King & Wood Mallesons (KWM) has not lost its foothold in Europe – yet. As the legacy SJ Berwin business heads towards administration, the firm has carved out a deal to retain 30-40 partners across Europe. However, will the new business – already dubbed KWM 2.0 – be able to regain client trust? And will it get enough support from China to survive in the squeezed mid-tier legal market?

KWM's Europe, UK and Middle East (EUME) arm is expected to file for administration imminently after months of turmoil, including rising debt levels, a failed recapitalisation plan and a stream of high profile partner exits, culminating in the firm's key lender, Barclays, refusing staff salary payments earlier this month.

Against this chaotic backdrop, KWM has managed to finalise a deal with a group of partners to retain a limited operation across Europe. While full details of the new business remain unconfirmed, it appears that the firm's China arm has managed to secure a presence on the ground in a number of Europe's key business centres.

So far, Legal Week has confirmed that KWM will keep a three-partner team in Frankfurt and a larger operation in London, where it has held talks with City banking, litigation and corporate partners. Slimmed-down operations in other European cities where KWM EUME already has a presence are also being considered.

However, many in the market are not optimistic about the prospects for a pared-back European operation, given the damage the brand has sustained in Europe.

"The brand has taken very severe damage. The question is: how can you attract further lawyers and further clients to this firm?" says one former Germany partner. A second ex-partner adds: "I don't understand how anyone could think they could trade under this brand as a lawyer in Europe. Will clients trust them?"

Another former Germany partner suggests that the business could struggle to attract work beyond referrals from the Chinese business. "For me personally, it was always quite clear that the damage that has been done to the brand in Europe was too severe for me to consider an offer from KWM China. For those who are working on relevant matters with China, it does make sense to stay, but it will not work if they only rely on Chinese matters. I wish them all the best, but it will be very difficult."

One former SJ Berwin lawyer adds: "The China deal is for two groups: those who are remaining because their practices have good synergies with Asia or Australia, and those who have not found jobs elsewhere. My worry is it's got to be a short-term solution. The chances are it's not going to grow – it is going to be hard to recruit and partners must have plan Bs and Cs."

Uncertainty remains in some of the firm's continental Europe offices, which operate as legally separate entities, such as Spain, France and Italy.

"We are very concerned about what is going on in London," says one KWM Milan partner. "However, we are less concerned about our personal position in Italy. We are certainly speaking with colleagues in China but we don't need a job – we have a job. We need to agree to keep going together and cooperate together, and we are progressing with them."

While in the short term KWM's Chinese leadership may be optimistic about the benefits of retaining a skeleton business in Europe, the firm will need to think very carefully about the message it takes to the market, as one City legal recruiter explains: "The legacy of the SJ Berwin and KWM brands is not strong from a recruitment perspective – there are huge question marks around the message they take to market."

As the ex-SJ Berwin lawyer warns: "There may still be a brand but it all comes down to leadership, management and messaging. Someone needs to be in London spreading the reasons why people should still join KWM."