Four senior London partners quit King & Wood Mallesons amid uncertainty over firm's finances
Troubled firm halts recapitalisation plan to reassess financial situation
October 27, 2016 at 03:18 PM
3 minute read
The original version of this story was published on Law.com
King & Wood Mallesons' European arm has halted its recapitalisation programme after the resignation of a number of senior London partners.
The firm confirmed the resignation of UK investments funds head Michael Halford, private equity partner Jonathan Pittal and corporate partner Andrew Wingfield. Former managing partner Rob Day has also indicated his intention to resign from the beleaguered firm, which has seen a spate of exits during the past 18 months, some of whom left the firm as part of a restructuring of the European, UK and Middle East (EUME) business.
As a result of the financial impact of these high profile exits, the UK arm is halting its recapitalisation programme to work out what its new financing requirements will be. The partner capital call announced earlier this year was intended to bring in more than £14m of capital by the end of this week and draw a line under the repeated delays in partner profit distributions that have plagued the firm for years.
In a statement, a spokesperson said: "In light of these resignations, the firm has paused its recapitalisation programme in EUME (having received commitments for the requested amount of capital) whilst it assesses the financial impact. We anticipate this process will be complete within four weeks."
The statement follows suggestions that the latest exits put the firm's financial stability under threat. One source alleging to be close to the firm, which has debt of £35m, said partners were told at a meeting today (27 October) that the recapitalisation would be suspended as a result of the departures. It is understood that representatives from advisers CMS UK and Grant Thornton were present at the partner meeting.
One ex-partner told Legal Week: "These departures could have an impact on two things – that's four people who won't be contributing to the capital call, but the other thing is I suspect as part of the renegotiation with their financiers there was a business plan, and those partners may have been critical to that. If I was a partner there I would be pretty worried."
Earlier this week, Legal Week reported how new European managing partner Tim Bednall – the former chairman of legacy Australian firm Mallesons Stephen Jaques – is giving himself a year to improve the immediate fortunes of the legacy SJ Berwin business after a bruising 18 months. SJ Berwin was taken over by King & Wood Mallesons in November 2013, but questions have persisted over the integration of the legacy UK practice into the wider firm, which operates as separate partnerships under a Swiss verein structure.
Earlier this week another senior departure emerged, with competition partner Philipp Girardet leaving to join Willkie Farr & Gallagher's London office.
The firm also has recently held elections for its EUME senior partner role, with Germany's Michael Cziesla beating the competition to take the post.
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