Weil, Gotshal & Manges plans an orderly wind-down of its operations following an exodus of top partners and failed merger talks, threatening a collapse for a nearly century-old New York law firm that generated roughly $2.1 billion in revenue last year.
Management Recommends Dissolution
The leadership team at Weil, Gotshal & Manges recommended an orderly wind-down to its partnership following an exodus of top partners and failed merger negotiations. Longtime leader Barry Wolf disclosed the recommendation during a companywide meeting, with a partner vote expected in the coming days, according to the firm.
Following a careful review of strategic alternatives, the Firm’s Management Committee has recommended to the partnership that the Firm pursue an orderly wind-down,
a Weil spokesperson said in a statement cited by Bloomberg Law News.
The recommended shutdown marks an extraordinary reversal for a 95-year-old institution that raked in $2.1 billion in revenue last year and helped steer some of the largest corporate bankruptcies in U.S. history. Even as lawyers head for the exits, Weil remains debt-free and has relatively few liabilities, according to The Wall Street Journal. The firm is still collecting payments on outstanding client bills and could wind down without entering bankruptcy, potentially allowing attorneys to recoup at least some of their unpaid earnings.
High-Profile Partners Leave as Succession Plans Collapse
The crisis at the firm deepened as high-profile dealmakers left for rival firms and succession plans collapsed. Ramona Nee, a Boston-based private equity partner who was due to succeed Barry Wolf as executive partner in January, informed colleagues that she would not take the role. Months earlier, Michael Aiello, the head of the firm’s M&A practice, announced plans to leave for Cravath and take five lawyers with him.
Additional departures weakened key practice groups. Global co-head of private equity Doug Warner joined Paul Weiss, while Skadden hired former SEC officials. Management committee members and corporate co-managing partner also lined up moves to other firms, according to Lawfuel.
Amid the talent drain, Weil explored a merger with New York competitor Willkie Farr & Gallagher. Those discussions collapsed late last week, accelerating the firm’s slide toward dissolution.
My old law firm is falling apart.
Gabriel Shapiro, former Weil associate and current CEO of MetaLeX Labs, via Yahoo Finance
Davis Polk Advisers Step In as Restructuring Experts Eye the Balance Sheet
To manage the crisis, Weil brought in advisers from Davis Polk, including restructuring partner Brian Resnick and managing partner Neil Barr, who previously guided major law firm mergers. Financial consultancies were also sounded out to review the firm’s books, including obligations tied to pensions and its lease at Manhattan’s General Motors Building.
The turmoil has raised questions across the legal industry regarding the stability of traditional partnership models in an era of aggressive lateral hiring. Kent Zimmermann, a consultant to law firm leaders at the Zeughauser Group, noted that firms with greater profits can destabilize competitors even if those rivals are only perceived as weaker.
Impact on Associates, Staff, and International Offices
The wind-down touches roughly 1,200 attorneys and 2,000 total employees across North America, Europe, and Asia. In London, where the firm counts about 45 partners and 200 total lawyers, associates were told they would receive a 90-day payout, with operations expected to wind up on December 31.
In the U.S., Alex Lynch, who heads the firm’s capital markets group, advised junior associates to look for new jobs while continuing their active client work. The firm’s storied history includes serving as lead restructuring counsel for Lehman Brothers during its 2008 bankruptcy—the largest Chapter 11 filing in U.S. history involving about $630 billion in assets—and representing General Motors during its 2009 restructuring, according to the New York Post.