44 LEXPERT MAGAZINE
|
MARCH 2017
FEATURE
SWISS
MISS
The collapse
of King & Wood
Mallesons'
European arm
offers a cautionary
tale to firms
intent on merging
misaligned entities
under the Swiss
verein model
BY JULIUS MELNITZER
PHOTO:
SHUTTERSTOCK
IN 2008,
SJ Berwin was ranked 14th among the top 50 firms in the
UK. It boasted revenue of about $350 million and profit per equity part-
ner exceeding $1.3 million. In 2013, SJ Berwin hooked up with King &
Wood Mallesons, using a Swiss verein structure to create the first com-
bination of top-tier practices in Asia and Europe. SJ Berwin became
KWM EUME, embracing the European, United Kingdom and Middle
East practice of KWM. In 2016, KWM EUME collapsed and, in January
2016, went into administration.
For law firms with global expansion ambitions, there's a lingering ques-
tion following on the speedy, vivid collapse of KWM EUME: does the
debacle speaks to the inherent advantages or the inherent disadvantages
of the Swiss verein, the legal structure of choice for the flood of major
international law firm combinations in the past five years?
KWM may have been sold something of a bill of goods by SJ Berwin, a
firm suffering from a host of issues that pre-dated the merger. "Berwin was
in serious trouble before it hooked up with KWM," says Edwin Reeser, a
California-based lawyer and consultant who was formerly the managing
partner of Sonnenschein Nath & Rosenthal LLP's Los Angeles office.
Arguably, to the extent that Berwin's legacy contributed to the even-
tual downfall, it speaks more to KWM's lack of due diligence in its haste
to expand to Europe than to the verein structure used to form the com-
bination. KWM has been vocal in assigning blame to European manage-
ment. Critics of the structure, however, say that KWM's failure to deal
with Berwin's issues when they reared their heads early on points to the
inadequacies of the Swiss verein.
