Legal Business

‘A clear cut case’ – Ex-KWM employees win £1m pay-out from employment tribunal

‘A clear cut case’ – Ex-KWM employees win £1m pay-out from employment tribunal

After being on the verge of accepting a six-figure sum last month, a group of 288 former King & Wood Mallesons (KWM) employees have been awarded over £1m by an employment tribunal to settle claims from the collapse of the firm’s European arm.

The ex-staffers received the compensation award this week (20 September) following the failure of KWM to properly engage in a formal redundancy consultation during its much-publicised European insolvency.

The pay-out represents a significant uplift in compensation for the claimant group, which had considered accepting a near-£800,000 settlement offer from the firm’s administrators made in August. Quantuma, KWM’s administrators, made the offer after conceding that a ‘technical breach’ had taken place during the required UK redundancy consultation period. The earlier proposed settlement constituted eight weeks’ pay, capped at £479 per week per person.

The claimants, however, rejected the settlement, taking the case to employment tribunal, which handed down its judgment this week.

The claimants were represented by Wokingham law firm Herrington Carmichael, with a team led by partner and head of employment Alistair McArthur. In a statement, McArthur thanked Quantuma ‘for being amenable and helpful throughout the process’ and described the case as ‘a very unfortunate situation for all involved’. McArthur went on to label the claim as ‘a clear cut legal case’ and stated the firm was ‘confident that the former employees had a strong case for compensation through the employment tribunal’.

The pay-out is the latest episode in the lengthy saga of KWM’s European collapse. The firm filed for administration in December 2016 with debts of over £30m after senior figures had left the firm in droves. It was the largest failure to ever hit the European legal market. The practice was largely made up of the legacy SJ Berwin practice, which merged with Asia-Pacific giant KWM in 2013. Despite the union, the firm remained structured as individual partnerships leaving the rest of KWM unaffected by the insolvency.

A report filed earlier this month by Quantuma at Companies House revealed the costs associated with the firm’s European administration, including CMS Cameron McKenna receiving a total of £826,740 for ‘assistance in attending to the complex legal issues which have arisen both in the pre and post-administration periods.’

tom.baker@legalease.co.uk

Click here for the definitive account of the collapse of KWM (£)

Legal Business

KWM insolvency report reveals cost of everything from artwork to legal fees as ex-staff agree payout

KWM insolvency report reveals cost of everything from artwork to legal fees as ex-staff agree payout

Eight months on and the King & Wood Mallesons (KWM) saga continues, with a progress report filed this week revealing the cost of the firm’s European administration amid confirmation that ex-staff are set to receive a payout.

According to a report filed by administrator Quantuma at Companies House on 5 September, CMS Cameron McKenna received a total of £826,740 for ‘assistance in attending to the complex legal issues which have arisen both in the pre and post administration periods’. This figure also includes costs of £235,544 incurred by the firm in dealing with KWM’s German offices while additional legal fees of £186,318 go to Pinsent Masons for advising the administrators as well as £70,000 to iLaw Legal Services.

The report also shows the amount paid to Barclays, KWM’s main secured creditor. The report states: ‘The joint administrators instructed their legal advisers to conduct a review of the bank’s security… valued at £16,557,222.’ A total of £4,473,767 has been paid to Barclays so far in three separate instalments.

Included by Quantuma are the costs owed by numerous law firms including KWM 2.0, DLA Piper and Baker McKenzie. KWM 2.0 paid £75,000 for numerous assets in January – however, the firm still owes £881,250. DLA Piper still owes £521,000 after making a payment of £419,000 in May this year while Baker McKenzie made a full payment of £103,603 in January.

Additionally the report lists numerous miscellaneous costs including everything from artwork to mobile phones. It is revealed that the firm’s mobile phones have been sold for a total of £5,780; £4,000 has been paid to Hector Patterson & Co in regards to the valuation of KWM’s artwork displayed throughout their premises and a total of £26,515 was paid to Clear it Solutions for clearance of KWM’s offices.

Tim Bednall, KWM’s former managing partner, was paid £25,380 to be ‘instructed as the joint administrators’ agent in order to advise and assist’ due to his knowledge of the firm’s clients. This was agreed on a fixed-fee basis.

