Weil Gotshal holds merger talks amid partner departures

One person says a tie-up would likely create a top-10 firm by revenue

Weil Gotshal told partners this week that it was in merger talks with another U.S. firm, according to people familiar with the matter. People familiar with the matter said there are no guarantees a deal will come together.

The talks come as Weil faces more senior departures. Management committee member Drew Tulumelo, an appellate lawyer, is expected to join Davis Polk with litigation partner Chantale Fiebig, while management committee member Caroline Zalka, a securities litigation partner, is headed for Paul Weiss, according to people familiar with the matter. Law.com earlier reported Zalka’s departure.

Lyuba Goltser, Weil’s co-managing partner in the corporate department, will join Sidley Austin, the people said. The expected moves add to a string of departures that includes top dealmaker Michael Aiello’s move to Cravath, Swaine & Moore.

Competitor firms have recently received an influx of résumés from Weil’s lawyers. Other exits over the past year include London dealmaker David Avery-Gee and Michael Hickey, who are leaving for Sullivan & Cromwell, and London finance head Tom Richards, who plans to go to Simpson Thacher. The exits this year have intensified questions about Weil’s future, but its woes predate this year’s departures, The Wall Street Journal reported.

Merger discussions accelerated after news that Aiello was departing for Cravath, Swaine & Moore, according to people familiar with the discussions. Over the past year, Weil quietly reached out to rival firms, including Vinson & Elkins, while other firms approached Weil. Many of those conversations, including those with Vinson & Elkins, did not progress.

People familiar with the matter said only a small group knew the other firm’s identity, which could not be learned. One person familiar with the matter said a potential tie-up would likely put the combined firm in the top 10 by revenue, while Weil currently ranks in the top 30. Weil, an elite firm in restructuring and private equity, has about $2.1 billion in revenue. Similar-sized firms, including Willkie Farr & Gallagher, have shown interest in finding merger partners in recent years, according to a person familiar with the matter.

Law firms have been racing to remake themselves as competition for talent and the threat of artificial intelligence upend their business models. The rise of mega firms such as Kirkland & Ellis and Latham & Watkins is making it harder for Weil to compete, according to The Wall Street Journal.

Founded in 1931, Weil Gotshal was a pioneer among elite firms in building a restructuring practice and led some of the largest bankruptcies in history, including Lehman Brothers, General Motors, Enron and WorldCom. The firm’s reputation as a restructuring force was solidified during the financial crisis. Legal industry observers said Weil was slower than some peers to reinvest in expanding its business and reduce its lawyer ranks when bankruptcy work dried up.

The firm has said it remains healthy and is adding new lawyers and clients even as its growth has been stagnant relative to top rivals. Weil is also undergoing a leadership transition: earlier this year, it appointed private-equity partner Ramona Nee to replace Barry Wolf, who had served as the firm’s leader for 16 years.

The prospective partner remains unnamed and the merger remains unguaranteed, while several senior lawyers are leaving or expected to leave Weil.