The new hires at Weil, Gotshal & Manges sat through orientation. Senior lawyers talked about a long future. Nine days later, at 3:30 p.m. on Wednesday, Oct. 28, everyone was called back. The 95-year-old firm was shutting down.
We wrote about Weil twice this past week, once when it hired a bankruptcy lawyer and once when it moved to dissolve. The Journal's weekend cover story, by Erin Mulvaney, Cara Lombardo, Corinne Ramey and Jasmine Li, fills in the last five days. On Oct. 20 the firm told partners it was in merger talks. The partner turned out to be Willkie Farr & Gallagher. Many partners balked. Four more said they were leaving, two of them from the management committee. The Willkie talks fell apart late on Oct. 22, and there was no one else. Five days later, by the paper's count, it was over.
The strange part is that the firm wasn't broke. It had some 1,200 lawyers and more than $2 billion in revenue. It ranked among the 20 most profitable firms in the business. It still has well over $1 billion in unpaid bills and work in progress. Last year its restructuring team landed the First Brands bankruptcy, worth roughly $160 million in fees. None of that mattered once the rainmakers left. Michael Aiello, the top dealmaker, told leader Barry Wolf in early September that he was going to Cravath and taking five merger partners along. The two old friends never spoke again, the paper says. Each had earned north of $20 million a year.
A run on the bank, in people
A retired partner of three decades put it to the Journal this way. "The run on the bank came, and the bank has to close." Weil plans to dissolve without filing for bankruptcy. It'll collect what clients owe and settle its accounts. One of its biggest debts is a lease of roughly 380,000 square feet in the General Motors Building. The firm isn't alone. Last year set a record for partner exits from top firms, and this year is on track to beat it, per the data firm SurePoint Technologies.
Our read
Career. A law firm's only real asset walks out the door every night. That's true of more businesses than people admit. Weil had the cash flow, the brand and the backlog. It still fell in five days because the people who bring in the work chose to leave. If you own a business, that's a lesson about key-person risk and a written succession plan. If you work for one, it's a lesson about your own exit plan, even when the place looks healthy. Especially then.
Here's where it touches your money. Your 401(k) is yours. By law, plan money generally sits in a trust, apart from the company's own accounts, so a wind-down doesn't take it. But you have to know where it sits. This week, log in to your 401(k) and write down three things. The custodian's name. Your vested share of the company match. Whether a beneficiary is on file. If your employer closed next Wednesday, those are the three facts you'd need first. We'd rather you find them on a calm day. Bring them to your next review and we'll check them against the plan.