News of the administration’s progress comes as KWM’s staff have accepted a financial settlement offered by Quantuma after conceding a ‘technical breach’ occurred in the required UK redundancy consolation period.

The proposed settlement constitutes eight weeks’ pay, capped at £479 per week per person. An email sent to around 200 staff from the group’s solicitors Herrington Carmichael said that following discussions with the Redundancy Payment Office, the firm would apply to the Employment Tribunal for the judgement by consent agreed between the parties. The email added: ‘We were delighted to receive full acceptance of the proposal from all claimants and, therefore, have now made the required application.’

This week’s news is the latest update in the acrimonious collapse of the European practice of KWM, which is formed by the legacy SJ Berwin. The SJ Berwin business, which remained a separate partnership after combining with KWM in 2013, collapsed in December 2016 with debts of over £30m after a string of senior departures. It was the largest failure to ever hit Europe’s legal market.

kathryn.mccann@legalease.co.uk

Legal Business

KWM Germany plans to double Chinese-German deals capability by mid-2018 in focus shift

KWM Germany plans to double Chinese-German deals capability by mid-2018 in focus shift

Asia-headquartered firm King & Wood Mallesons (KWM) has made a strategic commitment to its German practice with the hire of two new partners in Frankfurt to strengthen its Sino-German deals capability, following the collapse of its European arm in January.

With four corporate partners in Germany, all based in its Frankfurt office, the firm told Legal Business that it plans to grow around 50% in the region by mid-2018.

‘We want to implement our global strategy, and due to the activity in Germany we have decided to enlarge our corporate finance element here,’ said corporate partner Christian Cornett.

According to Cornett, KWM’s German practice is currently engaged in 40% local German work and 60% international transactions work, stemming from the Asia-Pacific region.

‘Germany currently has the strongest economy in Europe, so our international network naturally has a strong focus on Germany now,’ he added.

Corporate partners Hui Zhao and Daniel Ehret will join the firm on 1 October bringing additional corporate finance expertise including clients involved in Sino-German investments.

Cornett said that the firm had approached ‘a few select people’ to join the German practice, with Zhao and Ehret as the first to join, with two or three more due to come on board by the end of the year.

Based in Frankfurt, Zhao joins from Noerr and is a corporate lawyer specialising in Chinese M&A in Germany and worked to develop Noerr’s China practice over the last decade. Ehret is a finance and restructuring specialist who joined from Latham & Watkins. He has represented investors, lenders and distressed companies on restructurings.

‘The strategy is to build two strong pillars in this practice – one international platform servicing work from our Asia Pacific network, and the other to have a strong local German practice. With additional private equity (PE) capability we can now build these,’ Frankfurt Corporate partner Sandra Link said.

‘Outbound investment of Chinese investors has increased in general based on various factors including scarcity of attractive domestic assets in China and a supportive financing and political environment,’ she added.

‘Chinese investors are in particular interested in technology and industrial know-how and “Made in Germany” has a high reputation,’ Link said.

Link cited an rise in Chinese M&A transactions in Germany over the past five years, counting 39 in 2015 and 68 in 2016.

In 2016, in KWM Germany’s mandates included advising Techcent Entrepreneur Family Deng on its joint venture with ALBA Group, and Chinese fertilizer company Kingenta Ecological Engineering Group on its acquisition of Compo Consumer Business from PE investor Triton.

After the firm’s European practice broke down over the last year, EUME senior partner Michael Cziesla, based in Frankfurt, joined McDermott Will & Emery earlier this year. Cziesla had only been elected senior partner of the firm in October last year.

In January, DLA Piper also recruited KWM Germany real estate head Lars Reubekeul and real estate partner Florian Biesalski, along with their teams, to DLA’s Frankfurt and Munich offices.

When Reed Smith confirmed the hire of 50 KWM lawyers across Europe, adding 10% to its European headcount, it also hired two partners in Germany. These were competition and antitrust partner Tilman Siebert in Munich and litigation partner Francis Bellen in Frankfurt.

