On Wednesday afternoon, Oct. 28, the leaders of Weil, Gotshal & Manges held a call with the whole firm. The plan, they said, is to dissolve. The firm has some 1,200 lawyers. It brought in $2.1 billion in revenue last year, and it has no debt. Management wants to close it anyway.
On Wednesday we wrote that Weil, the firm that handled the Lehman Brothers and General Motors bankruptcies, had hired a bankruptcy lawyer for itself. A day later, the reason came out. Barry Wolf, who has led the firm for 16 years, said on the firmwide call that management recommends dissolving it. That's from a person familiar with the call, speaking to the Journal's Erin Mulvaney, Cara Lombardo and Alexander Gladstone. The firm's statement calls it an "orderly wind-down." Partners are expected to vote within days. The Journal says closing a profitable firm this size is "virtually unheard of."
A firm this rich can still fold, because its assets are people, and people can leave. Weil was one of the 20 most profitable firms in the business. But for a decade it grew more slowly than many rivals. Today, big firms dangle pay packages of $20 million-plus to pull star partners away. In September, Weil's top dealmaker, Michael Aiello, decided to leave with his team for Cravath. Weil also tried to merge with Willkie Farr, a deal that would have built a firm with more than $4 billion in revenue. The talks fizzled, and more partners headed for the door. The partner picked to succeed Wolf said in September she wouldn't take the job.
How a firm closes without going broke
Here's what's new, and it matters for anyone who works there. Weil isn't filing for bankruptcy. It hired restructuring lawyers at Davis Polk and advisers at AlixPartners, people familiar with the matter told the Journal. The firm says the process will unfold over the coming months while it keeps serving clients. Client bills are still coming due, so money keeps coming in. Support staff and associates are expected to get their bonuses if they stay through the end of the year. The firm will collect what clients still owe and settle its accounts. Lawyers will have to land somewhere else. They could still see at least some of the pay the firm owes them. One of the biggest bills is a roughly 380,000-square-foot lease at the General Motors Building across from Central Park. Real-estate experts told the Journal the space should be easy to re-lease, maybe for more than Weil pays now.
Our read
This is a Career story. Plenty of people work for a company that gets bought, merged or shut. The same checklist applies. First, a stay bonus is only as good as its terms. Get the date and what counts as staying in writing, because the firm that promised it is the one going away. Second, your 401(k) is not the firm's money. By law it sits in a separate trust. When a plan ends, the rules generally make the employer match fully yours, which is called being fully vested. You'll get a notice asking where to move the money. Read it and answer by its date. Third, health coverage. If the employer's whole health plan ends, the usual continuation coverage may not be there. Line up a spouse's plan or the marketplace early. Fourth, anything owed to you outside that trust is a claim on a company that's closing. That means deferred pay, unused vacation or a partner's capital account. At Weil, no debt means a shorter line to stand in.
The thing in your own plan this story touches is the vested balance on your 401(k) statement, the part that's yours if you leave tomorrow. The Journal says Weil's lawyers could get at least some of what the firm owes them. That's the money outside the trust. This week, log in to your 401(k) and find your vested balance and the plan's rollover rules. Then list every dollar your employer owes you outside the plan. Count the bonus, the vacation days and any deferred pay. That list is what you'd be chasing if the doors closed. You don't learn where the exits are during the fire. If that list is longer than you'd like, it's worth an hour with someone who reads them for a living.