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King & Wood Mallesons departures continue as rumours regarding firm’s financial status persist

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A look at the turbulence shaking the international giant

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Rumours regarding King & Wood Mallesons’ (KWM) financial status continue to make front-page legal news, as yet more of the firm’s top lawyers head for the exit.

Late last week it was reported that KWM partners were in the process of holding “crisis” talks over the firm’s debts, which (depending on who you believe) range from £25 to £35 million, when four of the firm’s biggest billers decided to resign, including former managing partner Rob Day and finance partner Andrew Wingfield.

At the time, a spokesperson for the firm — keen to stress the resignations would not affect other employees — said:

King & Wood Mallesons can confirm the resignations of London partners Michael Halford, Jonathan Pittal and Andrew Wingfield. Rob Day has also indicated his intention to resign. These resignations do not impact our employees.

As a result KWM placed its recapitalisation programme — which in simple terms means asking its partners to inject some of their own cash into the firm — on hold, while it assessed other options. The statement said:

In light of these resignations, the firm has paused its recapitalisation programme in Europe and the Middle East (EUME) — having received commitments for the requested amount of capital — whilst it assesses the financial impact. We anticipate this process will be complete within four weeks.

But it would appear that some lawyers aren’t sticking around for the process to be completed.

Yesterday, Legal Business revealed five lawyers from KWM’s Frankfurt-based banking team have signed deals to join global outfit Taylor Wessing. This followed news earlier this summer that KWM had lost its head of German operations, Sonya Pauls, to the Munich office of magic circle outfit Clifford Chance.

Legal Cheek understands that KWM has now lost over 50 partners in the last year, with the firm making up just 25 new ones through lateral hires.

Despite the recent uncertainty, KWM’s trainee recruitment has remained steady. Over the past year or so the firm — which is the amalgamation of three recent mergers between top City of London player SJ Berwin, Chinese market leader King & Wood and Australian giant Mallesons — has taken on around 30 wannabe lawyers annually.

Unfortunately the same can’t be said for the outfit’s retention rates. Earlier this spring KWM — which pays its newly qualified lawyers (NQs) a recently improved salary of £70,000 — hung on to 14 out of its 20 of its trainees (70%). This figure took a sharp drop to just eight out of 14 — or 57% — back in August, when the firm unveiled its autumn result.

With speculation regarding KWM’s finances set to continue, there’s a new head-honcho tasked with getting the firm back on track.

Last month, KWM unveiled Frankfurt lawyer Michael Cziesla as its new senior partner for the UK, Europe and Middle East. Cziesla — who was elected to the top spot after Stephen Kon opted to step down halfway into a three-year term — is the firm’s first senior partner to be based outside London. Hopefully he’s the right man to steady the KWM ship.

42 Comments

Titanic

We ain’t going down baby.

(17)(6)

Iceberg

O_o

(10)(0)

Anonymous

Your mum said the opposite to me last night.

(6)(3)

Rumpus

I hear DWF is ready to pick at what is left.

(10)(2)

Anonymous

Either that or top City titan Irwin Mitchell. The mangy shops will be pretty busy fighting over the carcass once this mess finally implodes.

(20)(2)

Bob Marley

🎼Ex-i-dusssssssssssss🎤

(2)(0)

City corker

Atta’boy Tommy! Took you several days to gather courage, but you finally went and wrote this despite your KWM sponsors pleading you not to. Well done.

(32)(0)

Anonymous

Glad to see the Chinese merger worked out well haha. Jokes aside, I’d be shitting myself if I was a future / 1 year trainee there.

(15)(0)

Anonymous

Was unfortunately destined to happen. SJ Berwin had several very impressive teams, but those largely operated as tightly-controlled personal fiefdoms with little firm wide cohesion. Now most of the rainmakers are long gone.

In 2013 enter Mallesons, who first bizarrely merged with King & Wood (and spurned CC, lol!), then decided to go for SJB. There actually were dozens of partner resignations over in Melbourne and Sydney when the merger went through in 2013, as they clearly knew what was going to come out of it.

(27)(1)

Anon

What is strange is how people believe that the merger was bad for SJ Berwin. If anything, the merger was bad for King & Wood Mallesons. In Asia and globally as well, KWM remains a strong brand and racks up pretty big deals advising big companies and governments — it is still regarded as a prestigious outfit everywhere except for Europe. People seem to forget that SJ Berwin was on the brink of financial mess before the merger which instigated numerous partner exists and extremely low retention rates and PE teams defecting to US rivals. Sj Berwin had a notorious toxic culture and it was a mess — KWM saw this as an opportunity because it needed a European presence badly. It took SJ Berwin thinking it could fix the mess but it only prolonged it. It was a bad investment because legacy Mallesons and King & Wood was always more prestigious and financially stable than their British counterparts. The management of legacy SJ Berwin is what caused this current mess not the merger with KWM. The exits in Melbourne and Sydney was comparatively low compared to other mergers during that time and KWM remains on par with HSF in terms of prestige, unfortunately, the same cannot be said in Europe. It is unfortunate that such a prestigious brand has fallen so much in Europe.

