Biglaw, Lateral Moves, Partner Issues

Why Are So Many Partners Walking Out The K&L Gates?

Peter "The King" Kalis breaks his silence; what does he have to say?

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woman running and try to escape from closing gates conceptWho: partners. What: leaving. Where: K&L Gates. When: now.

This brings us to the fifth of the Five Ws: why?

We’ve had hints in our prior coverage, and they get expanded on in this latest report from Law360:

K&L Gates LLP’s stream of partner departures is being driven by concerns that the firm’s management structure creates an autocracy that is unable to address partners’ anxieties about the firm’s financial future, former partners say, a contention the head of the firm slammed in an interview with Law360 on Tuesday, saying the firm takes great pains to give partners a voice.

Oooh, exciting — Peter “The King” Kalis breaks his silence! This is going to be good.

But first, let’s hear from the (not so loyal) opposition — a partner who left the firm, who opened up to Law360:

“I think there is a sense that the present management does not have a long-term vision for the firm. I think there is a sense that it is not responsive to the partners and frankly just doesn’t listen to the partners. And I think there is a sense that without some serious restructuring, the long-term health of the firm is not good,” an ex-partner told Law360, echoing sentiments shared by others.

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The firm’s latest financials weren’t terrible (although note that big drop in equity partners). There are, however, issues relating to the firm’s path forward. As Dan Binstock told Bloomberg BNA, “K&L Gates is a (middle market) firm that is trying to be international with flexible billing rates — does it support globalization? Is there enough demand for that?”

Peter Kalis pushed back against his critics:

[Kalis] called the critiques unfair. He contended that some of the complaints are the result of the firm culture not being a good fit for some, and that he and other firm leaders are focused on leading K&L Gates down the path most partners think is best for the firm.

“With 900 partners and 450 of them being owners of the business, achieving unanimity of viewpoints is not only impossible, but it’s undesirable. It’s a recipe for stagnation. It empowers your weakest link, not the thought leaders,” said Kalis.

Who are the weakest links at K&L Gates? You may recall in one of our prior stories a complaint about “extremely bloated” management ranks at the firm, featuring 70-plus lawyers who don’t bill that much. This concern got reiterated to Law360:

Several sources said that the firm’s “bloated” 75-member management committee is ineffective at taking concerns about the firm’s turnover or financial stability to the executive committee, which includes Kalis and 10 other top leaders. This, in turn, has bred unhappiness among the rank and file, according to sources.

“It’s run like a dictatorship. There is no management response. Any response is coming from the tippy top. There is no conduit to get questions and concerns addressed,” one source said.

The source also alleged that the managing committee is mostly made up of attorneys who don’t have big books of business and who essentially give the green light to Kalis and the executive committee.

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Kalis vigorously disputed these allegations: “That’s a mischaracterization. And it’s an insult to 75 people. They are there for a reason. These are people who are producers and hard workers,” with some of them billing 2,000 to 3,000 hours per year.

He also disputed the claims of major trouble in the Chicago office: “Despite the headlines, Chicago is doing extremely well. It’s [slimmed] down to the folks that really want to be here.”

This brings us to one area where Kalis and his critics actually agree: the firm’s infamously high buy-in, described by one source a few years ago as “astronomical,” is not for everyone. The big capital contributions from partners, which can run as high as 60 percent of a partner’s annual compensation, help the firm avoid debt and maintain strong books, which is why Kalis supports them. But some partners prefer different approaches:

[Some critics say] that for most average-billing partners, it can be very difficult to reap any significant upside when the buy-in is so high. “Accepting the equity partner deal was the worst deal I’ve ever done in my life,” an ex-partner said.

While Kalis stood strong on the firm’s buy-in position, he said he understands why some of the equity partners who have left have gone to firms with either lower buy-ins or guaranteed compensation. “I totally get it. They have other choices out there.”

And he said that he wishes well to those who have decided to leave. “They are all fine lawyers and all fine people. I hope they find the alignment with the new firm that they did not find us.”

That’s very… tame. What have you done with the real Peter Kalis?

P.S. Just kidding! We get that Peter Kalis is large, he contains multitudes, and we have previously discussed the complexity of Kalis in these pages. See, e.g., The Two Faces of K&L Gates.

K&L Gates Losses Fueled By Clashes With Firm Management [Law360]

Earlier: What The K&L Is Going On? More Partners Pass Through The Gates
The Latest Departures Through The K&L Gates
More Departures From The K&L Gates; Do They Matter?
Barbarians At The K&L Gates?
The Two Faces of K&L Gates

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