CMS Cameron McKenna and Pinsents to share £1m legal fees for KWM collapse

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Combined legal fees for the firms advising on the administration of King & Wood Mallesons’ European arm are expected to break £1m, according to a progress report from administrators Quantuma.

The report, which was released on 10 March, sets out in detail the failed firm’s finances when it collapsed into administration in January, as well as costs racked up since as part of the administration process.

It states that total legal fees relating to the administration of KWM Europe and its former employee holding company KWM EUME Services are estimated to reach £1m, with this money to be split between CMS Cameron McKenna, Pinsent Masons and Ashfords.

CMS is set to take home the largest share, as adviser to the administrators alongside Pinsents, incurring fees of £343,000 for work undertaken before KWM entered administration, with its post-administration fees expected to reach £490,000.

Pinsents billed £132,000 for its pre-administration advice to the administrators, with a further £60,000 in fees estimated for work post-administration.

Ashfords, where head of professional and financial risk Sam Palmer has been managing the billing and collection of remaining files and the allocation of client monies during the administration process, billed £60,000 for pre-administration work, with its total fees likely to be £120,000.

The report states that £1.6m has been spent on the administration process so far and estimates that Quantuma’s final bill will amount to £1.2m. The restructuring boutique has been paid £255,172 so far for work undertaken between 17 January and 10 March.

Former members of KWM Europe are owed £12.6m, sitting among unsecured creditors owed a total of £37m. These unsecured creditors are expected to lose £33.5m, as only £3.5m was available to be shared between them at 17 January.

KWM’s bank loans during the five months to 30 September totalled £24m according to the report, with Barclays holding £13m of unsecured debt with a valid security over £16.5m of debt. The total value of Barclays’ debt is unclear from the report. Other unsecured creditors listed include HM Revenue & Customs (which is owed £985,000), landlords (owed (£3.06m) and trade creditors of £6.8m.

The collapse left 85 law firms and barristers chambers owed a total of more than £2.6m in fees for client work, according to the report. However, most of these fees have now been paid by clients.

Property consultant Knight Frank is listed as the largest partnership creditor, with debts of £1.6m, while former administrator AlixPartners was owed £697,140 at the time the report was put together.

In January, Legal Week revealed that Quantuma had recovered £6.7m from sales of parts of the business to firms including DLA Piper, Reed Smith and Greenberg Traurig.

The latest report reveals that KWM’s Brussels office was sold on 25 January for £650,000 in work in progress, payable in three instalments throughout this year, and £253,000 in cash. It also states that KWM’s Frankfurt and Munich offices are currently being closed. It is understood from sources close to KWM that the Frankfurt partners remaining with the firm will move into new premises.