Timeline to failure: from the first ever Anglo-China law firm merger to administration - how SJ Berwin sank
A look back at the key moments in the three years from the SJB merger to KWM Europe's collapse
January 27, 2017 at 07:16 AM
8 minute read
In November 2013, SJ Berwin – a UK top 20 firm with revenue close to £200m – merged with King & Wood Mallesons (KWM), the product of a 2012 tie-up between China's King & Wood and Australia's Mallesons Stephen Jaques.
At the time, KWM chairman Wang Junfeng and SJ Berwin senior partner Stephen Kon hailed the move, saying it had created "the global law firm for the future".
Just three years on, the legacy SJ Berwin business has collapsed into administration in what represents the UK's largest ever legal failure.
The legacy UK firm had longstanding issues with capitalisation levels and, as a consequence, a history of delaying partner profit distributions. Here though, are the post-merger events that led to the firm's collapse.
2013: SJ Berwin partners approve the merger with KWM, creating a $1bn firm.
2014: The initial post-merger period is relatively uneventful, although management changes and big-name partner departures hint at the upheaval to come.
- 14 March: KWM to close Berlin after review of German offices
- 8 May: Top KWM corporate partner Tim Wright leaves for DLA Piper
- 8 September: KWM opts against US merger in favour of best friends network
- 26 September: Former KWM corporate chief joins ex-merger candidate Proskauer
- 7 October: KWM SJ Berwin elects William Boss as new MP as Rob Day stands down
- 2 December: KWM global M&A head Tim Bednall to relocate to London
2015: A summer partnership review sets the tone for the months ahead, while the longstanding issue of profit payouts at SJ Berwin comes to the fore once more.
- 9 July: KWM set for string of departures as it concludes partnership review
- 21 September: King & Wood Mallesons exits mount as tax partner jumps to K&L Gates
- 19 October: King & Wood Mallesons delays quarterly profit payment to UK partners
- 16 December: KWM restarts profit distribution to partners after five-month delay
January-September 2016: The surprise announcement that Europe managing partner William Boss (pictured) is stepping down after just one year in the role points towards big problems in the legacy SJ Berwin business. And the warning signs continue to mount, with another partnership restructuring, support job cuts and yet more problems with profit payouts.
- 15 January: KWM Europe chief William Boss to step down after just one year
- 20 January: KWM eyes raising capital contributions as part of global strategy review
- 19 February: KWM posts flat global revenue as it slashes practice group numbers
- 21 February: KWM mulls monthly profit distributions as UK payment delays continue
- 23 March: KWM to slash 15% of legacy SJ Berwin partnership alongside support cuts
- 28 March: KWM overhauls profit distribution system following repeated delays
- 4 April: KWM Paris private equity team jumps to Goodwin Procter
- 4 May: KWM exits continue as eight partners leave in London
- 8 May: KWM faces rent hike as City office goes up for sale
- 13 May: KWM delays partner profit distributions again
- 1 June: KWM cuts 37 London support staff
- 18 July: KWM taps salaried partners for capital contributions for first time
- 28 July: KWM partners agree to plough over £14m into the firm
- 11 August: KWM holds off on profit distributions following recapitalisation vote
- 15 August: Barclays tightens lending agreement with KWM
- 5 September: KWM senior partner Kon steps down as firm kicks off dual election
October 2016: Events come to a head as, despite the election of new leadership, the firm is forced to put recapitalisation plans on hold after the resignation of four senior partners, including former managing partner Rob Day (pictured).
- 4 October: KWM elects former Mallesons chair Tim Bednall as European managing partner
- 18 October: KWM elects first non-London European senior partner
- 20 October: KWM sets deadline for 2014-15 profit payouts as firm prepares for £14m capital injection
- 21 October: KWM sues Goodwin and former corporate co-head Lever
- 27 October: Four senior London partners quit KWM amid uncertainty over finances
- 28 October: Proskauer hires KWM partner duo including ex-managing partner Day
November 2016: KWM's China arm swoops in with an offer of financial support, but hopes are dashed once more as partners comprehensively reject the revised recapitalisation plan. As big-billing partners continue to head for the door, attention now turns to the possibility of a rescue merger deal.
- 4 November: KWM's new Europe leaders in talks with China over support for legacy SJ Berwin business
- 10 November: KWM global chief to step down as partners prepare for meeting on firm's finances
- 11 November: KWM Europe offered Asian rescue package conditional on lock-in and £14m capital raising
- 22 November: KWM's Europe arm considers merger options as recapitalisation fails
- 22 November: Fewer than 20% of KWM Europe partners signed up to failed deal
- 25 November: Goodwin returns to KWM for four-partner private equity team
- 29 November: Dentons in talks to take on KWM Europe as Greenberg and DLA circle City teams
December 2016: As merger talks falter and administration looks ever more likely, KWM China begins to put together plans to salvage a pared-down European operation from the remnants of the business. Partners continue to leave in their droves – including former senior partner Stephen Kon (pictured) – and the week before Christmas brings confirmation of the inevitable, as the firm files its first notice of intention to appoint administrators.
- 1 December: KWM's Chinese partnership in the frame to take on parts of firm's European business
- 6 December: Former KWM Europe head joins Addleshaws with real estate trio
- 7 December: Barclays takes greater security over KWM's European assets with second debenture
- 8 December: KWM Europe arm heading towards pre-pack administration
- 9 December: Winston & Strawn enters fray as KWM Europe reviews offers from multiple firms
- 13 December: Dentons bows out of race for KWM EUME business
- 15 December: Former senior partner Kon resigns from KWM Europe as firms circle
- 16 December: Greenberg recruits six-partner KWM London team
- 16 December: DLA to hire six KWM real estate partners
- 20 December: KWM China in talks to take on multiple international offices
- 21 December: Macfarlanes hires KWM competition team including former senior partner Kon
- 22 December: KWM Europe announces intention to appoint administrators
2017: The new year begins with 100 members of staff being put on unpaid leave. Following yet more team exits, salaries not being paid and the filing of a second notice of intention to appoint administrators, KWM Europe officially goes into administration on 17 January, marking the UK's largest ever law firm collapse.
- 4 January: KWM stops paying 100 European staff as administration looms
- 5 January: Baker McKenzie takes seven-strong KWM team including partner duo
- 5 January: Three KWM private equity partners opt for move to Stephenson Harwood
- 6 January: KWM China in advanced talks with City corporate and banking team
- 9 January: Six more KWM partners find new homes at Reed Smith, Mishcon and Simmons
- 10 January: KWM Europe delays administration with second intention of notice to appoint administrators
- 10 January: Barclays refuses salary payments to KWM staff
- 10 January: 'The bank has put us in an impossible situation' – managing partner's email to KWM staff
- 11 January: Former SJ Berwin senior partner Blake exits KWM for O'Melveny
- 11 January: KWM drops lawsuit against ex-partner and Goodwin with deal to take on 26-strong team
- 12 January: Goodwin hires five-lawyer KWM Paris team as London TCs are cancelled
- 12 January: KWM's Cambridge office finds new home at Bircham Dyson Bell
- 12 January: KWM seals deal to retain European presence after administration
- 17 January: End of the road for legacy SJB as KWM Europe files for administration
- 17 January: 'I am very sorry that it has finally come to this' – KWM chief confirms administration
- 19 January: KWM managing partner and CFO to lead team of 50-plus staff staying on for wind-down
- 20 January: KWM China blames European management and partners for collapse
- 20 January: Several hundred KWM staff made redundant as partners return to offices for clean-up
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