Law Firms

Why are so many K&L Gates partners leaving? It's partly due to management autocracy, some say

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Good financial news wasn’t enough to keep 30 partners at K&L Gates.

K&L Gates announced last month that it is reaping a $210 million contingency fee as a result of a $750 million patent settlement, the Am Law Daily (sub. req.) reports. Yet 30 partners left the law firm in the next two weeks.

The reason wasn’t due to the firm’s immediate financial situation, anonymous sources told the Am Law Daily and Law360 (sub. req.) in a story summarized by Above the Law. Both articles cited frustrations regarding management, or, in the words of Law360, concerns that “the firm’s management structure creates an autocracy.” One source complained to Law360 that the firm is “run like a dictatorship.”

Among those leaving was a “highly profitable” practice group of 15 partners and 17 other lawyers that joined Mayer Brown’s financial services regulatory and enforcement practice, the Am Law Daily says. The group included Laurence Platt, a former management committee member said to have a $30 million book of business, the article says.

Four partners are going to Morgan, Lewis & Bockius and are expected to bring other lawyers with them. Four other partners are moving to Stradley Ronon Stevens & Young.

K&L Gates has no debt, and the big contingency fee award “is bound to boost partner profits by a substantial margin this year,” the Am Law Daily says. Despite the good news, people “have decided to leave anyway,” one former partner told the Am Law Daily.

The firm is run by a 75-member management committee that, according to Law360 sources, is mostly made up of lawyers without big books of business who don’t disagree with the executive committee and firm chairman Peter Kalis.

Former partners who spoke with the Am Law Daily also said they were concerned by the firm’s large administrative and real-estate overhead, and a lack of growth in partner profits by the law firm. Some also voiced disapproval of the large capital contributions required from partners that can run as high as 60 percent of annual compensation.

Peter Kalis disagreed with the complaints in an interview with Law360. He said the criticism is unfair and the firm goes to great lengths to give partners a voice. Kalis said some complaints stem from some partners who don’t fit in with firm culture. He also recognized that some partners want to go to a firm with lower buy-ins.

“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,” Kalis told Law360.

Kalis also said lawyers on the management committee “are producers and hard workers,” some of whom bill 2,000 to 3,000 hours a year.

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