Kirkland & Ellis, one of the nation’s largest and most profitable law firms, is betting on its own trial work by launching a plaintiff-side contingent fee litigation practice.
The firm has handled more than 100 plaintiff-side cases typically on a pure contingency basis over the past decade, Chicago-based trial partner Jim Hurst told Bloomberg Law.
Kirkland plans to take on as much as a tenfold increase in that number of cases. “The reality is, we do in fact have an extraordinary win record for our clients both with a special fee and a regular fee,” said Hurst, a member of Kirkland’s global management executive committee. “And we thought to ourselves, ‘Why don’t we invest in ourselves? Why don’t we bet on ourselves?’”
Ditching the billable hour for higher-risk, higher-reward style fees could further grow Kirkland’s recently ballooning profits per equity partner. Or pouring lawyer time and firm money into unsuccessful litigation could be a drag on that figure, which AmLaw said last year surpassed $5 million. Only two other firms crossed that threshold last year, Paul, Weiss, Rifkind, Wharton & Garrison and Wachtell, Lipton, Rosen & Katz, according to AmLaw rankings.
Kirkland’s decision, which remains unusual for the defense-focused firms of Big Law, could bring it into more direct competition with traditional plaintiffs firms and also with litigation funders.
At least one other major firm, Quinn Emanuel Urquhart & Sullivan, has made healthy returns from a plaintiff-side practice. Quinn Emanuel turned to plaintiff-side litigation by suing Wall Street banks following the 2008 financial crisis and has said it won more than $30 billion in financial-fraud settlements.
Kirkland’s decision comes less than a month after the firm won a contingency fee case on behalf of Bracket Holding Corp. That case resulted in a $82 million jury verdict. In 2014, Kirkland represented Tronox Corp. in a fraudulent transfer claim brought against Anadarko Petroleum that settled for $5.1 billion.
The firm does not plan to take on qui tam cases, plaintiff securities cases or class actions, all areas that the firm has traditionally tackled on the defense side. Kirkland wants to invest in more traditional business disputes that Andrew Kassof, a member of the firm’s global management committee, said companies might otherwise instinctively send to plaintiffs boutiques.
Kassof said the decision was a bet on the belief that Kirkland has a deeper bench of talented trial lawyers than typical plaintiffs trial boutiques and that Kirkland lawyers are just as capable at bringing business disputes as they are at defending them.
“If that’s all true, which we firmly believe it is, then there is absolutely no reason why with our talent and our willingness to bet on ourselves and put our own capital in play that we wouldn’t want to take on more and more cases on the plaintiff side that aren’t traditionally handled by Big Law firms,” Kassof said.
The new practice will ultimately be led by senior litigators on Kirkland’s management committee.
Kirkland’s move to more contingent-style fees could be seen as a way for litigators there to increase their share of profits at a firm whose stellar financial performance has been increasingly driven by its transactional practices and, in particular, a high-powered private equity practice.
The American Lawyer reported in 2016 that the firm’s bi-annual reallocation of partnership shares that year stunted many litigation partners’ compensation. The firm has more than 2,500 lawyers, and over 700 are litigators.
Hurst said that was not a motivating factor in the decision, calling it a “firm decision” to invest more resources in contingent fee cases.
“Our chairman is 100 percent behind this. Our transactional partners are 100 percent behind this,” Hurst said. “As a firm, we are entrepreneurial and so this is part of that spirit.”
Kirkland has a special fee arrangement committee, chaired by partner Reed Oslan, that signs off on contingent fee cases and other alternative billing setups.
Kirkland has often been linked to litigation funding, partly because of its role representing a U.K.-based inventor who struck a deal with litigation funders to pursue a trade secrets claim against machinery manufacturer Caterpillar Inc. That high-profile case led to a nearly $75 million award for the plaintiff.
But Hurst said the firm has the resources, and now the desire, to fund plaintiff-side, contingent-fee cases on its own.
“We typically don’t discuss how we fund our litigation,” Hurst said, “but we are fully capable of funding our own litigation for sure.”