Partners at King & Wood Mallesons (KWM) could be asked to inject more cash into the business as the firm considers alterations to its capital contributions structure.
KWM is reviewing options to increase capital in its European and Middle East business, the legacy SJ Berwin practice, following persistent cash flow problems. The review comes as part of the firm’s 2020 strategy review, which will plot a path towards greater integration between the verein members.
A spokesperson for the firm confirmed that ‘there are a range of options being discussed’ as the firm looks to increase the capitalisation of the firm. One partner told Legal Business: ‘It’s always been a lowly capitalised firm so this is positive.’
A crackdown on limited liability partnerships (LLPs) by the UK’s HM Revenue & Customs in 2014 resulted in higher capital contributions for non-equity and fixed-share partners. This has led to a raft of capital contributions to law firms over the past two years.
The move follows a string of senior exits from the firm and complaints about delayed payments to partners. The first quarterly payment of the 2015/16 financial year was expected to be made by the end of August last year but was delayed until December.
William Boss, who became managing partner for the region just nine months ago, resigned from the post earlier this month. The firm has lost a number of key management figures in the past six months, with chief operating officer Rachel Reid departing for Taylor Wessing and finance director Simon Gill exiting the firm.
tom.moore@legalease.co.uk
Subscribers can read more about what’s going on at KWM in ‘Sum of its parts: can King & Wood Mallesons match the hype?