If the Houston office of Weil Gotshal & Manges ends up shutting down in the wake of the recent partner defections, management in New York might not shed a tear. In fact, it might have been part of their master plan.
As one Weil source told us, the Houston litigation defections were “not a surprise,” since the June layoffs “took away all but one assistant and all of the associates. The associates that were allowed to stay were switched to contract positions and have since left. Basically, it was an elimination by New York of the Houston group from the bottom up.”
Dallas, however, is a different story. It’s more of a standalone office, with a more diversified mix of practices, and it makes a bigger contribution to the firm’s bottom line.
But the latest partner departures do raise serious questions about its future. Which Dallas partners just left, and where are they going?
The news took place on Friday. Over the weekend, Law360 had this report (sub. req.):
Weil Gotshal & Manges LLP’s troubles in Texas deepened in recent days with two more Dallas partners leaving for other firms, according to sources familiar with the moves, bringing Weil’s recent partner losses in the state to sixteen.
The latest departures are Dallas corporate partners R. Jay Tabor, an M&A specialist with deep energy industry experience, and private equity-transactional attorney S. Scott Parel.
Both resigned Friday, with Tabor committed to Gibson Dunn & Crutcher LLP and Parel going to Sidley Austin LLP, according to two sources.
The latest departures, which come on the heels of the previously announced move of an eight-partner group to Sidley, were confirmed in an office-wide email that managing partner Glenn West sent out on Friday. He referred to Tabor’s and Parel’s moves as “personal decisions” and reiterated the firm’s commitment to the Dallas office. West will be holding a meeting with the Dallas office later today.
How may associates will leave Weil’s Dallas office for Sidley? This was the subject of earlier debate, with estimates ranging from 10 to 25. A source quoted by Law360 claims that the current number of Weil associates who have accepted Sidley offers is 16.
UPDATE (10:25 a.m.): A source tells us, “The total number of partners and associates leaving Weil for Sidley is expected to be in the neighborhood of 30 (which includes a couple of first year associates). It is also expected that anywhere between 5 to 10 associates will defect to other firms.”
UPDATE (4:00 p.m.): According to a Sidley press release about Scott Parel’s arrival, Sidley’s Dallas office “is now home to nearly 60 lawyers including 16 associates and counsel from Weil who have accepted offers from Sidley.” We’ve pasted that press release on the next page.
What is causing all of Weil’s Texas partner departures? In an earlier article, Law360 cited tensions over billing rates, with some of the Texas partners chafing under the requirement to charge New York-level rates. But some of our sources pushed back against that theory, and Law360’s sources are now stressing other factors as well:
A primary driver for the resignations, according to one source, is the widespread belief that Weil’s New York-centric management is disinclined to invest in Texas lawyers and practices, and carries a “protectionist” attitude for New York lawyers at the expense of revenue-generating practices elsewhere, including decisions regarding who is nominated for partnership.
At the same time, the source said, executive partner Barry Wolf and other leaders have been largely mute to the concerns of satellite partners and associates about the firm’s commitment in the wake of Weil’s massive layoffs in June, which hit the firm’s general litigation group in Texas particularly hard.
“We don’t to this day know what the management strategy is there because those offices have always been profitable,” the source said of the Texas branches, noting that many other firms are “doubling down” in the state.
Note that the two latest partners to leave, Jay Tabor and Scott Parel, are transactional attorneys who have worked on billion-dollar deals in recent years. While Weil might be happy to see litigation or bankruptcy partners head for the exits, the firm probably does not want to lose M&A and private-equity lawyers like Tabor and Parel.
In fact, in the wake of the initial Dallas defections, Weil offered a “battlefield promotion” to partnership to a senior finance lawyer there, in an effort to keep that practice going. But when that lawyer decided to move over to Sidley, the powers that be “kicked him out, blocked him from his email and computer access, and gave him hours to pack.” The firm plays hardball with those who decide to leave. (Note that the original Dallas defectors are still on the Weil website, suggesting that the firm is holding them to the notice period specified in the partnership agreement, as we previously reported.)
UPDATE (10/8/2013, 11:00 a.m.): Sidley’s chair, Carter Phillips, confirmed to Am Law Daily that the nine partners going from Weil to Sidley are bound by a 60-day notice period. “Weil, for some reason [that is] unclear to me, is enforcing it,” he said. “Historically it has always been waived.”
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(Flip to the next page to read (1) managing partner Glenn West’s email to the Dallas office and (2) Sidley’s press release about Soctt Parel’s arrival.)