Georgiana.tudor@legalease.co.uk

Legal Business

Ex-KWM real estate duo exits Ashurst for Fried Frank after one year

Ex-KWM real estate duo exits Ashurst for Fried Frank after one year

Real estate duo Darren Rogers and Patrick Williams has resigned from Ashurst to join Fried, Frank, Harris, Shriver & Jacobson’s London office just over a year after joining the City firm from King & Wood Mallesons (KWM).

Rogers was made up to partner at legacy SJ Berwin in 2010, where he started as an associate 16 years ago. Ashurst announced he was set to join the real estate team as a partner in April last year together with Williams, who was promoted to partner in 2015 when KWM made up only two London lawyers as part of a 36-strong round.

The pair counts British Land as a longstanding client, alongside Invesco Real Estate, CBRE Global Investors and Battersea Power Station Development Company among others.

The hire is the first Fried Frank’s London office has made for over a year, with the US firm bringing in Mayer Brown co-head of restructuring Ashley Katz in February 2016.

Fried Frank’s corporate real estate co-head Fiona Kelly said Rogers and Williams ‘have a strong reputation, both within the UK and internationally, for providing preeminent counsel in this sector.’

She added that the duo’s broad experience in commercial real estate law and corporate law would add strength to the firm’s clients ‘in all facets of high value commercial real estate investment’.

An Ashurst spokesperson said the real estate group, which has 21 London based partners, will continue to focus on high end work: ‘We do not anticipate these departures as having any significant impact on the real estate practice and they are likely to increase our profitability.’

Earlier this June, Ashurst lost a four-partner team from its Paris arm to Gibson, Dunn & Crutcher, which came just four months after it emerged a group of five Ashurst corporate partners in Paris to Freshfields, collectively responsible for a book of business worth £8m.

The firm’s London head of pensions Marcus Fink also departed to PwC earlier this year.

Conversely, in March Ashurst launched a European high-yield offering, bringing in Allen & Overy senior associate Tamer Bahgat, who was made up to partner at Ashurst, and Linklaters counsel Natalia Sokolova.

The firm has also hired Linklaters leveraged finance senior associate Pierre Roux and PwC tax director Emmanuelle Pontnau-Faure in Paris, who will both be made up to partner in the move.

In March, Fried Frank confirmed London managing partner and City veteran Graham White would leave private practice at the end of May. Asset management partner Mark Mifsud stepped into the role following his departure.

Georgiana.tudor@legalease.co.uk and Madeleine.farman@legalease.co.uk

 

Legal Business

‘Cementing KWM’: Australian chief exec Kench elected as new global managing partner

‘Cementing KWM’: Australian chief exec Kench elected as new global managing partner

After going months without a global managing partner, King & Wood Mallesons (KWM) has appointed Australia chief executive partner Sue Kench to the role, effective 1 June 2017.

Kench succeeds Stuart Fuller, who stepped down from the role at the end of 2016 during the collapse of the firm’s European arm, and has since returned to full time practice.

Kench has been chief executive partner in Australia since 2013. She is also currently a member of the firm’s global executive committee and the international management committee. In her new role, she will work with recently-appointed global chairman Wang Jungfeng.

Kench joined legacy Mallesons in 1996 and held leadership positions such as managing partner of the real estate and construction practice, sector lead in real estate and construction and board member.

KWM said in a release that Kench will lead the firm’s global strategy and operations ‘with a focus on cementing KWM as leading international firm in Asia’.

Speaking to Legal Business, Kench said: ‘The key for us really is to bring the firm closer together, integrate the businesses better and harness the opportunities that are out there for us. When coming into Asia, we should be the first firm that people recognise. And if Asia clients want work done outside the region, our other capabilities should be capturing that work as well.’

‘We will have a stronger focus on all of the component parts that make up integration, and what work should we be attracting beyond Australia and China. There’s no other firm like us in the world. That’s the differentiator, and we have to use that to the maximum.’

The firm has also announced the appointment of Rupert Li as global chief operating officer (COO) and Berkeley Cox as Kench’s replacement, as chief executive partner in Australia. Li was international partner within China and Hong Kong, and is also a current member of the international management committee and the China management committee. Cox was deputy managing partner for Australia.

