Summary: K&L Gates has suffered a major hit with the departure of dozens of its partners this year.
Concern about K&L Gates’ ability to keep talent, as well as its flat profits, are two of several reasons that more than 80 partners have departed the firm since the beginning of 2015. Many of those who left were seen as vital to the future success of the firm, according to Law360.
These included rising partners in corporate and financial practices, as well as high-profile veterans, such as Michael Bettinger.
Greg Jackson, Danny Ashby, and Steve Korotash transferred to the white-collar group of Morgan Lewis & Bockius.
One individual who left said, “When you see people of this kind of vintage leaving, people who are not on the back nine of their careers, that is a cause for concern.”
Many also noted that the firm’s biggest merger, a deal with Middletons just two years ago, failed to be profitable. One partner said, “There were a lot of people who thought there wasn’t a very deliberative process around the decision, and a lot of people wondering how it would help us. And when it didn’t go well, there were a lot of people who thought it was a bridge too far.”
Thomas Poletti left the firm last year.
According to firm numbers, its 2014 financial performance was flat, with a drop by 1.2 percent in gross revenue due to currency fluctuations.
Revenue per full-equity partner dropped a bit to $829,078. Cash and cash equivalents dropped by around 16 percent to $1.75 billion.
Net income for equity partners dropped for the second year in a row to 25.6 percent. In 2012, the number was 30 percent.
The equity headcount also dropped from 272 to 255, with partial equity partners dropping from 540 to 483.
In 2013, the firm opened a Delaware office.
After the merger with Middletons, the firm took in over $100 million in additional revenue from the Asia-Pacific area in 2013, but returns dropped last year by around 4 percent. Revenue in the Americas also declined last year.
This year, the firm has added over 20 partners. This includes a six-partner financial services, intellectual property, and antitrust team from Nelson Mullins in Boston, as well as hires in Frankfurt, London, and Hong Kong.
Read about the Middletons merger here.
Michael Allen, a principal at Lateral Link, a recruiting firm, said that the departures have hurt the firm’s bottom line. He said, “You can’t cut the fat without some muscle, and that will cause a reduction in profits to be distributed to partners.”
Source: Law360
Photo credit: indyweek.com, TheRecorder.com (Bettinger), Morgan Lewis Bockius (Ashby, Jackson, Korotash)