The proposed wind-down of Wall Street’s Weil Gotshal & Manges is extraordinary precisely because there was no obvious reason for one of the world’s most elite law firms to collapse.
This was not an unprofitable business staggering beneath a mountain of debt. There was no Enron/Arthur Andersen-style loss of a major client, no dot-com-style market crash and no significant unfunded pension liability hanging over it. In short, unlike previous Big Law collapses, there was no obvious bleed from a festering wound, nor an external shock that should have killed the firm.
Weil generated approximately $2.1bn in revenue last year, and profits per equity partner reportedly exceeded $5m. Yet, following an accelerating run of partner departures, failed merger discussions and the decision of incoming executive partner Ramona Nee not to take up the top job in January next year, on 28 October Weil’s management committee recommended that the partnership be dissolved.
There is more than a little irony that Weil, long home to one of the world’s leading bankruptcy and restructuring practices, could ultimately find no restructuring solution for itself. For those of us who spend our working lives moving partners between law firms, Weil is a dramatic demonstration of a structural weakness in modern Big Law which has been building for years.
Indeed, as we argued in April 2025 in Big Law Jenga: How Private Capital Stars Are Making Elite Firms Unstable, the very forces driving the extraordinary profitability of the Big Law elite were also making their partnerships increasingly vulnerable. The remarkable thing may not be that Weil collapsed, but that something like Weil had not happened already.
Law firms are a confidence trick
For all their many advantages, law firm partnerships are inherently unstable entities. Unlike normal businesses, the value of a law firm derives not from its manufactured product or its IP, but overwhelmingly from its people. Its working capital is quite literally provided by its equity partners who, together with their clients, can swiftly decamp en masse to rivals should they wish.
Big Law firms including Brobeck, Dewey & LeBoeuf, Heller Ehrman, Howrey, Thelen and Stroock, as well as the former SJ Berwin, all collapsed after partner departures. Scores of other law firms might have gone the same way had they not been rescued in fire sales, often on terms highly disadvantageous to their remaining members. What has changed is that today's legal market makes those inherently unstable structures more fragile than they were before.
Private capital clients have changed the DNA of Big Law
Before the financial crisis, private equity was hardly the glamorous end of corporate law. The sexy stuff was public M&A and capital markets: IPOs, public takeovers and relationships with major listed companies and investment banks. Private equity was sometimes regarded by corporate grandees as the rather grubby end of the practice.
Crucially, those prized public company and banking relationships tended to be institutional rather than individual. In the UK, major banks and listed companies frequently maintained law firm panels, with relationships embedded across multiple lawyers and practice areas. Rainmakers certainly mattered, but the departure of an individual lawyer rarely led to the wholesale transfer of a client relationship to another firm.
Star culture and the emergence of intergenerational wealth in Big Law
Post-financial crisis, the dramatic growth in size and profitability of the most successful law firms has been on the back of their private capital clients which, due to their strong personal relationships with individual lawyers, have increasingly fostered a star culture within Big Law. In areas like leveraged finance and private equity, individual law firm rainmakers now have portable client relationships running into the scores of millions of dollars.
Unsurprisingly, these rainmaker lawyers are in great demand and so are very highly paid. Whilst law has always paid well, today, for a lucky few, it can create intergenerational wealth, with elite rainmakers moving for $20m, $25m and even $30m-plus a year, sometimes guaranteed for several years.
To accommodate the financial expectations of these rainmakers, over the past decade, virtually every elite law firm has abandoned its once sacrosanct lockstep pay structures (where partner compensation increased with seniority) in favour of models which more directly reward rainmaker partners for the massive levels of work they personally bring in.
Weakened partnership cohesion
Whilst this has been highly successful as a recruitment strategy for some firms and has, at least partially, inoculated others against raids by headhunters, it has come at the price of weakened partnership cohesion.
US law firms have always been less structurally stable than their UK cousins. They tend to have shorter partner notice periods, fewer restrictive covenants and distribute profits much sooner after they are earned, meaning far less friction for departing partners.
Until comparatively recently, however, lawyers who qualified and made partner at truly elite US firms tended to remain there until they retired. Even where the pay arbitrage at peer and near-peer rivals was sufficiently tempting for them to move, the cultural mores of the firms in which they had grown up were so deeply embedded that many would never seriously contemplate a lateral move.
However, this has been upended by a combination of: (i) altered partnership compensation structures, under which existing partners perceive the once-immutable 'rules' to have dramatically changed; (ii) an influx of highly paid partners from other firms, whose very arrival subtly, and sometimes not so subtly, changes the DNA of the partnership; and (iii) the eye-watering levels of compensation now on offer within days.
Weil itself was both beneficiary and participant in this transformation. Like many of its peers, it had increasingly turned to the lateral market to strengthen key practices, bringing in partners from some of its most elite rivals. In London, perhaps the most striking example was Murray Cox, whose 2021 arrival from Slaughter and May was a rare and high-profile lateral hire from a firm famous for growing its own. Five years later, Cox was himself on the move again, this time to Simpson Thacher.
There is a certain irony here. The more successful elite firms have become at breaking down the old cultural barriers which kept rainmakers at their home firms, the less they can expect those same barriers to protect their own partners.
Today, even law firm lifers regularly move and expensive laterals, particularly those in private capital, are statistically more likely to move again than their homegrown peers, with some private capital teams moving as many as three times in five years, a once-unthinkable phenomenon in the conservative legal profession.
