Trainees at the European arm of City-based firm King & Wood Mallesons will have their contracts cancelled tomorrow, it confirmed this morning. Around 60 trainees currently at the firm in London will now have to find another home. 

Yesterday, fellow City practice Goodwin Procter became the first firm to officially announce that it has taken on trainees from the beleaguered KWM.

Five trainees will form part of a 27-member team specialising in private equity and private investment funds.

Other firms, including magic circle giant Allen & Overy, previously said they were keen to help trainees complete their contracts but have yet to confirm if they have taken any on.

Meanwhile today, Bircham Dyson Bell announced that it was appointing a nine-strong real estate team based in KWM’s Cambridge office, which it has also acquired.

The Law Society is also assisting with efforts to find new placements for KWM trainees. Clive Black, who manages the Law Society’s relationship with City firms, said he spoke to a ‘number of firms’ before Christmas with a view to finding new homes for trainees.

Earlier this week the Gazette reported that KWM was no longer able to pay salaries and had moved to appoint administrators for a second time.

The firm now has eight working days until it must file for administration, giving the KWM’s China arm more time to finalise efforts to retain parts of the business.

In a separate development, the Gazette has received an allegation that the firm failed to pay a bill for a training event for its staff, held in November last year.

The firm allegedly said it was unable to meet the payment, of less than £3,000, when it was invoiced in December and has not paid the outstanding amount since.

A KWM spokesperson declined to comment on the allegation.

Some observers have suggested the Solicitors Regulation Authority should get involved as the situation develops. 

An SRA spokesperson said: 'If the financial difficulties of a firm mean the interests of its clients are at risk, then we will intervene and close down the firm to protect those interests. No such decision has been posted for KWM.

'Where we have been involved with KWM is with the cohort of trainees to make sure that their training records are completed properly, and the experience and skills they have gained so far is properly captured.'