Kirkland & Ellis (Photo:Diego M. Radzinschi/ALM)

 

Kirkland & Ellis has hired two former KPMG tax lawyers for its two-month-old Dallas office, but the firm says the development is not part of a master plan to hire from the Big Four accounting firms.

“Basically we are just looking for talented lawyers, regardless of where they happen to be,” said Andrew Calder, a Kirkland partner in Houston who is a member of the firm’s global management committee. ”We just want the best in tax.”

Lane Morgan, who left accounting firm KPMG to join Kirkland & Ellis’ new Dallas office in July,  joins another former KPMG tax lawyer, R. David Wheat, at Chicago-based Kirkland’s growing Texas practice.

Wheat, who started at Kirkland’s Houston office on May 31, now splits his time between the Dallas and Houston offices.

Additionally, Houston partner Cyril Jones, who joined Kirkland’s Houston office in September 2015 from Akin Gump Strauss Hauer & Feld, previously worked at KPMG from March 2011 to August 2013.

Consultant Lisa Smith, a principal at Fairfax Associates in Washington, D.C., said there is limited flow back-and-forth between law firms and accounting firms in the United States, in part because accounting firms in the United States cannot practice U.S. law.

There may not be much movement of tax lawyers, but according to a 2017 ALM Intelligence report, two-thirds of law firms were “concerned” about the threat presented by accounting firms and other alternative service providers.

Recruiter Alysa Schildcrout, founding partner of Amicus Search Group in Dallas, said she has seen some senior tax lawyers move to accounting firms because of better retirement plans. But she said younger tax lawyers leave accounting firms for law firms because the law firm pay is generally better at their level.

Schildcrout said some of her recruiting firm’s clients in Texas have recently asked them to locate  tax lawyer candidates, and “there seems to be a shortage.” She attributed the demand for tax lawyers to the strong deals business at Texas firms.

The bottom line, according to Bill Cobb, a firm consultant in Houston, is that money can lure lawyers to law firms from accounting firms. Kirkland, which was the highest-grossing AmLaw 100 firm in 2017 with $3.165 billion in revenue, could be offering nice pay bumps to the former accounting firm lawyers, as well as to other lawyers who move to the firm’s offices in Texas.

Lane Morgan

Morgan said he jumped to Kirkland because of the caliber of lawyers in the firm’s Texas offices in Dallas and Houston. He also knew some of the lawyers at Kirkland, including Jared Rusman, a Kirkland partner in New York, who was his mentor when they both previously worked at Weil, Gotshal & Manges.

Morgan said the tax practice at a firm is very similar to the practice at an accounting firm.

“Both accounting firms and law firms, as professional service firms, are client-focused. You are primarily billing by the hour. It’s a large organization with a number of great professionals with deep expertise in a variety of areas,” he said.

But, Morgan noted, at Kirkland he does less tax diligence in connection with M&A deals, and more tax negotiation and drafting of transactions documents. He declined to identify clients, but said some of the clients he’s now representing at Kirkland he once did work for at KPMG.

Morgan said his move to Kirkland was not directly related to the opening of the Dallas office in July. He decided to join the firm and considered moving to Houston, but chose to stay in Dallas because the Chicago-based firm was opening the north Texas office.

Wheat said back in May, around the time of his move to Kirkland, that he could not pass up the opportunity to join Kirkland from KPMG because of the firm’s strong energy practice in Texas and the chance to move back to the legal side.

 

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