Weil held more than $1 billion in receivables and work in progress
Weil, Gotshal & Manges, a 95-year-old Wall Street firm with some 1,200 attorneys worldwide and more than $2 billion in revenue, is shutting down. New hires who gathered for orientation last week heard senior lawyers speak of plans for a long and successful future. Nine days later, at 3:30 p.m. Wednesday, senior partners gathered everyone again with a different message.
“Given the significant partner departures, resulting loss of revenue and other disruptions, and after careful consideration of the alternatives, we have reached the heartbreaking conclusion that we must recommend an orderly dissolution of Weil, Gotshal & Manges,” Barry Wolf, the firm’s leader, said on the call, according to a video reviewed by The Wall Street Journal. “This is not a recommendation we ever imagined making.” Wolf said a partner vote would be forthcoming.
The recommendation capped a chain of events that produced a once-unthinkable outcome in a matter of days. Late last week, merger talks with Willkie Farr & Gallagher collapsed and another wave of top partners chose to leave the firm; five days later, Weil’s downfall was complete. “It’s almost impossible to believe,” said one retired Weil partner of three decades. “But the run on the bank came, and the bank has to close.”
The idea that a run on top talent could take down even a leading firm in a matter of weeks has sent a shudder across the legal industry, which is already enduring a year of extraordinary turbulence. This summer, six Wachtell lawyers — including one of the firm’s co-chairs — departed a firm that until 2020 had lost only one partner to a rival in more than half a century. Last year saw a record number of partner exits from top firms, with this year on track to top that, according to data firm SurePoint Technologies.
None of the turmoil showed up in Weil’s finances. The firm was among the 20 most profitable in the industry and held well more than $1 billion in receivables and work in progress yet to be paid. It plans to dissolve without filing for bankruptcy, collecting outstanding client payments and settling its accounts. Among its biggest liabilities is a roughly 380,000-square-foot lease at the General Motors Building across from Central Park in New York.
The firm that invented much of modern bankruptcy practice and spent years as a go-to adviser for corporations under duress is now working with restructuring advisers of its own. Weil was founded by top Jewish lawyers excluded from other elite shops and built its reputation leading mega-bankruptcies at Enron and Lehman Brothers; Harvey Miller, the 14th partner, staked the firm’s claim on bankruptcy at a time when other big firms dismissed the practice as lesser work. Adversaries nicknamed the firm “We’ll Getcha & Mangle Ya” for its aggressive tactics. John A. E. Pottow, a University of Michigan law professor who worked as a bankruptcy lawyer at Weil in the early 2000s, said the firm had hardworking lawyers and a good vibe, with lawyers celebrating at a bowling alley when a case closed. Last year, its restructuring team landed a lead role on the bankruptcy of auto supplier First Brands, work that would bring in roughly $160 million in legal fees and be among the most lucrative bankruptcy assignments of the year, a recent filing shows. Its mergers and acquisitions practice, which fell under Aiello’s purview, was also humming along, advising on big deals for Home Depot and Sunoco.
Lawyers at Weil and across the industry are already examining the firm’s collapse, with scrutiny falling on leadership decisions made over years. Some people inside and outside the firm blame Wolf, 66, who eschewed client work for years after taking over in 2010, for failing to make the same decisive moves as rivals such as Kirkland & Ellis and Paul Weiss, including reinvesting profits from the financial crisis to poach top talent. Others lay the blame on Michael Aiello, the firm’s top dealmaker and a polarizing figure who some say made it harder to recruit for other practice groups that might create conflicts with his work. Aiello led the 600-person corporate practice and was seen by many as Wolf’s shadow leader. Wolf and Aiello were the two best-paid partners at the firm, earning north of $20 million a year each; their fortunes were linked, with a unique provision ensuring that, as the firm’s leader, Wolf was paid the same as the highest-earning partner each year.
About a year ago, Aiello and Wolf quietly began calling rivals to explore a merger that would let the firm compete with global giants, dialing potential partners including Houston-based Vinson & Elkins, a firm with a strong energy practice in Texas where Weil had been struggling to attract talent. As Wolf neared the firm’s mandatory retirement age of 68, a committee he created selected Ramona Nee, a successful private-equity partner based in Boston, to take over in January 2027; the firm announced her selection in March. Nee won partners’ support by championing a remaking of Weil that would bulk up in practice areas including private equity to compete with firms like Latham & Watkins and Kirkland & Ellis, though many competitors had laid the groundwork for similar expansions years earlier. “We have to constantly be vigilant and constantly be looking around corners and constantly making sure that we’re taking care of our people in a way that makes them want to stay,” Nee said in a Weil podcast interview earlier this year.
Aiello began quietly telling those close to him that he was unhappy and wanted the firm to maintain its tightknit culture, rather than adding lawyers without a clear plan. Meanwhile, other partners who decided to leave criticized Aiello for not giving space for the firm to grow and have a better shot at competing.
By the summer, many of Weil’s highest-producing partners were holding talks to leave for competitors. Christopher Machera, a member of the management committee, left for Paul Weiss, and Brian Parness, a private-equity partner, left for Simpson Thacher & Bartlett. In early September, shortly before Rosh Hashana, Aiello told his longtime close friend Wolf that he was leaving for Cravath, Swaine & Moore — taking five M&A partners with him. It was the last time the two spoke. Weil was now without its largest revenue generator and his prized M&A practice, and soon after, Nee told the management committee she no longer wanted to lead the firm. Some partners at the firm said Wolf wasn’t giving her an opportunity to lead, while negative press about partners leaving was reflecting poorly on her.
At management committee meetings, the group’s own ranks dwindled. Those still there debated how to stabilize the firm. Efforts to find a merger accelerated. Some firms reached out to Weil, while the firm sought partners.
On Oct. 20, Weil told partners it was in talks with a merger partner it did not identify, and the legal world lit up with a guessing game of potential tie-ups. When some partners learned the talks were with Willkie, many chafed at the possible combination, according to people familiar with the matter; four more partners told leadership they were leaving, including two more members of the management committee. The talks with Willkie fell apart late last Thursday, and there were no other contenders. Leaders received notice from several large practice groups that they intended to leave. Management committee members met through the weekend, phoned restructuring lawyers and, on Tuesday, brought in a top bankruptcy lawyer from Davis Polk. Some partners began encouraging their associates to find other jobs.
Late Wednesday afternoon, employees were invited to a firmwide meeting. Wolf appeared on camera from the firm’s midtown office, flanked by the remaining members of the management committee, including his onetime would-be replacement, Nee. In brief remarks, he said management was recommending a dissolution and that a partner vote would be forthcoming. The firm said in a statement that as the process unfolds it “will continue serving clients with the dedication and excellence that have defined it since its founding and will remain committed to supporting its colleagues.”
At the firm’s New York office Wednesday, lawyers poured bottles of scotch and Champagne they had been saving to celebrate promotions and deal closings into paper cups. That night, about 50 of the firm’s lawyers gathered on the Midtown rooftop bar Le Jardin for what was supposed to be a welcome party for the first-year associates of the New York finance group. The wake turned out to be one of the most highly attended welcome receptions.