We’ve all been so transfixed by the Patton Boggs meltdown that we’ve temporarily lost track of some other law firms that are facing challenges right now. The most prestigious name on the list: Weil Gotshal & Manges.
After last summer’s layoffs and partner pay cuts, WGM experienced a rash of partner defections. Some of these were true losses for the firm, but others were chalked up to Weil’s strategy of becoming leaner, more capital-markets-centric, and ultimately more profitable.
Has this revamping of the firm manifested itself in the form of higher partner profits? Not yet. In fact, in 2013, revenues and profits at Weil fell….
After a turbulent year in which at least three dozen partners left and some core practices fell into the doldrums, Weil, Gotshal & Manges reported substantial declines in revenues and profitability in 2013. Revenue dipped 7.4 percent to $1.14 billion from $1.23 billion a year earlier, while profits per equity partner fell by the same percentage, to $2.07 million from $2.23 million. Meanwhile, revenue per lawyer was down nearly 4 percent to $985,000 from $1.03 million last year.
Sometimes things have to get worse before they get better. At least that’s the view of Weil management:
Characterizing the year as one of “repositioning,” Weil executive partner Barry Wolf says earnings came in right at the target set by the firm last spring. “Given everything that went on last year, we’re satisfied with the way things went,” Wolf says.
If the firm was hoping to slim down, it’s certainly succeeding. According to Am Law, Weil’s total lawyer headcount fell by 3.7 percent, to 1,157 lawyers, and partner headcount dropped by an even larger amount, 11 percent.
Some of the departed partners grumbled to the American Lawyer about compensation still owed to them. According to Barry Wolf, the check’s in the proverbial mail — they’ll get paid within the next year. (Query whether some of this money involves a return of capital, which different firms’ partnership agreements handle differently; some firms provide for rather slow payback, perhaps to discourage departures.)
Let’s be clear: the troubles at Weil might be fun for some from a schadenfreude perspective, but the firm isn’t going anywhere (unlike certain other firms one can think of). Profits per partner remain north of $2 million, a traditional marker of elite status, and Weil continues to get some major engagements:
[D]ealmaking, particularly from the firm’s Silicon Valley office, strengthened near the end of the year. Late 2013 deals the firm had a hand in included advising Applied Materials Inc. in its $29 billion merger with Tokyo Electron Limited, announced in September; representing Jazz Pharmaceuticals plc in its acquisition of Italian biotech company Gentium S.p.A. for $1 billion, announced in December; and helping Oracle Corporation in its $1.5 billion acquisition of Responsys Inc., a cloud-based marketing software company, announced in December.
Deal flow remains strong this year, says Wolf. The firm is representing RF Micro Devices Inc. in its $1.6 billion merger with radio frequency chip maker TriQuint Semiconductor Inc.; Facebook Inc. in its $16 billion acquisition of WhatsApp; and China-based Lenovo Group Limited in its pending $2.9 billion acquisition of Google Inc.’s Motorola Mobility Holdings Inc. smartphone business.
These are some marquee M&A matters, and they’re in the tech space, a sector that’s only going to grow in the years ahead. If Weil is de-emphasizing its historically strong bankruptcy practice in favor of M&A for companies like Facebook, that seems like a smart strategy.
So has Weil turned the corner, and is it ready to reap some restructuring rewards? Or does it still face challenges ahead? Feel free to contact us, by email or by text message (646-820-8477), with any information or opinion you might want to share.
Weil’s Profits, Revenue, Head Count All Drop in 2013 [American Lawyer via Morning Docket]