The firm which used to be known as SJ Berwin looks set to disintegrate after partners decided not to put their hands in their pockets to save it.
King & Wood Mallesons' European and Middle East offices (which made up SJB before it merged with KWM in 2013) have been in crisis for months. Insiders say more than 50 partners have fled over the last year and the firm's debt stands at around £35m.
Partners were called in to an emergency meeting two weeks ago where they were informed of the gravity of the situation. A few days later, the firm's European Managing and Senior Partners flew to China to beg for help. They got it, with a couple of conditions. Partners were told that their Far Eastern board would bail them out - as long as they stumped up £14 million between them and agreed to be locked in to the firm for 12 months. Junior partners were asked to pump in £60k each. Equity partners were asked for an extra £4k per equity point on top of the £4k they had already paid, equating to contributions ranging from £80k at the bottom of the ladder to £240k at the top. They were given until this week to decide whether to share or to shaft.
SJB partners had a reputation for being hard-nosed when it came to corporate deals, and it may have been well-deserved. Management held a series of one-on-one chats with the partners, and it soon became clear that far too few were prepared to agree to both the capital contributions and the lock-in. Just 21 partners out of 130 signed up to the deal, RollOnFriday understands.
This week a spokeswoman confirmed that KWM EUME, "has not been able to complete its planned recapitalisation programme", because, "regrettably, insufficient value of new capital was committed".
The situation is now so dire the firm has publicly acknowledged that it is looking for a merger (read: takeover) to survive. Even that would be something as rumours are swirling around the City of further departures.
Nevertheless, the firm's spokeswoman said they would "continue to service the needs of clients, operating on a business as usual approach". Doubtless staff will do their best. But unless lawyers and non-fee-earners normally work while staring down the barrel of unemployment, circulating their CVs and trying to identify which partners screwed them over, business as usual is going to be difficult.
Here's a suggestion: in case the worst happens, why doesn't every firm that takes a partner from KWM, or has done in the last year, offer to rescue a trainee (and perhaps an associate and a non-fee-earner as well)? So far, that would mean berths at firms including:
It's the decent thing to do. If you're the Managing Partner at one of these firms and minded to share the love, please drop us an email to let us know and we'll give you a very public pat on the back.
STOP PRESS: Received this morning:
"Dear Roll on Friday
We spotted your article and totally agree that the legal profession should be helping out KWM and we would be very happy to talk to any person or any team that wants to stay together. While we usually only recruit partners with client followings, we are now hiring across the board including in support departments.
Best wishes,
William Robins
Operations Director
Keystone Law"
Anyone interested, please email [email protected].
Fantastic work from Keystone. Please, anyone else, let ROF know.
Tip Off ROF
King & Wood Mallesons' European and Middle East offices (which made up SJB before it merged with KWM in 2013) have been in crisis for months. Insiders say more than 50 partners have fled over the last year and the firm's debt stands at around £35m.
Partners were called in to an emergency meeting two weeks ago where they were informed of the gravity of the situation. A few days later, the firm's European Managing and Senior Partners flew to China to beg for help. They got it, with a couple of conditions. Partners were told that their Far Eastern board would bail them out - as long as they stumped up £14 million between them and agreed to be locked in to the firm for 12 months. Junior partners were asked to pump in £60k each. Equity partners were asked for an extra £4k per equity point on top of the £4k they had already paid, equating to contributions ranging from £80k at the bottom of the ladder to £240k at the top. They were given until this week to decide whether to share or to shaft.
SJB partners had a reputation for being hard-nosed when it came to corporate deals, and it may have been well-deserved. Management held a series of one-on-one chats with the partners, and it soon became clear that far too few were prepared to agree to both the capital contributions and the lock-in. Just 21 partners out of 130 signed up to the deal, RollOnFriday understands.
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"To share, or to shaft? You've made your bets!" |
This week a spokeswoman confirmed that KWM EUME, "has not been able to complete its planned recapitalisation programme", because, "regrettably, insufficient value of new capital was committed".
The situation is now so dire the firm has publicly acknowledged that it is looking for a merger (read: takeover) to survive. Even that would be something as rumours are swirling around the City of further departures.
Nevertheless, the firm's spokeswoman said they would "continue to service the needs of clients, operating on a business as usual approach". Doubtless staff will do their best. But unless lawyers and non-fee-earners normally work while staring down the barrel of unemployment, circulating their CVs and trying to identify which partners screwed them over, business as usual is going to be difficult.
Here's a suggestion: in case the worst happens, why doesn't every firm that takes a partner from KWM, or has done in the last year, offer to rescue a trainee (and perhaps an associate and a non-fee-earner as well)? So far, that would mean berths at firms including:
- Arnold & Porter
- Ashurst
- Baker Botts
- Clifford Chance
- Covington & Burling
- Dechert
- Dentons
- Forsters
- Fried Frank
- Goodwin Procter
- Keystone Law
- Mayer Brown
- Mishcon
- Proskauer Rose
- Squire Patton Boggs
- Taylor Wessing
- Willkie Farr
It's the decent thing to do. If you're the Managing Partner at one of these firms and minded to share the love, please drop us an email to let us know and we'll give you a very public pat on the back.
STOP PRESS: Received this morning:
"Dear Roll on Friday
We spotted your article and totally agree that the legal profession should be helping out KWM and we would be very happy to talk to any person or any team that wants to stay together. While we usually only recruit partners with client followings, we are now hiring across the board including in support departments.
Best wishes,
William Robins
Operations Director
Keystone Law"
Anyone interested, please email [email protected].
Fantastic work from Keystone. Please, anyone else, let ROF know.
Comments
Associates, support staff etc. are more likely to have children or other dependants, mortgages, school fees and other obligations that would make their loss of job far more life changing and stressful than that of a trainee who, for the most part, has invested very little time in his/her career to date, probably lives in rented accommodation and is relatively young, mobile and unencumbered.
The plight of all the employees merits consideration, but if one was to choose any particular category of staff for particular mention or consideration, trainees would not immediately occur to me to merit a place at the top of the list.
When updating your profile, as sadly you have all done, could you please indicate your current team in the current job description.
Please also link to your colleagues so users can quickly trace the department.
Just saying :)