K&L Gates After Peter Kalis’s Reign

As we mentioned yesterday, the longtime chair and managing partner of K&L Gates, Peter Kalis, will not be running for re-election after his term ends in February 2017. His departure from the top job will mark the end of an era for the firm: Kalis has led the firm for almost two decades, ever since becoming chair in 1997 at age 47.

In our story about his departure, we chronicled Kalis’s triumphs as a leader. Kalis — a Rhodes Scholar, Yale Law School graduate, and Supreme Court clerk — is no stranger to success, and he certainly succeeded in growing K&L Gates. During his tenure, the somewhat provincial Pittsburgh firm evolved into a global giant, through mergers, acquisitions, and lateral hiring. Today it boasts more than $1 billion in annual revenue, generated by almost 2,000 lawyers spread across 46 offices on five continents.

But that expansion came at a cost, some claim. Critics of Kalis — one of Biglaw’s most powerful leaders, nicknamed “The King” by some for his strong management style — argue that culture and collegiality at K&L have suffered under his watch. For some past critiques of the Kalis regime at K&L Gates, see here (“management is extremely bloated”) and here (“it’s run like a dictatorship”).

Some of Kalis’s critics ended up leaving the firm, resulting in the departures of some major rainmakers. As noted by Big Law Business:

[Earlier this year, t]he firm saw partners depart for Mayer Brown, Morgan Lewis & Bockius, and Venable, and internal controversy festered over payments to lateral partner hires. Perhaps most notably, Jeff Randall, an intellectual property partner who joined the firm from Paul Hastings in 2015, was brought on to earn roughly $5 million, according to two sources with knowledge of the matter.

Another high-profile lateral the firm brought on board — John Pierce, who joined from Latham & Watkins in January — left the firm after five months for an in-house position at the venture capital fund SGVC. He was a global practice area leader for litigation.

Given the powerful central management at K&L Gates, the question of Kalis’s successor looms large for the firm’s future. Julie Triedman handicaps the field over at Law.com:

Attention is now focused on three candidates, say several insiders: the firm’s vice chair and general counsel, James Segerdahl, in Pittsburgh; longtime management committee member and energy practice area co-head Michael Zanic, also in Pittsburgh; and vice chair for practice management Michael Caccese, in Boston.

Others possibly in the running include Craig Budner, a dual management and executive committee member recently named to lead the firm’s global integration and strategic growth efforts, and R. Charles Miller, the well-liked head of the firm’s U.S. offices, but neither “has much of a power base,” says a former member of management.

Part of the challenge in finding a Kalis successor, according to one former partner, is that “the vacuum created by Kalis’s departure is too deep.” There are two possible paths, per Triedman:

The firm “could find someone in Kalis’ mold, or the firm could revert to somebody who is a stable hand whom everybody trusts and who will hopefully steady the ship in terms of defections and the up and down numbers,” said a fourth departed partner, “until they figure out where they’re going. In light of the way things have gone recently, I feel strongly that they’re going to opt for the latter.”

A consensus candidate, say several former partners, would be the firm’s general counsel [James] Segerdahl, an extremely well-liked insurance coverage partner. Segerdahl, who is in his early 50s, has “resolved internal problems to the satisfaction of many, and as the general counsel, he knows the firm’s strengths and weaknesses. And he’s a Pittsburgh guy, which would give many people comfort,” said one, echoed by the others. But he doesn’t have a big book of business, a few noted, and might be best for a single term.

But should lack of a big book really be a problem, especially for a firm as large, diversified, and dispersed as K&L Gates? As managing partner Bruce Stachenfeld recently wrote in our pages:

I would avoid picking the biggest rainmaker [to lead the firm after the charismatic head departs] – this is painfully stupid. The rainmaker most likely should be out making rain and not running the firm. Plus, rainmaking skills are not necessarily the skills needed to run a law firm.

But the temptation to make the rainmaker the king (or queen) is hard to resist, because of a simple Biglaw equation that Stachenfeld also notes: “Rain = power.”

P.S. It’s not as problematic to make a rainmaker the head of the firm if you have a relatively small, fairly unified firm that doesn’t require much management. So I wouldn’t worry too much about, say, Faiza Saeed taking over at Cravath, which has just a few hundred lawyers (not thousands), two offices (New York and a small London outpost), and a flat, democratic partnership structure. The same goes for my former firm, Wachtell Lipton, which is even smaller than Cravath and has just one office. Wachtell has long been run by rainmakers — Marty Lipton and Herb Wachtell in the early days, Ed Herlihy and Dan Neff today — and it has done just fine for itself. But K&L Gates is a different animal, and running such a large and global firm is a full-time job that leaves little to no time for maintaining a practice.

Who Will Be the Next Chair of K&L Gates? [Law.com]
Peter Kalis, Chair of K&L Gates, to Step Down [Big Law Business]
Longtime K&L Gates chair Peter Kalis to step down in 2017 [ABA Journal]

Earlier: Peter Kalis Won’t Run For Re-Election As Chair Of K&L Gates
Reinventing The Law Business: Succession Planning — My Top 15 Recommendations (Items 1-7)
Cravath Elects Its Next Presiding Partner, M&A Star Faiza Saeed

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David Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at [email protected].