Weil Gotshal Plans to Wind Down. If Your Company Uses It, Here's Your To-Do List

NEW YORK — One of New York’s best-known law firms is preparing to close. Weil, Gotshal & Manges, founded in the city in 1931, said on Wednesday that its management committee has recommended “an orderly wind-down,” with a partner vote expected in the coming days, CNBC reported.

For most founders, a big-firm collapse is industry gossip. But Weil worked on mergers, private equity deals, financings, litigation and restructurings, so plenty of companies, investors and portfolio businesses have open matters there. If yours is one of them, now is the time to plan, not wait for the vote.

What Happened

The firm’s statement, quoted by CNBC and others, said that “during the wind-down process over the coming months, the firm will continue serving clients.” It did not give a closing date.

The decision followed months of partner departures. The Global Legal Post reported that more than two dozen partners have left Weil in the U.S. and London in recent months. Departures included former private equity co-head Chris Machera, who joined Paul Weiss in August, and dealmaker Michael Aiello, who moved to Cravath, Swaine & Moore with five other partners in September. Merger talks with New York firm Willkie Farr & Gallagher ended last week, according to the same report. Ramona Nee, who had been due to succeed longtime leader Barry Wolf in January, told the firm she would not take the job.

The firm is not described as broke. Weil brought in nearly $2.1 billion in revenue last year, according to Bloomberg Law, and the New York Post, citing The Wall Street Journal, reported that it is debt-free and has relatively few liabilities. Reuters reported that restructuring firm AlixPartners was brought in to advise on a wind-down that Weil intends to complete outside of bankruptcy. Associates and staff were told they will keep receiving pay for 90 days, Reuters said.

Yale law professor John Morley, who studies law firm collapses, told Bloomberg Law that there are reasons to start a wind-down quickly even when a firm looks financially healthy, because it limits the liability partners face.

Why It Matters Beyond Big Law

Weil has about 1,200 lawyers worldwide, according to CNBC. Its lease at the General Motors Building on Fifth Avenue covers roughly 380,000 square feet, the Post reported, citing the Journal. Real estate experts quoted in that coverage said the space should be relatively easy to lease again.

For entrepreneurs, the more immediate issue is continuity. When a firm winds down, the lawyers who know your deal or your case usually move to other firms, often in groups. Your files, your deadlines and your relationship may not all move together unless someone manages it.

A Practical Checklist for Weil Clients

None of the following is legal advice, and your own general counsel or a new outside lawyer should guide the specifics. But these are the questions worth asking this week.

Find out where your lawyers are going. Ask the partner who runs your matter directly whether they are staying through the wind-down or moving, and to which firm. You choose your lawyer, not the firm, so you can follow them or pick someone else.

List every open matter and deadline. Pull together pending deals, court dates, regulatory filings, trademark renewals, and anything with a closing date in the next 90 days. Those are the items most at risk of slipping during a handoff.

Ask for your files in writing. Clients are generally entitled to their files. Request a clear plan for how documents, data rooms, signed agreements and corporate records will be transferred to you or to new counsel.

Settle billing questions early. Ask for an up-to-date statement and how any retainer or prepaid amount will be handled. Weil is still collecting payments on outstanding bills, the Post reported.

Check conflicts before you switch. A new firm has to clear conflicts before it can take your matter. If you are in the middle of a transaction or dispute, start that process now so you are not stuck without counsel at a key moment.

Tell your investors and lenders. If Weil represents you in a financing, or your board or lender expects a legal opinion from the firm, let them know who will handle it going forward.

The Bigger Picture

Weil worked on some of the largest corporate bankruptcies in U.S. history, including Lehman Brothers and General Motors, according to the Post. Its decline happened fast. As Debtwire’s John Bringardner told City A.M., it was a “crisis of confidence” rather than heavy debt that led to the plan.

For New York’s founders, the lesson is broader than one firm. Your company’s legal history lives in someone else’s system. Keeping your own copies of key documents, a current list of open matters, and more than one relationship with outside counsel makes any transition, planned or not, much easier.

Entrepreneurs Of New York is an independent publication and is not affiliated with Weil, Gotshal & Manges. This article is general information, not legal advice.