What’s Going On Here?
The self-proclaimed ‘elite firm for the next century’ has its days numbered.
What Does This Mean?
In November, KWM tried to raise £14 million to pay off their debts, by offering a plan which asked partners at the firm to put up some of their own money (the plan didn’t get the green light). The financial uncertainty meant that a number of senior employees jumped ship, leaving the firm in an even worse position. The firm tried to raise money from its other geographical branches but this failed too. They’ve since given up on trying to raise the money.
KWM were in negotiations to sell their European branch to Dentons but, as you can guess, the deal fell through.
Since then, we’ve got to see how the firm is going to be affected.
Why Should I Care?
KWM is a silver circle firm which was made of a merger of British, Chinese and Australian law firms with a revenue of over $1 billion. Last month the firm stated that the European branch would be going into administration (basically being made bankrupt). The firm operated under a Swiss Verein structure, meaning that each geographical branch of the firm is financially separate. So the Australia and Chinese limbs of KWM haven’t been financially impacted.
Here at home, the lawyers of the firm are heading in different directions. Senior employees have been subject to lateral hires (hired to other firms to do the same job as before), and some of the lawyers are to be taken on by the Chinese branch of the firm.
To make things worse, the firm have announced a pay freeze for 100 of their staff and have also not figured out what to do with all their trainees!
With over 40 of KWM partners leaving in the last 2 months of 2016, it’s fair to say that the firm is in bad shape. A ‘lack of strategic direction’ coupled with ‘poor governance’ are the main reasons given for their downfall. KWM is a perfect example of the problems with the ‘bigger is better’ direction that some law firms take. The Swiss Verein structure allowed them to all operate under one mask on their balance sheet but it’s been made clear that the inner workings of the firm was far from united.
Article written by Idin S.
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