Who will be the next leader of K&L Gates? Contenders emerge as Kalis calls time after 20-year tenure
Partners discuss potential successors to longstanding K&L Gates leader
September 07, 2016 at 05:54 AM
6 minute read
Peter Kalis, the longstanding chairman of K&L Gates, has announced that he will step down after 20 years at the head of the firm.
Kalis, who has served five consecutive leadership terms after being appointed as chair in 1997, has steered the firm from a Pittsburgh-based regional player into a global powerhouse with 46 offices spread across five continents.
"In early July, I informed our management committee that I would not be a candidate for another term as head of the firm," Kalis said in a statement. "It has been an honour to serve the only law firm I have called home and I look forward not only to concluding a strong 2016 but also to seeing my successors take the firm to greater heights in the years to come."
The focus will now turn to selecting and grooming a successor who can fill such large shoes, with a single-term chair a distinct possibility, according to one current and four former partners.
Michael Missal, a well-respected enforcement partner and 17-year management committee veteran, was viewed by many as Kalis's natural successor, but he left in April to become inspector general at the US Department of Veteran Affairs.
Attention is now focused on three candidates, according to several insiders: the firm's vice-chair and general counsel, James Segerdahl, in Pittsburgh; long-time management committee member and energy practice area co-head Michael Zanic, also in Pittsburgh; and vice-chair for practice management, Michael Caccese, in Boston.
Others possibly in the running include Craig Budner, a dual management and executive committee member recently named to lead the firm's global integration and strategic growth efforts, and Charles Miller, the well-liked head of the firm's US offices, but neither "has much of a power base", says a former member of management.
The firm declined to comment on prospective candidates. Budner declined to comment and none of the other four potential candidates returned requests for comment by press time. But none of the five are shoo-ins, the current and former partners say.
"I think the vacuum created by Kalis's departure is too deep," explained one recently departed partner. In the interim, the former partner said, the firm will probably look for someone who can hold the course steady. "It would really surprise me if they went and found a 45 or 50-year-old. They don't have enough groomed for top-level management," the former partner added.
Kalis has spearheaded expansion into five continents and opened 40 new offices, most recently in Munich in July. But some partners, including management figures, have become more worried that the many years of expansion and churn have taken a toll on firm culture and financial results. Turnover has been heavy, with 57 partners leaving and 35 newly hired since 1 January. Some former partners also express a growing fatigue with Kalis's energetic leadership style, viewed as charismatic by some and heavy-handed by others.
The firm's 21-member management committee is likely to have known of Kalis's plans since July, when he said he intended to reveal his decision. Ultimately, that committee will elect a successor under the firm's partnership agreement.
The firm "could find someone in Kalis's mould, or the firm could revert to somebody who is a stable hand whom everybody trusts and who will hopefully steady the ship in terms of defections and the up and down numbers", said a fourth departed partner, "until they figure out where they're going". The partner continued: "In light of the way things have gone recently, I feel strongly that they're going to opt for the latter."
A consensus candidate, say several former partners, would be the firm's general counsel Segerdahl, an extremely well-liked insurance coverage partner. Segerdahl, who is in his early 50s, has resolved internal problems to the satisfaction of many and, as the general counsel, he knows the firm's strengths and weaknesses. But he does not have a big book of business, a few noted, and might be best for a single term.
Caccese and Zanic, by contrast, are rainmaking partners in the mould of Kalis, a prolific insurance litigation partner when he ascended to the top role in 1997 at age 47. Caccese, who is about 60, "has successfully managed and grown the investment management practice in a very key office", noted one source. The practice that he built now numbers 145 and is very well regarded, while the Boston office he headed now numbers 113 lawyers. Kalis, who went out of his way to praise Caccese in April in an interview with The American Lawyer, tapped him for a new position last year, spearheading firm-wide efforts to raise productivity.
Zanic, an energy regulatory and disputes expert in his early 50s, would have a longer potential tenure than Caccese. He has long led the Halliburton relationship and is known as a good administrator; as leader of the firm's Pittsburgh office from 2005 to 2011, he oversaw a 30% growth in annual office revenues, according to the firm. But his personality – which two former colleagues call brusque and abrasive – could work against him. "He would have a hard time convincing people that, in the post-Kalis era, he has the diplomatic skills" needed to steady the ship, said one.
Whoever is put forward for election by the management committee, Kalis is likely to play an outsized role in the succession process. "Much is going to depend on who Kalis selects," said another former partner. "He's going to have a big say. I would just think they'd expect leadership from him in that role."
Kalis, via a firm spokesman, declined to discuss the succession process or his decision to step aside. But in an interview with The American Lawyer in early April, Kalis said he would stay centrally involved in the process. "I'd play a more active role in managing the internal consultation for my successor, and managing the firm-wide partner consultation as well," he said. "I think that works out pretty well. You can't do this for 20 years without learning a few things."
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