Weil Gotshal & Manges, a 95-year-old law firm that generated $2.1 billion in revenue last year, is winding down after a rapid collapse triggered by partner departures. Corporate chair Mike Aiello took five mergers and acquisitions partners to Cravath in September. Seven weeks later, the firm ceased operations.
The firm's failure differs markedly from past law firm collapses. Dewey & LeBoeuf's 2012 collapse involved traceable causes: debt, unpaid obligations, and criminal charges. Weil carries no debt and few liabilities, according to the Wall Street Journal.
Yale Law professor John Morley, who has studied law firm collapses, told Bloomberg Law that legal reasons exist for a firm to shut down quickly even when financially healthy. Kent Zimmermann, a consultant at the Zeughauser Group, attributed the departures to more profitable rivals destabilizing a perceived weaker competitor.
Laura Saklad, legal industry vice president at Intapp and former chief operating officer of Orrick, framed Weil as a case study in rainmaker dependency. She identified three vulnerabilities. First, firms concentrate business in too few partners rather than developing a deep bench of emerging business developers. Second, client relationships attach to individual partners rather than the firm. Third, partners underestimate the firm's network value.
Saklad recommended institutionalizing client relationships to serve clients better while creating stickier firm relationships independent of any single partner. She also emphasized the importance of technology to help partners understand firm-wide capabilities.