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King & Wood Mallesons (KWM) has informed 100 staff and fee-earners in the UK, Europe and Middle East that their pay has been halted as of today (4 January).
The measure has been taken as the firm prepares to go into administration later this month, and contradicts previous messaging to staff that January wages would be paid.
The Lawyer understands the 100 people in question were selected following an informal consultation process to consider the future needs of the business as it is broken up and sold off. The majority of those affected are support staff, some currently on holiday, maternity leave and sick leave, although a small number of lawyers will also have salaries halted.
Staff were handed letters on Tuesday (3 January), the first day back at work after the Christmas period, informing them of the pay freeze.
The Lawyer first revealed late last year KWM had informed staff the firm could not guarantee wage payments after January 2017. The news came at the same time it emerged a potential deal to sell KWM’s EUME LLP to Dentons had failed.
According to KWM’s LLP accounts published in February 2016 the firm had 425 support and business services staff in the 2014/15 financial year.
A spokesperson for the firm said: ““We do not comment on any matter concerning our people, whether individually or collectively, in order to protect their privacy.”
KWM filed its intention to appoint administrators in late December following a failed recapitalisation of its EUME business and several senior exits. Since then groups of partners have departed for both US and UK firms, including former senior partner Stephen Kon, who is joining Macfarlanes alongside three partners.
KWM China is expected to pick up a handful of partners, fee-earners and staff from the firm’s offices in London, Dubai, Spain, Madrid and Italy when the EUME LLP goes into administration later this month.
Among those in talks to stay with the global firm in KWM’s City office is a 10-lawyer disputes team led by international arbitration partner Andrei Yakovlev and litigation partners Dorothy Murray and Darren Roiser. KWM China is also in talks to buy out part of the London corporate and M&A practices.
The firm has also established a new LLP in the last week named KWM Deutschland. It is understood the entity is a move by KWM China to fulfil its regulatory requirements in Europe.
Not all of the firm’s German partners will stay with KWM however. On Tuesday (3 January) it emerged Allen & Overy had hired Frankfurt corporate partner Michiel Huizinga, with further departures expected.
It is not yet known what will happen to KWM’s offices in Belgium and Luxembourg. KWM’s Paris team, which was largely depleted following amass departure to Goodwin Procter earlier this year, is understood to be in talks with another firm.
In total, more than 40 partners left KWM across the UK, Europe and Middle East in the last two months of 2016 as the LLP’s finances reached crisis point and an administration became inevitable. Around 90 partners left the firm in total over 2016.
How the story unfolded:
- 27 Oct: KWM’s recapitalisation scheme stumbles and four stars quit
- 28 Oct: Exclusive: KWM former managing partner Day heads for Proskauer
- 4 Nov: KWM energy team departs for Squire Patton Boggs
- 10 Nov: KWM global boss Fuller steps down
- 11 Nov: KWM China bail-out: Partners have a week to agree to 12-month lock-ins
- 18 Nov: Dewey administrator adviser drafted in on KWM rescue deal
- 22 Nov: KWM China bail out fails and EUME arm moots merger plan
- 7 Dec: Exclusive: Barclays takes extra lawyer of security over KWM assets
- 12 Dec: KWM tells staff it cannot guarantee wage payments after January
- 13 Dec: It’s over: KWM partners told that takeover deals have failed
- 22 Dec: KWM LLP files notice of intention to appoint administrators
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