(2)(2)

Anonymous

Wholly agree with this. I feel that the OP was trying to say that the merger itself went bad, not that it was bad for SJB per se.

(2)(0)

Anonymous

Your all management at pretty poor,,,

(0)(0)

Anonymous

Anon @ 12.35 – “rainmakers” is a slightly pompous and false – heroic way of describing what is essentially a law drone with a mortgage and financial commitments to keep up with

(3)(3)

Anonymous

Whatever you say mate, I was just repeating a oft-used phrase in the legal press. The point still stands though: most if not all of their highest billing partners have left the firm.

(16)(1)

Anonymous

This post has been removed because it breached Legal Cheek’s comments policy.

(12)(0)

Tommy is my homeboy

Banter Award of the Day, 10/10.

(4)(0)

Anonymous

This post has been removed because it breached Legal Cheek’s comments policy.

(0)(0)

Anonymous

Wow. A post about a post about KK and Alex gets removed. This is LC censorship gone mad!

(3)(0)

Anonymous

This post has been removed because it breached Legal Cheek’s comments policy.

(1)(0)

Lorene

i found you guys online im thinking on starting to get into comic boook i saw that you guys have magic maches every friday i just wanted to confirm this with you and do you have tips for starting to read them if edged into cotinclleg them?

(0)(1)

Anonymous

Stop smoking that dope already.

(0)(0)

Anonymous

Goodbye 10 qsp.. hello again Grey’s inn

(7)(0)

Anonymous

Was that SJB’s original office location?

(0)(0)

IM amazing associate

Don’t know but it’s new one will be Blackpool front by the sounds of things.

(8)(4)

Anonymous

I hear everyday someone resign from the firm, some people hanging around for payout, that is if they any money left,,,,lol,,

(8)(1)

Anonymous

This shop is done. Another big article in The Lawyer today, there is no coming back.

Must suck being a September 2016 intake trainee.

(6)(0)

Anon

Lol the firm is losing its position as a city elite but its not done. It might descend to the likes of CMS or other mid-tiers but you are ridiculous to think its going to close shop.

(0)(6)

Anonymous

They said the same thing about Dewey & LeBoeuf. Time will tell.

(6)(0)

Anonymous

SJB was never City elite, wtf are you on about? 😂

(10)(0)

Anon

City Elite are Magic Circle and Silver Ciricle. It is part of the Silver Circle of firms. I never said it was Magic Circle. Further, it still maintains the best PE/Funds offerings than any other firm. Although, that cannot be said of its other practice areas. RIP.

(1)(1)

Anonymous

Small but essential difference: SJB used to maintain one of the best PE/funds practice in the City. By now, three quarters of the department jumped ship for far greater rewards at a number of US shops.

Ditto for other departments, e.g. most of the Energy/Infra team decamping for Squire Patton on Friday.

(5)(0)

Anonymous

Got to feel sorry for the poor German bloke who has to pick up the pieces of this mess.

Seems he must the ‘useful fool’ of the play.

(4)(0)

Anonymous

Only losers left at the firm now!! All the talent has gone

(6)(4)

Anonymous

The platform in Asia is financially separate, large and doing well. And has the benefit of the huge and rapidly growing Chinese market. Even if the debts are £30 million it can easily cover them (and it will, since bankruptcy of a member firm of the Swiss Verein would be reputationally disastrous). The concern isn’t financial collapse more one of a death spiral in market position through departures. However bad it gets the practice can always be built back up over time but it will be a slow process and there is no guarantee the London office will ever get back to the market position/size SJB had.

(5)(5)

Anonymous

In other words it’s gone. Also, I think you underestimate the willingness of the Aussie legacy Mallies partnership to throw SJB under the bus. They were never sold on the value of this cocked-up merger.

(2)(0)

Anon

I don’t think you understand the Asian partnership or business in general. They were happy with the deal but skeptical since SJ Berwin was financially in a mess before the merger. No matter how bad the European arm gets the global firm still needs a large presence in Europe and they won’t throw their European counterparts under the bus. Having a presence, albeit deflated and financially unstable, is better than having no presence at all in such a larger market. Please think before you write exaggerated BS.

(2)(4)

Anonymous

Hi KWM HR person.

(4)(0)

Anon

Go read the newspapers, then you will understand that the Aussie and Chinese partnerships won’t throw them under.

(1)(1)

Anonymous

It might not be literally ‘under the bus’, but whatever deal Cziesla comes back from HK next week will hardly be good news for whoever is left from SJB at 10QSP.

It’s anyone’s good guess what are the best next steps to take: a US merger still seems to be a possibility (as Morgan Lewis confirmed on Friday), but it seems to me like that would just kick the can further down the street. Time will tell I guess.

(0)(0)

Anonymous

Seems like just the hardcore KWMs defending themselves here, it’s no good pal your all washed up now,,, let face it there is no passion left,,,
Anyone still at the firm should consider salvaging their career!!

(0)(0)

Anonymous

Halford …. the sloth …. greatly missed … said no one ever!!!

(0)(0)

Comments are closed.