If King & Wood Mallesons allows its struggling Europe, UK and Middle East (EUME) partnership fail, the firm will also have to face hurting its chances of merging with an American firm to complete its global footprint.
“It would cause immeasurable harm to the global ambitions of KWM to let Europe fail,” an unnamed source told
The Lawyer.
The comment comes as EUME KWM partners have until Monday, 21 November, to agree to several conditions, particularly to a 12-month lock-in with the firm, for the Chinese partnership to prop up the beleaguered EU arm.
Legal Business reported earlier this month that the firm has been in talks for a possible merger with US BigLaw Morgan Lewis & Bockius. Stuart Fuller, who’s stepping down from the global managing partner post later this year to return to fee-earning in Sydney, is said to have been aggressively pursuing a US merger to solidify the firm’s global footprint.
According to
The Lawyer, KWM’s China operation will provide £14 million (about $23.24 million) in assistance to meet obligations and pay rents and taxes due in January if the 130 EUME KWM partners agree to be locked to the firm for a year.
Meanwhile,
Legal Week said that the Europe partners will also have to agree to contribute £14 million to the firm aside from agreeing to the lock-in.
The firm’s EUME bosses – managing partner Tim Bednall and senior partner Michael Cziesla – went to the east earlier this month to discuss how the firm’s operations in China and Australia could help their EUME counterparts. The three operations with independent profit pools are organised under the KWM Swiss verein umbrella.
The EUME arm is reportedly £35 million (about $58.1 million) in debt, after it was revealed in a London partner meeting that the firm has incurred an additional £10 million (about $16.6 million) in obligations. Financial and legal advisers Grant Thornton, AlixPartners and CMS Cameron McKenna were also present at the meeting, reported
The Lawyer.
According to one of the publication’s sources, the Chinese partnership “has enough financial resources to front the money” but they want the remaining Europe partners to agree to be locked in.
The EUME business, formed largely from the legacy SJ Berwin business, has had to cancel a last-ditch capital call of about £14 million after a flurry of partner exits in London culminating in the departure of three high-profile partners. A lock in would stabilise the EUME arm to ensure a smoother recovery.
Related stories:
KWM reported to be in merger talks as another team exits
European KWM partnership gets bailout from China and Australia – strings attached
KWM global managing partner to return to fee-earning
