King & Wood Mallesons (KWM) global revenue dropped 1% to $1.02bn in 2015 as the Hong Kong-headquartered firm unveiled a new global strategy to see it through to 2020.
Despite rapid growth in China, where the firm made 35% of its revenue last year, the firm suffered a 1% drop on the $1.04bn it generated in 2014 due to volatile currency movements in its two major markets, Australia and China. KWM said its global turnover would have been up by 8% to $1.13bn on constant currency basis, citing a 17% fall in the Australian dollar against the US dollar in 2015.
Growth accelerated in China last year, largely off the back of extra corporate and capital markets capability through a string of hires that included JPMorgan Chase’s ex-China head Zili Shao, but Europe put in a below-par performance. The Europe, Middle East and Africa (EMEA) division of KWM, which the firm acquired through its merger with City firm SJ Berwin, has been through a period of turmoil with senior exits and William Boss’s early resignation as the region’s managing partner.
Nonetheless, the EMEA arm did benefit from a rise in the number of referrals from the rest of the network, with 104 mandates arriving from China alone.
Across the entire global network, referrals rose by 38% to 11,018 as KWM plots closer financial integration following its landmark Asia merger between Australia’s Mallesons Stephen Jaques and Hong Kong’s King & Wood in 2012.
Having recently had his term as the firm’s global managing partner extended by five years to 2020, Stuart Fuller timed the announcement with a new global strategy designed to push the firm towards full financial integration. Fuller said the firm, currently operating as a Swiss verein with separate profit centres, has ‘set a vision to be in the global elite for the next century’.
Three core strands of this strategy are growth of the firm’s corporate, energy infrastructure and US law capability. Fuller noted that launching a full service offering in the US, possibly through a merger, ‘has been the plan since 2013’ and added the firm is looking at the market with ‘intense scrutiny’.
Fuller said growth of KWM’s capital markets practice was a highlight of 2015 following a roll out of US law capability across the network and he hoped to build on that with further hires. He said that the firm’s instruction last year by South Korea and Canadian province British Columbia on two panda bonds, Renminbi bonds issued by non-Chinese entities, is an example of ‘work that previously would have gone to someone like Linklaters’.
The EMEA business has just begun a practice restructuring, with London the first to roll out a series of merged divisions with the aim of reducing the amount of management layers. The London office, which currently runs 17 practices and profit and loss accounts, will consolidate into three areas. These are corporate, funds and finance; dispute resolution and regulation; and real estate on its own.
Corporate partner Tim Bednall will lead the corporate, funds and finance division, which will also include employment, commerce and technology, restructuring & insolvency, employment and incentives and tax.
Competition specialist, Tom Usher, will lead the dispute resolution and regulation division, which will encompass litigation, arbitration, competition, financial regulation and intellectual property.
Real estate, one of the big winners from the restructuring, will be headed up by William Naunton, who KWM hired from Eversheds at the end of 2014, after convincing him to ditch his plans to launch his own boutique. Naunton recently led the opening of KWM’s Cambridge office to offer low-cost support the real estate practice in the City. The real estate division will encompass construction, real estate, planning & environment and property litigation.
The firm’s EMEA senior partner Stephen Kon told Legal Business that the practice restructuring ‘will bring more client focus as it creates a more flexible workforce that can draw out the firm’s synergies’. The restructuring means that the search for Boss’s replacement has been delayed, with Kon explaining that its wants to allow time for the new management trio ‘to bed down’.
The move follows a slimming down of KWM’s China practice to five divisions last year, and Europe is earmarked for similar re-arrangement. Ramping up its integration efforts, it has also created a raft of new global roles, with the firm seeking to recruit a global chief operating officer and global head of business development. Fuller says the firm’s first global COO will be based in London to ‘distribute the global roles around the firm’.