In the way that Cravath is the trendsetter for associate salaries in the Big Law world, Kirkland & Ellis might soon become a trendsetter alternative fee arrangements.
The Chicago-based powerhouse announced Wednesday the formation of a plaintiff-side trial group that tackles commercial litigation matters based on pure contingent fees or other unique fee arrangements.
While it will be a wait-and-see on whether other large law firms follow suit, Kirkland appears to get creative in its litigation practice in hopes of generating new business from current or existing clients that would usually turn to litigation boutiques for higher risk matters with potentially large payoffs.
The initiative could also help Kirkland, widely viewed as one of the most profitable law firms in Texas and around the world, attract and retain trial lawyers who have a more entrepreneurial spirit.
Kirkland partner Anna Rotman, who leads the litigation practice in the firm’s Houston office, said she believes the new focus on contingency-fee commercial cases “will align very well with the industries we’ve already made a [big push in] in Texas,” which has predominately involved energy and infrastructure clients.
“Our new effort is focused on exactly the type of classic commercial claims we see for energy and infrastructure clients: contract disputes — especially with joint venture partners and fights over the rights and duties of operators — disputes with producers and pipelines over take-or-pay contracts, trade secrets including fights over seismic data, and fraud claims,” Rotman told The Texas Lawbook.
It’s an effort that may up the ante among litigation boutiques, which have enjoyed great success in Texas partially due to their ability to offer plaintiff commercial clients lower rates than big firms through alternative billing arrangements and contingency fees.
“If there’s a mid-sized or smaller sized company that happens to have a large claim, they may instinctively think, ‘I’m going to go to a smaller boutique or smaller firm which is going to charge a lot less premium rates than Kirkland,’” said Andrew Kassof, a litigation partner in Kirkland’s Chicago office who is on the firm’s global management executive committee.
Instead of these clients asking what the cost will be when considering which law firm to choose, Kassof said, this new initiative allows them to focus on another question: Who are the best lawyers for the job?
“I’ve practiced in Texas for my whole career and there are plenty of great trial lawyers,” Rotman said. “But no firm in Texas on the Big Law side can match the breadth and depth of Kirkland. And our trial lawyers can go toe-to-toe with any litigation boutique. We’re making the best of both worlds available to clients with our talent and alternative fee arrangements, which is really unique.”
“It’s what we view as a potential market disruption,” Kassof added.
Kassof said Kirkland decided to expand its alternative/contingency fee services after studying nearly 20 years of internal performance data on plaintiffs’ side commercial cases where alternative billing was present. The common pattern, Kassof said, was “tremendous success.”
Most recently, Kirkland secured an $82 million verdict in Delaware Chancery Court for Bracket Holding Corporation, a plaintiff company that claimed it was duped by false financial statements when it bought a software business from Express Scripts Inc. in 2013.
Other recent Kirkland wins on the plaintiff’s side include a $78 million settlement for a Russian affiliate of Exxon against WorleyParsons Ltd and a $74 million jury verdict for Miller UK Ltd. against Caterpillar Inc.
“We want to be available for commercial cases where we typically have been perceived in the marketplace as being on the defense side,” Kassof said. “It’s the result of the confidence we have in our trial lawyers and our historical results.”
Kassof said the firm believes it will serve commercial clients of all sizes — small, medium and large — with this new offering.
“The beauty of this is it lends itself to all of the above,” he said.
That said, he added, Kirkland does not plan to extend its plaintiffs’ work into cases involving class actions, personal injury, whistleblowers or securities litigation.
Rotman said alternative billing is not unique to Kirkland’s plaintiff clients — the firm is also willing to work out fees with defense clients as well.
“We are really being thoughtful for our clients in terms of how we approach fees on both sides of the ‘v’ and are open to coming up with creative arrangements,” she said.