Last month Legal Business revealed KWM Europe partners who took out personal loans from Barclays for their capital contributions had received payment ultimatums. Former KWM staff have also come together earlier this year to take legal action over the way redundancies were handled, as the administrators’ investigation into the collapse of the legacy SJ Berwin business.

georgiana.tudor@legalease.co.uk

Read more: ‘Shattered – The final days of ‘SJ Berwin’

Legal Business

News in brief – May 2017

News in brief – May 2017

PINSENTS LAUNCHES IN MADRID

Pinsent Masons has launched in Madrid, the firm’s third international office in less than a year. The new office comprises six partners, four from local Madrid firm Ramón y Cajal Abogados. The firm has also hired from contractor OHL and promoted a Pinsents associate to partner.

Legal Business

Barclays deadline looms for KWM partners who took personal loans for capital

Barclays deadline looms for KWM partners who took personal loans for capital

Former King & Wood Mallesons (KWM) partners who took out personal loans from Barclays for their capital contributions have received payment ultimatums as the bank is demanding repayment by the end of April.

Lawyers often take out loans for working capital at law firms when they are elevated to partners. As at 30 April 2016 KWM comprised of 163 partners, and according to one former partner, at least 50 of these owed six-figure sums to Barclays, which is also the largest creditor of the now defunct European arm.

‘The point scale was 20 to 60 – by the time you got to 30 points you’d be over £160,000 debt. I estimate Barclays will recover at least £8m from these loans,’ he said.

The bank started sending letters asking for the money back in February after legacy SJ Berwin went into administration, but partners argue they have not received any response to their emails in February. Instead, the bank followed with a demand for repayment, asking partners to avoid default notices and pay by the end of April.

‘The guy who sent out the letters initially has since been ill and nobody has been getting any responses,’ a former partner said.

‘Barclays cocked it up internally with these loans, and did not respond to our letters asking for payment schedules. Instead they sent a demand straight away. Not to mention they were incompetent enough to pump tens of millions into a firm who clearly couldn’t pay it back’ says another former partner who owes a six-figure sum.

However, it is understood that since the second set of letters demanding repayment arrived in March, the bank has had someone in place to respond to communication from former partners.

Another former partner added: ‘This is quite personal for me. I understand they’re asking for it rationally but [Barclays] should have known back then that the finances were not what they appeared to be, and they were still lending people like me money to put into the business.’

Other former partners are more pragmatic about the situation, with one adding: ‘These are regular business loans that happen in all law firms. I don’t want to undermine the positions of the others but they don’t have a leg to stand on. However most partners will have taken out these loans, they were so easy to get.’

Other events some junior partners have criticised are the billing practices in the last few months of 2016, as the legacy SJ Berwin practice was collapsing.

‘The billing practices going on towards the end of last year were very dodgy. People stockpiled WIP, they got their new firms to buy it and made a shedload of cash and used that to help them repay their loans – no skin off their nose,’ one said.

‘When people were moving it was well known that some would move to protect those loans,’ another added.

Some partners have looked into challenging the loans using the Consumer Credit Act, however previous cases around the collapse of Dewey & LeBoeuf or Halliwells suggest a successful challenge is unlikely.

In both cases, Barclays was involved. With Dewey, the bank had $56m worth of outstanding loans to 220 partners when the firm collapsed in 2012. In 2015 the bank won a High Court lawsuit in a long running battle to secure repayment of a $540,000 loan from former Dewey partner Londell McMillan. The case was closely watched by the industry.

As is typical with any insolvency, KWM administrators Andrew Hosking and Sean Bucknall of Quantuma are investigating all elements of the collapse of the legacy practice. This includes management, how the firm’s finances were run and other circumstances that led to the failure. In January when they released their first report, the administrators concluded partner exits had ‘accelerated the ultimate demise’ of the firm.

georgiana.tudor@legalease.co.uk

Read more in: ‘Shattered – The final days of ‘SJ Berwin’

Legal Business

Unsecured creditors to lose almost £34m as KWM Europe admin continues

Unsecured creditors to lose almost  £34m as KWM Europe admin continues

KWM China buys reassurance by taking SJ Berwin name

An initial report into the financial affairs of King & Wood Mallesons’ (KWM) now defunct European arm estimates that unsecured creditors are set to lose £33.5m as the firm’s inner financial workings begin to surface.

