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The Weil Gotshal Dallas Departures: A Deeper Dive

“Who shot J.R.?” That was the question that everyone (hi Mom!) was dying to know on the wildly popular prime-time soap opera of Dallas.

“Who drove out Yvette Ostolaza?” That’s the question everyone is dying to know on the wildly popular prime-time soap opera of Weil Gotshal.

Okay, “drove out” is probably not the right phrasing here, for reasons we’ll explain below. But there’s no denying that people are keenly interested in the drama surrounding the departure of eight Weil partners to Sidley Austin in Dallas.

Let’s take a closer look at the situation, shall we?

We broke the news of the Weil defections yesterday morning. Since then, Sidley Austin issued its press release, and a number of other outlets wrote stories as well (links collected at the end of this post). Here’s a quick recap:

WHO: Eight partners. Six litigators: Yvette Ostolaza, Penny Reid, Vance Beagles (awesome name btw), Angela Zambrano, Yolanda Garcia, and Michelle Hartmann. Two banking and finance lawyers: Angela Fontana and Kelly Dybala.

WHAT: Moving from Weil Gotshal to Sidley Austin. The litigators will join Sidley’s Complex Commercial Litigation practice, and the banking lawyers will join Sidley’s Private Equity practice.

Ostolaza, who served as co-head of Weil’s CCL practice and on the firm’s Management Committee, will serve as a global coordinator of Sidley’s CCL practice and take over from James Bradley as Dallas managing partner, effective January 2014. Fontana, who served as co-head of Weil’s U.S. Banking & Finance practice, will serve as a global coordinator of Sidley’s Private Equity practice and become a member of the firm’s Global Finance practice.

WHERE: Dallas, y’all!

WHEN: “Later this month,” per the press release.

WHY: To that we now turn….

From Sidley’s point of view, the “why” is captured in comments that chairman Carter Phillips made to the WSJ Law Blog:

“We’ve been thinking seriously about expanding our Dallas office,” which previously had about 30 intellectual property lawyers, Sidley chairman Carter Phillips told Law Blog on Tuesday. “But if this group had shown up at any of our offices we would have been equally enthusiastic.”

And what prompted the partners to pack up? Carter Phillips pushes back on speculation that some of the departing partners were affected by the partner pay cuts that accompanied the big Weil Gotshal layoffs over the summer:

Mr. Phillips said none of the partners joining Sidley had been targeted as part of those cuts, adding, “I do think it probably raised some concerns on their part about Weil’s commitment to practices outside of New York.”

Just because none of the defecting partners got hit with pay cuts doesn’t mean, however, that the summer restructuring played no role in their decision to leave. From Reuters Legal (sub. req.):

The latest defections were linked to the widespread cuts in June, the sources said. The departing lawyers were not happy about how their dismissed colleagues had been treated and that the firm appeared not to be investing in its Texas offices, they said.

This is consistent with what our tipsters have told us. We’ve picked up two themes in our discussions with current and former Weil lawyers: (1) the treatment of women and (2) the treatment of non-NYC offices.

We’ll start with the women. As we noted yesterday, seven of the eight departing partners are women, and they amount to virtually all of the women partners in Weil’s Dallas office (except for P.J. Himelfarb, who splits her time between Dallas and New York). In meetings this week with visiting Weil leaders, including executive partner Barry Wolf, “associates asked what kind of diversity efforts the firm would undertake in light of the recent exodus of female partners,” according to Reuters.

“When Weil did the major cuts a few months ago, women were disproportionately affected,” one former Weil lawyer told us. “A number of women who were on maternity leave or pregnant were offered severance in order to leave. A number of partners whose pay got cut were women as well. The firm wouldn’t have pushed out Yvette [Ostolaza] — she was in management, well-respected — but some of the [changes from over the summer] probably didn’t sit very well with Yvette, who is super-pro-woman.”

Ostolaza appears to be one of the leaders of the defectors. The other is Angela Fontana, whom another source of ours suggested might have been troubled by Weil’s treatment of women as well:

Finance had been going great guns and has always been one of the cash cows of the Dallas office. The senior departing partner, Angela Fontana, has a national reputation for doing borrower-side private equity work, and the other departing finance partner, Kelly Dybala, is extremely capable and generally considered an up-and-comer in the finance world. Their loss is a serious blow to Weil, not just in Dallas, but nationally.

Fontana is of a vintage with several of the other departing partners, and they’ve displayed remarkable solidarity in the past, so this may be the fallout from an internal power struggle with Glenn West, the Dallas managing partner…. West is a bit of an “old boy,” and it’s hard to see him sharing authority with a bunch of ladies.

Interesting tidbit: Fontana appears to have mailed in her resignation, as she’s currently in Europe. Dybala has not commented publicly on the reason behind the jump, but has told associates it was not “about money.”

So if it wasn’t about money, it was probably about power — which, along with money and prestige, is a major motivator for lawyers. It seems quite plausible that internal firm politics, inflected with gender, triggered the departures of Ostolaza, Fontana, and their colleagues.

The second factor, which also ties into office politics, relates to the balance of power between New York and the non-New York offices. Due to the slowdown of Weil’s marquee bankruptcy practice and prominent litigation practice, some pain had to be distributed to the partnership. But was the distribution equitable? In implementing the summer cuts — a restructuring that, we’re told, was recommended to Weil by consultants they hired from McKinsey & Company — some of the offices outside New York took disproportionate hits.

Tipsters tell us that firm management may have miscalculated. They thought they could snatch some golden eggs from the non-NYC offices while not driving away the geese that laid them, and that turned out to be incorrect — at least in Dallas, which one source describes as “an extraordinarily important and profitable part of the firm.” This is hinted at in Carter Phillips’s comment about how the departing partners had “concerns on their part about Weil’s commitment to practices outside of New York.”

We’ll continue to watch Weil (which has, at least for now, displaced Quinn Emanuel as the most fun firm to cover). If you have information to share with us, please email us or text us (646-820-8477). Thanks.

UPDATE (2:30 p.m.): A source disagrees strongly with any suggestion that the departing partners have a beef with Glenn West: “Nothing could be farther from the truth. Yvette is very close to Glenn, and in fact would love to continue working with him. This is not a struggle within Dallas, as she is supposed to be the head of the office after him, which is known by all, and they both serve on the firm’s 17-person management committee. Rather, the concern has been about the firm pulling away from growth markets and not having the ability to expand in the United States to service client needs.”

Sidley Austin LLP Adds Team of Litigation and Private Equity Lawyers [Sidley Austin (press release)]
Sidley snags 8-partner Weil Gotshal group, including 2 practice group leaders [ABA Journal]
Nine Partners Exit Weil’s Dallas Office [WSJ Law Blog]
Weil loses nine Dallas partners in a week [Reuters Legal (sub. req.)]
Eight Dallas Weil, Gotshal Partners Move to Sidley Austin [Texas Lawyer (sub. req.)]
Dallas’ Weil, Gotshal loses eight partners to Sidley Austin [Dallas Morning News (sub. req.)]

Earlier: The Soap Opera of ‘Dallas’: Now Starring Weil Gotshal

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