Kilpatrick mismanagement blamed for London downsize

The executive committee of US firm Kilpatrick Stockton has come under attack for its failed ‘remote management’ of the firm’s London office, following the announcement last week that the team is being “restructured”.

London managing partner Gerald Jeutter entered redundancy negotiations with the majority of staff in the Atlanta-based firm’s 38 fee-earner London office last Monday (19 September), as the firm attempts to realign the office in the image of its US practice. It is expected that the partnership will be slashed from 19 to four by the end of the year.

After a three-month review, the firm’s executive committee has concluded that the UK practice it inherited from the defunct Altheimer & Gray does not fit with the firm’s IP-heavy international business. The firm has some 100 lawyers in the US handling solely IP work.

“We decided to confront market reality head on by building on our core practice areas and foregoing opportunities in areas less central to our strategic goals,” says managing partner Bill Brewster.

The shake-up is understood to have already resulted in the loss of several partners, including arbitration partner Per Runeland, who is moving to SJ Berwin, and property partner Mark Johnstone, who has joined Finers Stephens Innocent. Head of projects Anthony Fine is also hunting for a new firm.

As first revealed on www.thelawyer. com (21 September), the surviving team in the London office will focus mainly on its burgeoning IP practice.

Atlanta-based international head of IP Virginia Taylor has been in London for the last year with a remit to “get London sorted”. She went some way towards doing that last September, when former Simmons & Simmons London IP head Helen Newman arrived, followed by a team of four associates.

Despite Runeland’s departure, the executive committee has decided that some expertise will be retained in international arbitration and dispute resolution, and international labour and employment law, along with a small corporate support function. However, staff are likely to be culled from these groups, along with the majority of the office’s sizeable projects, commercial property and international business practice groups. All are understood to have entered redundancy negotiations with the executive committee.

This will have created consternation among those that have joined the London office in the past 12 months, notably projects partner Andrew Walsh, who joined from Pinsent Masons, and projects associate Morgan Clewley.

Despite the ongoing redundancy negotiations, Kilpatrick is downplaying the shake-up. A statement from the firm reads: “The sharpened focus means that the firm will strengthen its recruitment efforts for new partners and associates in specific areas, starting immediately.”

While the firm will recruit with one hand, it will sack with the other. The statement continued: “The firm has entered into consultation with partners and staff on the full implications of the decision, including the need for any departures.”

The downsizing is understood to coincide with a break clause in the firm’s lease on its Canary Wharf premises early next year. This will leave the surviving team open to move back to its previous premises on Pall Mall, for which the firm still holds the lease.

One former member of the London office states that the root of the problem was Kilpatrick’s misguided belief that it would be able to fit the domestic-focused practice that it inherited from the defunct Altheimer into its internationally-focused business.

The Kilpatrick statement reveals that it has taken the firm’s management two years and an internal review to realise that the London office had a “lack of fit with the firm’s acknowledged strengths in international work”.

Kilpatrick is primarily known for its IP, international arbitration and global infrastructure practices in the US, but in the UK the 14 partners and 25 lawyers it inherited from Altheimer focused mainly on project finance, real estate and international trade.

Another source claims that the London office has been unprofitable for two years, since it took on the Altheimer team in August 2003. He claims that this was the likely result of the team being unfocused and mid-market driven. At the time of the move, head of Altheimer’s London office Anthony Fine claimed the firm had made collections of £9m for the financial year ended October 2002.

Partners within Kilpatrick’s London office claim that the office’s feeble performance is the result of poor management by the firm’s ineffectual US-based executive committee.

“The US management have failed to provide the London office with the autonomy needed to grow,” says one soon-to-be-former Kilpatrick partner.