- Feb 17, 2018
- 4,717
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Big and profitable
Kirkland is now the largest law firm in the world thanks to a 19% growth in revenue for 2017. The firm has expanded aggressively in recent years growing its revenue by an estimated 89% between 2009 and 2016.
But Kirkland isn’t just big; it’s also very profitable. That makes it stand out from its rival Latham & Watkins and other large law firms. The firm doesn’t set up shop everywhere but targets a number of highly profitable geographies and practices. That's helped Kirkland to consistently grow its PEP over the last two decades. Kirkland even weathered 2008 and 2009 - a time when profits fell for many law firms- because the firm invested in countercyclical practice areas like restructuring and litigation.
Partnership & Culture
Kirkland’s associates make partner a lot quicker than other law firms, often after just 6PQE. In 2017, 97 lawyers became salaried partners with 13 in London. Most of these are in corporate followed by debt finance.
Kirkland is known for paying huge amounts of money for targeted lateral hires and in many ways that has changed lateral law firm recruitment altogether. The magic circle and other US law firms have been forced to modify their lockstep model – where partners are paid according to seniority – to compete. That’s helped Kirkland to recruit star corporate partners from magic circle firms like the 2017 hire of David Higgins.
Kirkland’s remuneration system is even more flexible than other elite US firms. Kirkland’s top partners can earn 8 times more than its junior partners compared to 3 or 4 times more at rival firms. A few years ago Kirkland’s hire of star leveraged finance partner Stephen Lucas from Weil at a reported $8m shocked the market.
Kirkland makes up more partners each year than almost any other law firm. That’s because the firm makes use of non-equity partners i.e. salaried partners who don’t have a stake in the business or join partner meetings. That’s useful for a number of reasons: it makes junior partners work hard to bring in business but they’re only paid a little more than they were as associates; it lets the firm heavily assess partner potential and if they’re not equity partner material, they can be told to leave; it keeps equity partner compensation high to attract lateral hires.
The firm is one of the most active lateral hirers in London. It recently took a team from Debevoise in New York and a 5 partner investigations and corruption team from Ropes & Gray. But Kirkland also has one of the highest attrition rates of any US law firm in London. According to The Lawyer, out of 40 associates that made partner in London between 2010 and 2015, only 25 remained by March 2016.
That leads to the issue of culture. Kirkland is often described as competitive and ‘sharp elbowed’. Some point to the firm’s alleged ‘up or out’ policy and the heavy management of partner performance. Others have noted the clash between existing partners and newly hired laterals on large pay packets – allegedly a factor in the recent six-partner exit for Sidley Austin. But it’s difficult to say whether this is still the case. Kirkland recently introduced a number of measures to encourage group working and collaboration between partners.
London heavyweight
Kirkland originally launched in London to serve its key US clients, including private equity firm Bain Capital. But Kirkland quickly integrated and began promoting from within - in contrast to other US law firms that relied on lateral hires.
The firm did hire aggressively, picking up a number of partners for magic circle firms Linklaters and Freshfields. That combination of organic growth and lateral hires has helped to make Kirkland the second largest US law firm in London. The firm grew its London revenue by almost 50% in 2017 and it’s also taking another floor in the Gherkin to compensate for a sharp rise in lawyer headcount, which is up 61% since 2013.
Profitable practice areas
The firm excels in public M&A and this recently became a core practice area. It also boasts one of the best private equity practices in the City thanks to its strength in leveraged finance. Its finance team has been responsible for securing many private equity relationships, an area where rival Freshfields lags behind, and that's helped it to take market share. In 2017, Kirkland topped the deal value rankings for UK M&A and placed fourth by global deal value.
Meanwhile, Kirkland has been trying to boost its corporate/M&A practice in London through a number of magic circle lateral hires.
Kirkland's bankruptcy practice is also very profitable. In 2017 the firm acted on three of the four largest Chapter 11 bankruptcies. That includes Toys R Us in one of the largest ever filings for a speciality retailer.
Before it dominated the transactional space, Kirkland was mainly a litigation firm. And that shows today – in 2017, Kirkland secured 34 trial victories for its clients and was ranked by The Lawyer as the second largest litigation firm by revenue. The firm had recently acquired 17 lawyers from Bancroft PPLC, an elite boutique in Washington D.C. that specialises in Supreme Court and appellate litigation. The move included star lawyers such as Paul Clement, who has "argued more Supreme Court cases since 2000 than any other lawyer" and Bancroft founder, Viet D. Dinh. Over the years, Kirkland has represented clients in many of the biggest headlines including BP's oil spill and Volkswagen's emissions scandal.
Targeted international reach
In 2006, when many US firms were happy to act as counsel for UK firms in Hong Kong, Kirkland ambitiously pursued its own local law capability. It began as a small private-equity-focused office but soon ballooned in size. Between 2011 and 2015 Kirkland more than tripled its headcount in Asia and became one of the fastest growing firms in the region. This helped to position Kirkland for Chinese outbound investment and for large private equity deals in the region. In 2017, the firm topped the Mergermarket table for private equity buyouts by value in the Asia Pacific region.
Kirkland excels in other regions by operating targeted practices. In San Francisco, the firm's patent litigation practice advises big names like Apple, Intel and Cisco. Whilst its fast-growing Houston office has a successful energy practice, which was recently named Energy Practice Group of the Year by Law 360.
