Large Firms
Jul. 30, 2002
Townsend, Lyon Merger Talks End
SAN FRANCISCO - Merger talks between San Francisco's Townsend and Townsend and Crew and Los Angeles' Lyon & Lyon are dead. "Talks between Townsend and Lyon are off as of today," Townsend partner Susan Spaeth said Friday.
"Talks between Townsend and Lyon are off as of today," Townsend partner Susan Spaeth said Friday.
The merger "ended up not being in line with our strategic plan for growth," said Spaeth, the managing partner for operations at the 150-lawyer intellectual property boutique.
Spaeth said she couldn't be more specific about why the talks failed. Negotiations began a month ago.
"We're looking at different opportunities to expand our geographic market and/or expand organically," she said. "We're still interested in Southern California, whether it's Los Angeles, Orange County or San Diego."
Lyon partner John McConaghy, who doesn't have a title but is essentially running the 80-lawyer intellectual property firm, had not heard that the merger had fallen through until a reporter's call Friday afternoon. Following that, he e-mailed Lyon partners telling them the news.
He said it wasn't surprising that he found out about the talks' failure from a reporter because he wasn't Lyon's main negotiator.
Nevertheless, he said, he had been "looking favorably" upon the prospect of merging with Townsend and had met with many Townsend lawyers in recent weeks.
"I enjoyed those people," he said. "I'm sorry this is the outcome, if that is indeed the case."
McConaghy said a confidentiality agreement prevented him from being more specific about the talks. Still, he said, a merger outline drafted for the two firms had "some provisions that were inconsistent with what the two firms could do."
McConaghy said he couldn't predict what would happen to the 100-year-old intellectual property firm, but he noted that Lyon's 10 New York lawyers had recently left for Proskauer Rose in Manhattan.
"Things are up in the air here," in Los Angeles, he said. "We haven't resolved what we're going to do."
Over the past two years the firm has lost about 30 lawyers, including six partners who left last year to join Jones Day Reavis & Pogue, and two partners, Douglas Olson and Richard Warburg, who left for Brobeck, Phleger & Harrison in February 2000.
Despite those problems, McConaghy said, he is as busy as ever.
"The entire high-tech industry has suffered in California," he said. "But I'm finding that outside of the dot-com areas, there seems to be continuing demand."
Spaeth said Townsend, which hasn't suffered from major defections in recent months, is doing well financially.
"I'd say the mood here is good," she said.
The merger would have been Townsend's first entrance into the Southern California market. Lyon has offices in Irvine, La Jolla and Los Angeles, as well as in Washington, D.C.
Townsend has offices in San Francisco, Walnut Creek, Palo Alto, Denver and Seattle.
Erik Cummins
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