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Blackstone Spent $70 Million at Big Law’s Top Dealmaker (1)

March 1, 2022, 11:00 AMUpdated: March 1, 2022, 4:01 PM

Kirkland & Ellis received $69.6 million in legal fees from Blackstone Inc. last year, the company disclosed in a securities filing.

Kirkland, the world’s largest law firm by gross revenue, has been engaged “from time to time in the ordinary course of business to provide legal services to us and our subsidiaries,” Blackstone said in a 10-K filed Feb. 25 that also unveiled a $1.1 billion payday for its chairman and CEO Stephen Schwarzman.

Reginald Brown, a Washington-based Kirkland litigation partner, joined Blackstone’s board in September 2020. Brown “does not receive any direct compensation, specific origination bonus, or other disproportionate allocation from legal fees we pay to Kirkland,” Blackstone said.

Kirkland has capitalized on its private equity ties to become a leading adviser to clients pursuing corporate transactions. Kirkland was outside counsel to a Blackstone affiliate in early February on its sale of Death Row Records to rapper-turned-entrepreneur Calvin “Snoop Dogg” Broadus Jr.

Blackstone’s president, Jonathan Gray, a high school classmate of Kirkland chairman Jon Ballis, told Bloomberg Law last week that Kirkland’s ties to his firm were strengthened by its decision to invest in a broad array of legal services that it provides to alternative asset managers.

“It’s all these other functions they’ve brought together under one roof that has been a powerful combination and has really accelerated their growth,” Gray said.

Blackstone’s relationship with Kirkland predates its addition of Brown to the board, the New York-based investment firm said. Brown’s interest is “estimated to be less than 1%” of the $69.6 million in fees paid to the firm last year, the filing said.

Blackstone’s 10-K in 2020 noted Brown’s board role but didn’t disclose how much it paid Kirkland that year. In “making a determination with regard to Mr. Brown’s independence, our board of directors considered Mr. Brown’s role as a partner” at Kirkland and “our past and current work with this law firm,” that filing said.

Brown, in his role as a Blackstone board member, earned $150,000 in cash and $211,400 in stock awards. Bloomberg data shows that Brown currently owns Blackstone stock valued at almost $669,000.

Brown was chairman of the financial institutions practice and vice chair of the crisis management and strategic response group at Wilmer Cutler Pickering Hale and Dorr prior to making the move to Kirkland with three other partners in late 2020.

Kelly Ayotte, a former associate at New Hampshire’s McLane Middleton, also serves on Blackstone’s board. Ayotte went on to serve as a U.S. senator and attorney general for the state and helped the Trump administration handle the nomination process for U.S. Supreme Court Justice Neil Gorsuch.

Ayotte received $150,000 in cash and $210,300 in stock awards last year. She currently owns $1.5 million in Blackstone stock, per Bloomberg data.

Michael Chae, a Yale Law School graduate serving as Blackstone’s chief financial officer, earned more than $30.8 million in total compensation last year.

Law Firm Ties

Kirkland’s legal fee windfall comes despite Simpson Thacher & Bartlett, a firm also known for its transactional expertise, being Blackstone’s longtime go-to legal adviser. Neither firm has yet to disclose their gross revenue for 2021.

Kirkland’s gross revenue hit more than $4.8 billion during 2020, while Simpson saw that same metric exceed $1.8 billion, according to reporting by The American Lawyer.

Simpson advised Blackstone in February on its $24 billion recapitalization of European logistics operator Mileway and $5.8 billion acquisition of a multifamily apartment owner in the southeastern U.S. The firm also counseled Blackstone last year on its $1.3 billion buy of media and data company International Data Group Inc. and its $4.7 billion acquisition in late 2020 of Ancestry.com Inc.

John Finley, a former Simpson partner who once co-headed the firm’s global mergers and acquisitions group, became Blackstone’s chief legal officer in 2010. Finley leads a corporate law department that within the past year has welcomed aboard former Simpson associates Matthew Freeze and Lauren Maxfield to in-house roles.

Finley didn’t respond to a request for comment about whether Kirkland was Blackstone’s highest-paid outside legal adviser during 2021.

Blackstone spokesman Matthew Anderson declined to discuss anything about the firm’s legal expenses outside its 10-K disclosure.

Kristin Leighton-Wade, a former Kirkland associate seconded to Blackstone in 2020, was officially hired by the asset manager last year for a legal and compliance role in its real estate business.

Jason Pyke, another former associate in Kirkland’s investment funds group, joined Blackstone’s secondary and fund solutions business late last year in a legal and compliance position.

Kirkland, which also represented Blackstone last year on its $1 billion investment in purchasing music rights and song catalogs, reportedly began doing litigation work for the investment giant about a decade ago.

Legal Chief’s Pay Up

Finley’s own pay package rose 34% year-over-year, according to Blackstone’s most recent 10-K filing. He earned nearly $17.8 million in total compensation last year, up from almost $13.3 million in 2020.

The bulk of Finley’s remuneration was comprised of more than $9.6 million in stock awards. He was also paid roughly $3.9 million in cash, approximately $350,000 of which is his base salary with the remainder a bonus.

Securities filings show that over the past year Finley has sold off more than $14.4 million in Blackstone stock. He currently owns Blackstone shares valued at about $46 million, according to Bloomberg data.

(Adds detail in second section about Kirkland and Simpson's work for Blackstone.)

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes at jhughes@bloombergindustry.com