Kirkland’s Blackstone Fees Slip as Legal Chief’s Pay Also Falls

Blackstone Inc. paid $41.6 million in legal fees last year to Kirkland & Ellis, according to a securities filing.

The sum is down from the $53.4 million that Blackstone said it paid Kirkland for legal services in 2022 and the $70 million that the firm received from the company in 2021. Those disclosures were made after Blackstone added prominent Kirkland partner Reginald “Reg” Brown to its board in late 2020.

Brown, a Washington-based litigator known for his crisis management expertise, has represented high-profile clients such as Facebook billionaire Mark Zuckerberg and former US Secretary of State Rex Tillerson. Brown is one of a growing number of current Big Law partners whose board seats at public companies require the disclosure of related-party transactions.

Blackstone said that Brown received $359,600 in total compensation for his board work in 2023, according to a 10-K filing last week that also noted an $896.7 million payout for Stephen Schwarzman, the New York-based private equity firm’s co-founder and chief executive officer.

Blackstone estimated that Brown’s interest is “less than 1% of the fees” it paid Kirkland, which for the past few years has had the highest gross revenue globally among law firms. Blackstone added that Brown doesn’t “receive any direct compensation, specific origination bonus, or other disproportionate allocation from legal fees we pay to Kirkland.”

“We have engaged Kirkland from time to time in the ordinary course of business to provide legal services to us and our subsidiaries,” Blackstone said. “Our relationship with Kirkland pre-dates Mr. Brown’s appointment to our board.”

Kirkland Connections

Kirkland didn’t respond to a request for comment about its ties to Blackstone, which do go beyond that of Brown, who last year wrote a $50,000 check to Never Back Down, a political action committee that supported Florida Gov. Ron DeSantis’ ultimately unsuccessful Republican presidential campaign.

Blackstone’s president and chief operating officer, Jonathan Gray, is a high school classmate of Jon Ballis, chairman of Kirkland’s executive committee. Gray, the heir apparent to Schwarzman at Blackstone, told Bloomberg Law in 2022 that Kirkland’s ties to the company were strengthened by the firm’s decision to invest in a broad array of practice areas.

Kirkland, which last year promoted its largest-ever partner class but also shed associates in a move the firm claimed was related to performance reviews, has been engaged in an ongoing recruitment battle with Paul, Weiss, Rifkind, Wharton & Garrison. The latter raided Kirkland last summer for debt finance star Neel Sachdev and several other partners in London. Kirkland announced last week its hire of Paul Weiss debt finance partner Paul Sandler in New York.

Paul Weiss also does work for Blackstone, advising the company last year on its $150 million investment in London-based alternative investment firm Astaris Capital Management. Paul Weiss represented a Blackstone affiliate on its purchase of a minority stake in an Indiana utility that closed last month. Ravi Purohit, a Paul Weiss partner that took the lead on that deal, joined the firm in September. He had previously worked at Blackstone.

Deal volume was down in 2023 with private equity-related transactions also tumbling amid high borrowing costs. Legal fee payouts stemming from those engagements are also increasingly delayed due to earnout provisions. Still, despite the slowest mergers and acquisitions market in a decade, Kirkland took the No. 1 spot for legal advisers, according to Bloomberg data.

Kirkland counseled Blackstone last year on its $2.3 billion bid for online pet care marketplace Rover Group Inc., as well as a $1 billion investment in Invenergy Renewables LLC, a clean and renewable energy provider.

Executive Pay

Blackstone’s 10-K filing noted the company’s longtime chief legal officer, senior managing director John Finley, received a pay package valued at more than $17.9 million in 2023. That sum is down slightly from the $22.2 million he earned the year prior but on par with the $17.8 million that Finley received in 2021.

Finley, a former co-chair of the mergers and acquisitions practice at Simpson Thacher & Bartlett, joined Blackstone as its top lawyer in 2010. Securities filings show that Finley sold off more than $13 million in Blackstone stock in the past year. He still owns roughly $55 million in company shares, per Bloomberg data.

Finley, 67, is one of several ex-Simpson Thacher lawyers working at Blackstone.

Vikrant “Vik” Sawhney, a former Simpson Thacher associate now serving as Blackstone’s chief administrative officer and global head of institutional client solutions, received nearly $25.1 million in total compensation during 2023, his first year appearing among its five highest-paid individuals. Sawhney, who left legal practice in 1998, has been at Blackstone since 2007.

Blackstone disclosed that former Sen. Kelly Ayotte, a Republican from New Hampshire now running for governor in that state, received $359,200 in total compensation from her role as a member of its board. Ayotte, who was New Hampshire’s first female attorney general, played a key role shepherding the Trump administration’s appointment of US Supreme Court Justice Neil Gorsuch.

M. Brian Mulroney, a former Canadian prime minister now serving as a senior partner at Norton Rose Fulbright in Montreal, also received about $358,500 in total compensation for his role as a board member at Blackstone.