Pacific region, as well as far-flung locales like the Falklands.
The partners that joined Pinsent Masons were Lozano, who had played a key role in the negotiations between the two firms, corporate partners Sanchez Montero and Inmaculada Castello Bernabeu, finance partner Idoya Arteagabeitia and litigation partner Fernando Gutierrez.
Ramon & Cajal claims that the hires by Pinsent Masons breached a no-hiring provision contained in a memorandum of understanding between the two firms signed in July 2016, while also breaching a nonsolicitation provision in a nondisclosure agreement between the firms signed in October 2016.
The suit by Ramon & Cajal also asserts that Pinsent Masons used confidential data provided to it during the merger talks between both firms, such as which of the Spanish firm’s partners had the most profitable practice and which of its clients were the most profitable, in its recruitment of its lawyers in Madrid. According to court filings, Lozano and Sanchez Montero were two of the Ramon & Cajal’s three most profitable partners.
As evidence of the alleged solicitation, the Spanish firm points to a presentation given by Pinsent Masons’ Seddon to a group of its associates at the Hesperia Hotel in Madrid where he pitched his vision for the Madrid office in an attempt to get them to join the British firm.
According to court documents, this included Pinsent Masons’ intention to invest €10 million ($11.9 million) in Madrid with a view to engaging at least 60 lawyers in the city within the next five years.
Ramon & Cajal is claiming that but for the actions of Pinsent Masons and the other defendants, its lawyers would still be working for the firm and generating profits. As a result, the Spanish firm is seeking lost profits and any other monies made by the defendants as a result of their alleged breach of confidence. Ramon & Cajal also argues that Lozano is obliged to disgorge to the firm any gain received by him as a result of his breach of duty to the firm.
Richard East, a founding and co-managing partner of Quinn Emanuel Urquhart & Sullivan’s London office, is representing Ramon & Cajal in the matter. Quinn Emanuel declined to comment on the case.
Pinsent Masons, which absorbed leading Scottish shop McGrigors in 2012, has turned to Ashurst dispute resolution partner James Levy. Pinsent Masons said in a statement that it was disappointed in the litigation, which it claims has no merit.
“As we build our business, we take great care to meet the responsibilities we agree to as part of our discussions with individuals and firms alike,” the firm said. “We believe we have always met our responsibilities in relation to Ramon & Cajal and regret they have chosen to take this action. Given formal proceedings are underway it would not be appropriate for us to make further comment.”
Pinsent Masons officially opened its Madrid office in May with the partner hires from Ramon & Cajal, a group that was joined by projects and construction partner Ricardo Garcia from Spanish construction law firm OHL and construction partner Sofia Parra, who relocated from Pinsent Masons’ headquarters in London.
Civil disputes after unsuccessful law firm merger negotiations, while rare, are not without precedent. In 2008, Nixon Peabody hired 25 French lawyers from Taylor Wessing after the adjudication of a dispute between both firms following failed tie-up talks, which threw into question the enforceability of certain noncompete agreements.