Legal Business

Scaling back: KWM pulls out of Riyadh in latest loss for global giant

Scaling back: KWM pulls out of Riyadh in latest loss for global giant

King & Wood Mallesons (KWM) confirmed today (3 April) that it is closing its Riyadh office, one of two bases the firm has in the Middle East.

Legacy SJ Berwin opened its only Saudi base in 2014, following its merger with Sino-Australian giant KWM, through an association with a local law firm led by corporate lawyer Majed Almarshad. As well as Almarshad, the firm had one other partner in the office, Glenn Lovell.

In a statement, KWM said following its ‘relaunch of offices’ in Europe and the Middle East earlier this year, the firm and the Law Office of Majed Almarshad have reached a mutual agreement to exit from their arrangement. KWM’s Middle Eastern presence continues through its Dubai office, which is currently home to four partners including former senior partner contender Tim Taylor QC. Dispute resolution partner Andrei Yakovlev is also based both in London and Dubai.

The spokesperson said: ‘KWM China remains committed to its Dubai office, which will allow KWM to continue to service its clients in the Middle East. The Dubai office will continue to support clients in dispute resolution, corporate and construction matters.’

‘However as the agreement to exit the arrangement is still being finalised, we cannot comment on any individual partner, fee earner or staff member at this stage,’ they added.

Riyadh was one of the bases retained by KWM China following the collapse of its European entity, legacy SJ Berwin, which went into administration earlier this year.

This closure also comes as KWM halved its US partnership last month, after losing New York-based international funds partner Parik Dasgupta to Reed Smith.

An initial administrators’ report into KWM’s now defunct European arm, released last month, states that unsecured creditors are expected to lose £33.5m as Quantuma continues to sift through the affairs of legacy SJ Berwin.

georgiana.tudor@legalease.co.uk

Read more in: ‘Shattered – The final days of ‘SJ Berwin’

 

Legal Business

KWM New York co-founder Dasgupta quits for Reed Smith leaving one partner in legacy SJ Berwin outpost

KWM New York co-founder Dasgupta quits for Reed Smith leaving one partner in legacy SJ Berwin outpost

Reed Smith confirmed today (21 March) King & Wood Mallesons (KWM) New York-based international funds partner Parik Dasgupta has joined the firm’s corporate practice.

Dasgupta (pictured) launched KWM’s US funds practice and was one of two co-founding partners based in the firm’s New York office. The office was until recently part of the collapsed European arm and has now been taken on by the new European entity dubbed KWM 2.0, which is funded by KWM’s Chinese verein.

Dasgupta’s exit leaves George Pinkham the only partner in the New York base.

Before KWM, Dasgupta was an associate at Mayer Brown, Kirkland & Ellis and Baker & McKenzie. He focuses on the commercial, legal and regulatory issues associated with private equity and venture capital fund formation. His key clients include PAI Partners, Triton, Macquarie, Astorg, Antin, First State, Capital Dynamics and UBS. Dasgupta was also a member of the firm’s India practice.

Matt Petersen, co-chair of Reed Smith’s global corporate group said: ‘Parik’s practice is a great fit for our corporate group and, in particular, our strong and growing funds practice. His high-end fund formation experience in connection with private equity and venture capital funds is a perfect addition to our existing practice.’

He added: ‘Parik also worked closely with many of the KWM attorneys who joined us earlier this year in Europe. All of these connections will be invaluable to us as we further grow our fund capabilities locally, nationally and globally,’ he added.

The addition of Dasgupta follows Reed Smith’s recent hire of 50 former KWM lawyers, including 17 partners who joined its London, Munich, Frankfurt and Paris offices in January.

Earlier this month, Reed Smith also took on three partners from Winston & Strawn, part of an eight-lawyer team in Paris.

However the firm’s global revenues fell for the second consecutive year in 2016, by 4% to $1.08bn from $1.12bn, which the firm said was the result of strategically managing down headcount by 81 lawyers over the year.

georgiana.tudor@legalease.co.uk

Read more on King & Wood Mallesons in: ‘Shattered – The final days of ‘SJ Berwin’