Kirkland is now the largest law firm in the world thanks to a 19% growth in revenue for 2017. The firm has expanded aggressively in recent years growing its revenue by an estimated 89% between 2009 and 2016.
But Kirkland isn’t just big; it’s also very profitable. That makes it stand out from its rival Latham & Watkins and other large law firms. The firm doesn’t set up shop everywhere but targets a number of highly profitable geographies and practices. That's helped Kirkland to consistently grow its PEP over the last two decades. Kirkland even weathered 2008 and 2009 - a time when profits fell for many law firms- because the firm invested in countercyclical practice areas like restructuring and litigation.
Partnership & Culture
Kirkland’s associates make partner a lot quicker than other law firms, often after just 6PQE. In 2017, 97 lawyers became salaried partners with 13 in London. Most of these are in corporate followed by debt finance.
Kirkland is known for paying huge amounts of money for targeted lateral hires and in many ways that has changed lateral law firm recruitment altogether. The magic circle and other US law firms have been forced to modify their lockstep model – where partners are paid according to seniority – to compete. That’s helped Kirkland to recruit star corporate partners from magic circle firms like the 2017 hire of David Higgins.
Kirkland’s remuneration system is even more flexible than other elite US firms. Kirkland’s top partners can earn 8 times more than its junior partners compared to 3 or 4 times more at rival firms. A few years ago Kirkland’s hire of star leveraged finance partner Stephen Lucas from Weil at a reported $8m shocked the market.
Kirkland makes up more partners each year than almost any other law firm. That’s because the firm makes use of non-equity partners i.e. salaried partners who don’t have a stake in the business or join partner meetings. That’s useful for a number of reasons: it makes junior partners work hard to bring in business but they’re only paid a little more than they were as associates; it lets the firm heavily assess partner potential and if they’re not equity partner material, they can be told to leave; it keeps equity partner compensation high to attract lateral hires.
The firm is one of the most active lateral hirers in London. It recently took a team from Debevoise in New York and a 5 partner investigations and corruption team from Ropes & Gray. But Kirkland also has one of the highest attrition rates of any US law firm in London. According to The Lawyer, out of 40 associates that made partner in London between 2010 and 2015, only 25 remained by March 2016.
That leads to the issue of culture. Kirkland is often described as competitive and ‘sharp elbowed’. Some point to the firm’s alleged ‘up or out’ policy and the heavy management of partner performance. Others have noted the clash between existing partners and newly hired laterals on large pay packets – allegedly a factor in the recent six-partner exit for Sidley Austin. But it’s difficult to say whether this is still the case. Kirkland recently introduced a number of measures to encourage group working and collaboration between partners.
London heavyweight
Kirkland originally launched in London to serve its key US clients, including private equity firm Bain Capital. But Kirkland quickly integrated and began promoting from within - in contrast to other US law firms that relied on lateral hires.
The firm did hire aggressively, picking up a number of partners for magic circle firms Linklaters and Freshfields. That combination of organic growth and lateral hires has helped to make Kirkland the second largest US law firm in London. The firm grew its London revenue by almost 50% in 2017 and it’s also taking another floor in the Gherkin to compensate for a sharp rise in lawyer headcount, which is up 61% since 2013.
Profitable practice areas
The firm excels in public M&A and this recently became a core practice area. It also boasts one of the best private equity practices in the City thanks to its strength in leveraged finance. Its finance team has been responsible for securing many private equity relationships, an area where rival Freshfields lags behind, and that's helped it to take market share. In 2017, Kirkland topped the deal value rankings for UK M&A and placed fourth by global deal value.
Meanwhile, Kirkland has been trying to boost its corporate/M&A practice in London through a number of magic circle lateral hires.
Kirkland's bankruptcy practice is also very profitable. In 2017 the firm acted on three of the four largest Chapter 11 bankruptcies. That includes Toys R Us in one of the largest ever filings for a speciality retailer.
Before it dominated the transactional space, Kirkland was mainly a litigation firm. And that shows today – in 2017, Kirkland secured 34 trial victories for its clients and was ranked by The Lawyer as the second largest litigation firm by revenue. The firm had recently acquired 17 lawyers from Bancroft PPLC, an elite boutique in Washington D.C. that specialises in Supreme Court and appellate litigation. The move included star lawyers such as Paul Clement, who has "argued more Supreme Court cases since 2000 than any other lawyer" and Bancroft founder, Viet D. Dinh. Over the years, Kirkland has represented clients in many of the biggest headlines including BP's oil spill and Volkswagen's emissions scandal.
Targeted international reach
In 2006, when many US firms were happy to act as counsel for UK firms in Hong Kong, Kirkland ambitiously pursued its own local law capability. It began as a small private-equity-focused office but soon ballooned in size. Between 2011 and 2015 Kirkland more than tripled its headcount in Asia and became one of the fastest growing firms in the region. This helped to position Kirkland for Chinese outbound investment and for large private equity deals in the region. In 2017, the firm topped the Mergermarket table for private equity buyouts by value in the Asia Pacific region.
Kirkland excels in other regions by operating targeted practices. In San Francisco, the firm's patent litigation practice advises big names like Apple, Intel and Cisco. Whilst its fast-growing Houston office has a successful energy practice, which was recently named Energy Practice Group of the Year by Law 360.
