Why Are K&L Gates Losing Partners?

Why Are K&L Gates Losing Partners? 1

A steady loss of partners from K&L Gates has seen amosrt 100 walking in less than a year, according to ALM Intelligence.

Although 32 new partners were picked up the decrease was almost eight per cent and overall the data shows the firm is down by 56 lawyers across the firm’s office.

The most recent defection was in Australia when nine partners left part of a 28-lawyer group last month, while 17 left in Warsaw, 10 in the company’s home town of Pittsburgh, six in London and five in Boston.

But why?

Put simply, the firm has been seeing financial decline in recent years.

As reported by Law.com, the firm fared considerably better in the other categories of lawyers (counsel and associates) where, overall, the firm didn’t lose many bodies:

Looking at the rest of its lawyer ranks, K&L Gates hired 59 counsel and lost 61 from mid-November 2018 to mid-November 2019, data showed. It did hire more associates than it lost—164 hires compared with 154 departures. The greatest associate hiring was in Singapore, followed by Pittsburgh and Seattle, then Charlotte and Boston—though Pittsburgh, Seattle and Charlotte were also among the top offices for associate defections.

In a statement sent to media, K&L Gates, expressed confidence in their strategic direction, saying:

“As a firm, we are quite pleased with the laterals who have joined us over the last several years. In the aggregate, their practices have been substantially accretive, and they have added in many cases key capability and bench strength across the extensive K&L Gates platform,” the spokesman said in a statement. “While partners depart law firms from time to time for any number of reasons, K&L Gates has continued to gain strength and momentum in accordance with our strategic direction, including through the lateral markets.”

Bad Years

The firm reached its peak complement in 2014 with almost 2000 lawyers.

It lost 100 lawyers from 2015 to 2016 when the firm experienced a net loss of 42 equity partners and 100 associates, and a net gain of 32 nonequity partners and 74 other (nonpartner and non-associate) attorneys.

There was also the departure of 90 partners over the course of seven months in 2015 when then-chairman Peter Kalis and others attributed this to the firm’s efforts to trim unproductive partners from the nonequity ranks in the firm.

And the firm showed a gross revenue decline of seven per cent that year.

In 2016 K&L suffered a number of high profile departures, but also collected a $210 million windfall success fee coming from a $1.5 billion patent infringement judgment.

Declining Revenues

K&L Gates has seen its ranking the Am Law 50 slip more than 20 places in eight years. It was the 16th largest law firm by revenue on the 2011 Am Law 100, but has now slipped to spot 37 in the 2019 ranking.

Even in the years when K&L Gates reported strong gross revenue gains, it wasn’t able to overtake many of its peers. For the 2014 Am Law 100, when gross revenue was up 9 per cent (from 2012 to 2013), it only moved modestly by one place and in 2017 it was the same story. inched ahead one additional place.

Meanwhile, its profit margin suffered, going from 26 per cent in 2010 (which was still the third-smallest profit margin among Am Law 50 firms that year) to 17 per cent in 2017.

Time will tell what happens with K&L Gates as it faces the headwinds of many large and small firms.

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