Weil Gotshal Leadership Recommends Wind-Down of 95-Year-Old Law Firm, Partner Vote Expected in Coming Days

Weil, Gotshal & Manges has told its partners it wants to close.

The firm's management committee has recommended that the partnership pursue an orderly wind-down, Weil said in a statement today, Oct. 28. Longtime leader Barry Wolf delivered the news at a companywide meeting Wednesday afternoon. A partner vote is expected in the coming days.

"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," Weil said. "During the wind-down process over the coming months, the firm will continue serving clients with the dedication and excellence that have defined it since its founding."

The recommendation is not yet a final decision. The vote is.

From denial to wind-down in about six weeks

The timeline is short. On Sept. 21, Weil denied a merger report, saying it was "not engaged in merger discussions with any firm." By Oct. 21, reports said it was pursuing a tie-up with an unnamed firm. Merger talks with Willkie Farr & Gallagher then ended late last week, after the two sides had signed a non-disclosure agreement.

Earlier this week, a Weil spokesperson told the Wall Street Journal that "No decision has been made to dissolve the firm." That was before today's announcement.

The firm also brought in restructuring help from Davis Polk & Wardwell, including managing partner Neil Barr and restructuring partner Brian Resnick. Resnick is advising on the wind-down process. The Financial Times reported that other options under review included a last-minute merger or continuing as a slimmed-down standalone business.

The partner exodus

The slide began in September, when corporate department chair Michael Aiello, widely regarded as one of the country's leading M&A lawyers, left for Cravath, Swaine & Moore. He took five partners with him. At the time, Weil said he was leaving for "a smaller platform."

Others followed:

• Private equity partner Christopher Machera went to Paul, Weiss, Rifkind, Wharton & Garrison.
• Two London M&A partners went to Sullivan & Cromwell.
• Simpson Thacher & Bartlett hired six Weil partners in London and New York.

In all, more than two dozen partners have left on both sides of the Atlantic, according to the Global Legal Post. The Wall Street Journal reported that more were set to go, including management committee members Drew Tulumello and Caroline Zalka, and corporate co-managing partner Lyuba Goltser.

Weil did not stand still. It added at least 20 partners across private equity, corporate and litigation in recent months.

The succession plan fell apart too. Ramona Nee, named in March to succeed Wolf, who has led the firm for 16 years, told the management committee she would not take the job in January, the Financial Times reported. A Weil spokesperson said she had "not interviewed with any firms and does not have an offer from any firm."

What was at stake, and what was not

Weil had $2.1 billion in revenue last year and about 1,200 lawyers. Founded in 1931, it advised on the General Motors, Enron and Lehman Brothers bankruptcies, the last the largest Chapter 11 case in history.

The firm also reportedly carries little debt. The Wall Street Journal, citing people familiar with the matter, said Weil is debt-free with relatively few liabilities and is still collecting on client bills. It could shut down without bankruptcy, which could let its lawyers recoup at least some unpaid earnings. Its lease of roughly 380,000 square feet in the General Motors Building on Fifth Avenue ranks among its largest liabilities, and real estate experts told the Journal it should be easy to re-let.

That sets Weil apart from Dewey & LeBoeuf, a firm of similar size that failed in 2012 after lawyer departures, heavy debt and large obligations to current and retired partners. Dewey ended in Chapter 11, and its former leaders later faced criminal charges. No such charges are involved here.

Insiders told the Journal that influential Weil partners disagreed on strategy. Some wanted to compete head-on with larger rivals. Others preferred to stay a slimmed-down operation. Growth had also been sluggish over the past decade while Kirkland & Ellis and Latham & Watkins competed for top talent, the Journal reported.

Reuters describes an industry where firms use aggressive pay packages to lure rainmakers for private equity, M&A and litigation work. That talent war leaves even storied firms exposed when a few key partners leave and others start looking for their own exits.

What comes next

The partner vote is the next step, with no date set beyond "the coming days." Weil has not said what the wind-down means for its lawyers, staff or creditors. The firm has said only that it will keep serving clients "over the coming months." Whether the firm shuts down inside or outside bankruptcy could affect how much unpaid compensation lawyers recover.