Eight years ago, at a restaurant in New York the night before speaking at a litigation finance conference, I told Reed Oslan he was probably the first Chief Investment Officer at any law firm in the world. Reed is a successful litigation partner in his own right, but I was referring to his role as the chair of Kirkland & Ellis’s Special Fee Arrangement Committee and particularly the fact that he managed the firm’s burgeoning portfolio of contingent fee co-investments in large commercial litigations.
Fast forward to July 2019. Kirkland put out a press release trumpeting it was “Doubling Down” on “contingent-fee commercial cases.” The release, meant to be a clarion-call to multinational businesses, quoted Reed saying: “mobilizing the Firm’s resources and litigators to try more of these types of plaintiff cases will reinvigorate the Firm’s special fee arrangement program.” He went on to add: “We are perfectly positioned to partner with our clients and share risk on plaintiff cases” given their “20-year history as a market leader on alternative fee arrangements.”
Kirkland, originally a scrappy Chicago firm but now a global law juggernaut that sports “no headquarters location,” is a platform for over two thousand lawyers around the world. At last counting, it continues to occupy the pinnacle position of “world’s largest law firm by gross revenue,” shattering the $4 billion revenue mark for the first time in 2019, according to American Lawyer data.
Chicago, pugnacious, and brash are words that would seem to resonate alongside an announcement of doubling down on contingent-fee work. For the American audience, it probably conjures images of “Just Call Saul,” the popular network spin-off from the much-loved series, “Breaking Bad.” Even the American Lawyer described Kirkland’s announcement as intended “to upend the market—traditionally dominated by smaller, plaintiff-oriented shops.”
So wrong. Don’t let your mind wander to billboards plastered with “Kirkland” lining Lake Shore Drive. This is Kirkland the Powerhouse. It is advertising for big contingent-fee engagements with big clients, particularly those exceeding $50 million in damages.
Astonishingly, several of Kirkland’s competitors for massive contingent-fee work dismissed the announcement as a boastful marketing ploy. That should tell you something. If anyone, Kirkland wants to take market share in the large-dollar contingent-fee market away from those competitors, the likes of Quinn Emanuel Urquhart & Sullivan, Bartlett Beck (which shares substantial Kirkland DNA) and “Texas upstart” Susman Godfrey, all fellow litigation titans.
What these firms share is a position at the pinnacle of litigation firms on the planet. And they all compete for multi-million-dollar contingent-fee cases. Why?
To begin with, it’s not because they are trolling the bottom looking for claims held by impecunious clients. Nor are they wanting for decent litigation work. Such motives would be inconsistent with Kirkland ramping up its contingent-fee engagements at the same time it surpassed $4 billion in annual revenue, earning astronomical profits per partner. More likely, and consistent with Reed Oslan’s institutionalized role as contingent fee-portfolio Chief Investment Officer, is they see co-investing with clients as a way to generate new, quality business and financially out-perform the competition, particularly those who continue to turn their noses up at “no-win, no-fee” arrangements.
Kirkland’s portfolio returns on contingent-fee investments no doubt eclipse stock market investments even in the best economic times, and the portfolio is a safe, recession-proof asset class in the worst of times. Why not make calibrated, rational investments of firm capital—lawyer time and disbursements—into cases the firm manages? These are assets in which the firm has dominant expertise and that the firm can thoroughly underwrite. Managing a diversified segment of your own treasury in a portfolio you select, balance and re-balance can systematically increase the average profits generated by the firm, for the benefit of litigators and transactional lawyers alike.
That’s what Kirkland does.