Magic Circle firms poach IP lawyers from US peers

UK law firms have been offering US-based intellectual property partners and associates lucrative deals to join them, as the war for legal talent shows little sign of abating.

The so-called Magic Circle firms are seeking US partners to open or expand their offices in the US, and to meet their technology and life-science clients’ needs, according to recruiters and law firm management consultants.

Freshfields Bruckhaus Deringer and Allen & Overy have both shown a willingness to make offers that far exceed US-based partners’ pay packages, as well as multiyear salary guarantees.

“It’s not a secret,” says Sharon Garb, a managing director in New York for the recruiters Major Lindsey & Africa, about the deals — some of which include a commitment to pay seven-figure salaries for five years. “If you want to lure somebody, you have to pay them a lot of money to make a move worthwhile because there is risk involved.”

In February, A&O nabbed five IP litigation partners from Goodwin Procter, some of whom helped the London-based firm open a Boston office. And, in August last year, A&O plucked seven partners from White & Case, who helped run multidisciplinary technology-oriented practices, including patent litigation. The new hires from northern California set the stage for A&O to open San Francisco and Silicon Valley offices.

If you want to lure somebody you have to pay them a lot of money . . . because there is risk involved

But money is not the only carrot that UK firms are using to attract US talent. They argue that new recruits’ work-life balance will improve thanks to differences in how firms operate, according to Nick Crasner, founder of London-based Crasner Consulting.

Unlike their US peers, large UK firms “don’t necessarily allocate the cost of every single associate to one partner or to one practice”, so that gives partners more wriggle room when they represent their profitability achievements, Crasner says.

Partners at large UK firms also do not face the same pressures to create work assignments for associates simply to keep them busy and billing clients, Crasner adds.

“The life of an associate [who has moved to a UK-based firm] is probably a little easier . . . although they still work insane hours.” Overall, Crasner says: “It’s more a team game and less of a silo game than in the US.”

The differential in revenue-generation potential between IP practices in US and Europe helps explain the temptation for the UK firms to seek a piece of the action on the other side of the Atlantic.

The potential in the US for multimillion-dollar jury verdicts leads to outsized contingency winnings for plaintiff counsel and billable hours for defence lawyers.

In Europe, by contrast, those dynamics don’t exist. Crasner estimates that big-firm IP partners in Silicon Valley, generating $20mn to $30mn in patent litigation revenues, would be pulling in just $2mn to $3mn in fees if they had the same practice in Munich or London.

Given this contrast, he says, there have been very few cases of US firms chasing Europe-based IP lawyers and their practices. In 2018, US firm Kirkland & Ellis did hire Nicola Dagg, who was global IP leader for A&O. Similarly, in May this year, Los Angeles-based Quinn Emanuel Urquhart & Sullivan opened its Berlin office with Marcus Grosch, an IP litigating partner whom it had poached in 2010 from A&O, as its lead.

However, US firms’ appetite for domestic hires has grown in recent months, according to one recruiter.

“I have absolutely seen the demand for patent litigators all across the country increase during this year,” says Michelle Fivel, a partner at Major Lindsey & Africa, based in Los Angeles and New York.

The requests have surprised her, she adds, “because a number of the other practice areas are getting slower”. Calls for IP litigation associates often follow a firm coaxing a rain-making IP partner from a rival, Fivel says. “They really need the soldiers.”

The strength of the US technology and bioscience sectors, and the dealmaking taking place in those industries, have fuelled the nationwide demand for IP lawyers.

But the costs associated with deals between Magic Circle firms and US IP practices take a back seat when compared with European firms’ hunt for private equity and merger and acquisition lawyers, according to Kent Zimmermann, a management consultant with Zeughauser Group in Newport Beach, California, who has UK-based clients.

He says that clients view IP litigation costs as an expense, whereas they perceive M&A and private equity transactions as “helping create value for the business”.

“They’re less concerned about the legal fees for that,” Zimmermann explains.

Given these different attitudes, “the rates firms command for IP work, generally, are not nearly as high as the rates for those other practices, so it’s not the highest priority of most firms,” he says.