Kirkland doubles equity partners' notice period worldwide as exits continue

Kirkland & Ellis has doubled the notice period for equity partners planning to leave the firm from 60 days to 120 days.

The firm, which has seen seven London partners hand in their notice in recent days and dozens leave around the world over the last two years, has also introduced a 30-day notice period for its large salaried partner rank. Previously salaried partners were not held to a notice period and put on gardening leave.

The new system came into effect globally this week, meaning all of those quitting in recent days should narrowly avoid being held to the extended notice period.

The change should make it easier for the firm to maintain client relationships following partner exits. Traditionally partners in US firms are rarely held to notice or subject to restrictive covenants, enabling them to leave one US firm and join another shortly after, often taking client matters with them.

It is understood that all seven of the partners leaving in London this week opted to quit earlier than perhaps they may otherwise have done so in order to avoid the extended notice.

High yield partner Andrew Hagan is set to join Freshfields Bruckhaus Deringer, where he will be reunited with Ward McKimm, co-head of European leveraged finance at the magic circle firm, who joined from Kirkland in June 2015.

Meanwhile Sidley is boosting its City offering with a six-partner team from Kirkland. The firm has hired City private equity partners Christian Iwasko, Erik Dahl and Fatema Orjela alongside banking partner Bryan Robson, corporate partner Sava Savov and tax partner Oliver Currall. Only two of the group are understood to be equity partners at Kirkland.

Overall, the firm has seen some 20 partners – both salaried and equity – exit in London over the past two years, including those quitting in recent days. In addition to those listed above exits have included finance partner Stephen Gillespie, who quit for Gibson Dunn at the end of 2014, and former office head Graham White, who left for Fried Frank Harris Shriver & Jacobson in October 2014.

Globally, more than 100 partners have left Kirkland over a similar period. The firm normally sees a lot of turnover in its partner ranks each year, largely because it has a lot of non-equity partners who move on if they don’t make equity partner. However, the firm has also lost a significant number of equity partners.

Several former Kirkland partners say the London office has been unsettled by some of the firm’s recent high-profile lateral hires.

One former partner says: “The firm made a conscious decision to make changes in London driven by Stephen Lucas. They want to grow the office and they are doing it at the expense of the existing partnership. They are unable to effectively integrate the new hires alongside the existing partnership.”

As it has in the US, Kirkland has turned heads in the London legal community by offering above-market packages to big-name lateral hires. That has caused resentment among some long-time Kirkland lawyers. Stephen Lucas, who plays a leading management role in London, joined in 2014 from Weil Gotshal & Manges and is reportedly being paid $8m (£5.8m) a year.

Kirkland’s business model, with its emphasis on lateral hiring, may not please everyone, but the firm has been highly profitable.

The firm has not yet reported its financial results for 2015, but in 2014 its revenue increased 6.6%, to $2.15bn ($1.6bn), and profit per equity partner rose 7% to $3.51m (£2.5m).

Kirkland declined to comment.