(Fixes typo in name of Stroock in paragraph 15)
By Mike Scarcella and Sara Merken
Oct 29 (Reuters) - Prominent US law firm Weil, Gotshal & Manges is planning to wind down amid a partner exodus, setting the stage for complex decisions involving its lawyers, their clients and rival firms looking to capitalize on its downfall.
Here are some of the next steps facing Weil in what would mark one of the largest-ever law firm dissolutions.
HOW DID WEIL COLLAPSE?
In an abrupt turn, Weil said that its management
committee recommended to partners that the firm wind down in the coming months. The partnership must formally vote on the plan.
The 95-year-old Manhattan firm had long been a leading player in major corporate bankruptcies, deals and litigation, employing around 1,200 lawyers and generating more than $2 billion in revenues last year.
But Weil faced mounting departures by key partners in recent months to rival firms, creating a spiral of defections. Its situation worsened after merger talks with another law firm broke down in late October, and when private equity partner Ramona Nee backed away from plans to succeed longtime Weil leader Barry Wolf.
WHAT HAPPENS TO THE LAWYERS?
Rival law firms were already recruiting aggressively from Weil and fielding lawyer resumes before it crossed the tipping point. More than 30 partners left this year, including members of the firm's executive committee.
The hiring and job hunting will now go into overdrive as other firms compete for top remaining partners and hundreds of associates flood the legal hiring market at once.
As it announced its dissolution plan, Weil still had lawyers in 16 offices in the US, Europe, Asia, and large, well regarded practices including restructuring, litigation and private equity. In some past dissolutions, large groups of lawyers in the same city or practice have been absorbed en masse by other firms.
The firm also employs hundreds of paralegals, technical experts and other staff.
MUST WEIL FILE FOR BANKRUPTCY?
The firm intends to wind down out-of-court and has engaged restructuring advisory firm AlixPartners to advise it on the process. Weil also previously hired restructuring counsel from Davis, Polk & Wardwell.
A court-overseen bankruptcy process is not necessary if the firm remains solvent and able to satisfy obligations to its employees, landlords, lenders and others, legal experts said.
In 2023, law firm Stroock dissolved amid a wave of lawyer departures to other firms. The firm two years later announced a settlement with its major creditors, resolving its wind-down and asset distribution.
Several other major firms in the past two decades filed for bankruptcy, including Dewey & LeBoeuf and Howrey.
WHAT OBLIGATIONS DOES THE FIRM HAVE?
Weil's lawyers have professional obligations to continue serving their clients that they must balance as they take positions at other firms. Its current and recent clients include Apple, Goldman Sachs and Dow Chemical.
The law firm's associates and staff were told they will continue to receive pay for 90 days and receive bonuses at the end of 2026. It was unclear what Weil may owe certain partners under the firm's partnership agreement.
Weil's real estate footprint spans 10 US cities and six international locations including its leased home in the General Motors Building in Manhattan that lists more than 500 lawyers.
(Reporting by Sara Merken in New York and Mike Scarcella in Washington, DC; Editing by David Bario and Nick Zieminski)
