Philadelphia-based intellectual property boutique Woodcock Washburn is set to merge with 800-lawyer Baker & Hostetler pending a partnership vote, the firms confirmed to The Legal.
The two firms sent out a statement Friday afternoon confirming they have signed a letter of intent to combine subject to both firms’ partnerships voting for the merger in early December. If approved, the merger will go into effect Jan. 1, 2014.
“Our clients will benefit from being able to tap into the various practice strengths within Baker & Hostetler,” Woodcock Washburn policy committee member Joseph Lucci said in a statement. “We’ll be a go-to law firm for technology companies of all types. Baker & Hostetler’s strength in New York, Southern California, Washington, D.C., and other litigation and technology corridors will enable us to expand the resources we collectively can provide to a wide range of market-leading companies.”
If the merger goes through, Steven Rocci of Woodcock Washburn will join Baker & Hostetler’s policy committee and Lucci will become managing partner of the Philadelphia office, the firms said. Additional Woodcock Washburn partners will have leadership roles in the combined firm’s IP practice, they said.
Lucci said in an interview Friday that the partnership vote is “akin to a formality” given both firms believe they have the needed partner support to get the deal done. He said the two sides have been talking since the summer. An official date for the votes has not been set, Lucci said.
Lucci said he gets the sense all of the attorneys at Woodcock Washburn are welcome at Baker & Hostetler, but said he couldn’t say whether they would all choose to join the combined firm.
As of right now, Lucci said, there are no plans for staff changes at Woodcock Washburn to address redundancies from the merger, but he said “going forward, it’s hard to say.”
Woodcock Washburn will assume the Baker & Hostetler name but may try to keep its identity in some form for the near future, Lucci said.
With roots in Ohio dating back to 1916, Baker & Hostetler has grown to around 800 lawyers across 11 offices throughout the United States. The firm has offices in Cincinnati, Cleveland and Columbus, Ohio; Chicago; New York; Washington, D.C.; Denver; Houston; Orlando, Fla.; and Los Angeles and Costa Mesa, Calif.
Aside from its Philadelphia headquarters, Woodcock Washburn has offices in Seattle and Atlanta.
“As part of our overall growth strategy, we have talked about expanding in major markets where we do not currently have a presence,” Baker & Hostetler executive partner Steven Kestner said in a statement. “Woodcock Washburn’s offices place us in three important new cities where their attorneys have strong, established client relationships.”
As general practice firms have looked to gobble up IP boutiques over the years, Woodcock Washburn has often been at the center of merger talks and rumors but no deals were inked. The firm has long been a fixture in Pennsylvania’s legal circles as one of the oldest, and at times largest, stand-alone IP boutiques in the country.
Lucci said Woodcock Washburn has been approached by a number of firms over the years. He said the Baker & Hostetler merger was too good to pass up, noting the firms have similar cultures, including a “collegial and collaborative work environment.”
Sources who spoke to The Legal all pointed to a very democratic system at Woodcock Washburn that requires significant buy-in from its attorneys before moving forward with major law firm decisions.
Over the past few years, the firm has seen some defections, going from a high of 93 attorneys firmwide in 2007 to 74 attorneys firmwide as of mid-2013, according to statistics tracked by Legal sister publication PaLaw magazine.
In 2010, partners Michael J. Bonella and Paul B. Milcetic left to open a patent litigation practice at Barroway Topaz Kessler Meltzer & Check.
A few months later, litigation practice services group Chairwoman Dianne B. Elderkin, partners Barbara L. Mullin and Steven D. Maslowski and three other attorneys left to join Akin Gump Strauss Hauer & Feld. The group was said to have a substantial book of business, including handling litigation work for Johnson & Johnson. But Woodcock Washburn was also said to have retained some of that work.
In May 2011, two partners and six associates—including Joseph R. Condo, former chair of Woodcock Washburn’s patent procurement services group, and Vincent J. Roccia, former transactions operations manager at the firm—left to form their own patent procurement firm, Condo Roccia.
Most recently, former policy committee member and litigation practice head David J. Wolfsohn and Aleksander J. Goranin, then head of the firm’s litigation practice, left the firm in October for Duane Morris.
It is unclear how the two firms’ finances match up. While Woodcock Washburn pays toward the top end of the Philadelphia market for first-year associates at $140,000, the firm’s profits per equity partner are said to be below Baker & Hostetler’s $930,000 average for 2012.
Baker & Hostetler has seen a steady rise in revenue and profits over the last two years, thanks in part to its work representing partner Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities. According to Legal affiliate The American Lawyer, Baker & Hostetler saw its PPP grow more than 10 percent in 2012 to the $930,000 mark. Its gross revenue rose 16 percent last year to $510.5 million and its revenue per lawyer grew 5 percent to $630,000.
One source familiar with Baker & Hostetler said the firm’s numbers were bolstered by the Madoff work and are an “enhanced snapshot” of the firm’s true rate and profit structure. The source, who described Baker & Hostetler as more of a Midwest, middle-market firm, said it could support the various aspects of an IP practice and the resultant rates that come with them more so than could a larger firm.
Lucci said the reason many of Woodcock Washburn’s previous merger discussions didn’t come to fruition was because the firm would only merge with a firm that was willing to do the patent prosecution work along with the patent litigation.
“For a number of firms, that is something that crosses them off the list,” Lucci said.
When asked about the firms’ financial compatibility, Lucci said both firms were satisfied that the numbers worked. He also said he doesn’t expect Woodcock Washburn attorneys’ rates to change post-merger.
Mark Jungers, a recruiter with Lippman Jungers, said the merger is a great move for Baker & Hostetler.
“They have been looking for a major play in IP for several years and Woodcock is a venerable firm with a long history and seems like it would be a great partner,” Jungers said.
There are more than 70 professionals in Baker & Hostetler’s IP practice who focus full-time on IP issues, according to the firm’s website. The firm said Friday the addition of 68 lawyers from Woodcock Washburn will about double its IP practice.
Tony Volpe, founding partner of Philadelphia IP boutique Volpe and Koenig, said the market for boutiques depends on the clients. He said his firm has brought on work recently from Japan and Europe in which the clients only want to deal with boutiques. But the patent prosecution and due diligence work that large firms typically eschewed in favor of the more lucrative patent litigation is becoming more competitive. While he used to compete for that work with other boutiques, Volpe said the general services firms are getting more involved in that space.
Volpe said his firm has been approached about a merger over the years since. The selling point of these mergers is often that the boutique lawyers will now be able to cross-sell their practices, Volpe said.
“But then you go in and you find out the IP side gets hit with more of the conflicts than the other side and the general business side becomes less happy with you,” Volpe said.
Lucci said he found the low number of conflicts between Woodcock Washburn and Baker & Hostetler “amazing” given the size of the deal.
Sara Randazzo and Brian Baxter of The American Lawyer contributed to this report.