A look at the turbulence shaking the international giant
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.