Nonhire Pacts in Law Firm Merger Talks Are Worthless, Ruling Suggests
A ruling in a partner poaching dispute between Nixon Peabody and French law firm Taylor Wessing highlights a significant problem with pacts not to hire each other’s lawyers during merger talks: The agreements are probably not enforceable.
Judge Kenneth Fisher of New York ruled last week that such contracts cannot be enforced in the state because they restrict the right of lawyers to work where they want, the American Lawyer reports. Experts told the publication that case law in most other states also gives lawyers the right to mobility.
Mergers consultant Lisa Smith of Hildebrandt International told the American Lawyer that such contracts are nothing more than “gentleman’s agreements” and law firms should not expect them to survive in court.
Taylor Wessing had filed suit in August, seeking $5 million in damages and an injunction to stop 12 of its nonequity partners from moving to Nixon Peabody. Just a year before, the two firms had been discussing a possible merger.
The lawyer for Taylor Wessing, Dreier name partner Marc Dreier, contended the agreement in his client’s case is enforceable because it bars only a limited number of lawyers from moving.