On both sides of the Atlantic, over the past two years, a private capital-fuelled internecine talent war between US law firms has driven a boom in partner compensation and, according to the 90th edition of Edwards Gibson’s Law Firm Partner Moves in London, record levels of partner hiring in the world’s second-largest legal market.
A run on the partnership - when staying becomes the risky option
More than at any time in its history, today’s Big Law culture demands that elite law firms remain profitable relative to their peers. Failure to do so means that rainmaker partners can quickly decamp to rivals, taking scores of millions of dollars in client fees with them.
Where teams, or multiple teams, depart, this can result in the loss of hundreds of millions of dollars of revenue, further depressing profitability and potentially triggering a ‘run on the partnership’, a self-fulfilling prophecy in which partner after partner loses confidence and jumps ship to escape the financial consequences of reduced profitability and, beyond a certain point, the increasingly likely collapse or fire sale of the business.
When this process starts, the push factors for remaining partners can be overwhelming: equity partners who fail to get out while the going is good risk being left holding the baby in an insolvent collapse. In those circumstances, whilst their personal financial exposure is theoretically limited by the LLP agreement to the extent of their capital contributions, as Yale Law School Professor John Morley writes in Why Law Firms Collapse, the LLP “shield will be useless against a variety of indirect claims that flow from the partners’ status as owners and come out of the laws of fraudulent transfers, preferential transfers, and unfinished business”.
Happily for partners, given the difficulties of recovery, Morley notes that bankruptcy trustees and creditors nearly always settle these claims at a fraction of their value. However, as equity partners from a multitude of collapsed law firms will attest, even if they ‘only’ lose their capital, vexatious recovery actions and painful tax issues can trail them for years to come.
If that is not enough incentive for partners to jump ship early, those who leave it too late can find that the gravitational pull of the firm’s collapse exposes them to many of the same liabilities as those who remain.
What this means is that if an elite law firm whose profits per equity partner are, say, $6m a year suffers the sudden loss of major clients through a series of high-profile rainmaker defections, then even where its remaining underlying business would still be both profitable and strong, it may nevertheless face a high risk of collapse or fire sale. This is because partners who might otherwise be perfectly happy to take the financial hit and remain at the firm, perhaps earning a more modest $4m a year, simply cannot afford to risk the consequences of staying.
At the same time, the pull has never been greater. A star rainmaker may be able to leave the uncertainty behind and join a thriving rival on remuneration potentially worth tens of millions of dollars a year, possibly even securing an indemnity, or partial indemnity, against the loss of their capital and claims by creditors of their former firm should it become insolvent. Indeed, in those circumstances, however damning it may be for the partnership as a whole, jumping ship is precisely what the rational economic actor should do.
Weil’s death spiral
Whilst there was no apparent intrinsic reason for Weil to collapse, in today’s highly liquid lateral market, once some of its star rainmakers started to jump ship, their departures had a domino effect. And, as with all law firm death spirals, it happened remarkably quickly.
From August, the firm’s troubles rapidly unfolded on both sides of the Atlantic and across many of the transactional businesses at the heart of its franchise. US private equity co-head and strategy committee member Christopher Machera left for Paul Weiss, helping kick off the latest wave of departures. Then, in September, came the more seismic loss of corporate department chair Michael Aiello, who left for Cravath with five other M&A partners, including Weil’s M&A co-head Matthew Gilroy.
By late October, more than a score of partners had announced their departures in barely two months; rumours were swirling about multiple others; and events were moving at bewildering speed.
Merger talks with Willkie collapsed on 23 October and, within days, it emerged that Ramona Nee, Weil’s co-managing partner, US private equity co-head and anointed successor to longtime leader Barry Wolf, had told her colleagues she had decided not to take up the executive partner role in January.
If there was any lingering doubt, to outsiders at least, news of Nee’s decision looked like the death knell. If the person selected to lead the firm was no longer prepared to do so, persuading everyone else to keep the faith was always going to be difficult.
On 28 October, Weil’s management committee recommended that the firm be wound down.
Inevitably, Weil’s collapse has prompted retrospective explanations: culture, management succession, insufficient scale – $3bn of revenue is already being suggested as some sort of safety line – and a failure to keep pace with its most profitable peers have all been suggested. All are arguable, but they risk rationalising with hindsight an outcome which, until very recently, almost nobody seriously expected.
A deep market for Weil émigrés
Of course, Weil’s partnership run could only gather pace because there was somewhere for its partners to run to. And for Weil’s rainmakers, there was no shortage of willing buyers.
Across New York and London, Weil émigrés were rapidly absorbed by some of the most profitable and prestigious firms in the world, including Cravath, Paul Weiss, Simpson Thacher, Sullivan & Cromwell, Davis Polk and Sidley. For partners deciding whether to stay and take the financial pain or leave, the knowledge that some of the world’s richest law firms were willing to pay handsomely for them, their teams and their clients helped make the run possible.
Edwards Gibson’s particular window onto that international story is London, where, by the time Weil announced its proposed wind-down on 28 October, we had recorded 17 partnership-to-partnership departures from Weil in 2026 – more than at any other firm – with a slew of further announcements pending.
The significance, however, is not really the number. It is the extraordinary liquidity it demonstrates. Weil had benefited enormously from the modern lateral market. Ultimately, that same market helped pull it apart.
Unfortunately for the managing partners of Big Law’s elite, the lesson from Weil is that if it can happen there, it can happen anywhere and, sooner or later, a similar firm will probably suffer the same fate. Live by the lateral, die by the lateral.
Scott Gibson is a director at legal recruitment consultancy Edwards Gibson
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