Weil, Advising on Big Bankruptcies, Sees Revenue and Profits Climb
Total hours billed by lawyers fell about 3.8%, but the firm's pullback in Central Europe and its growth in higher-rate markets meant more revenue could be derived from a similar number of hours, the firm's leader said.
March 05, 2020 at 06:38 PM
5 minute read
Weil, Gotshal & Manges grew its revenue 3.9% to $1.52 billion in 2019 and its profits per equity partner grew at an even faster clip, crossing the $4 million mark.
Barry Wolf, the firm's executive partner, said he was "thrilled" with the firm's success, saying 2019 capped a five-year strategic push in which profits per equity growth averaged about 12% per year. He said all parts of the firm helped deliver growth, but its litigators and its restructuring lawyers, with their work on major bankruptcies such as Pacific Gas & Electric, Sears and a raft of others, led the pack.
"Where we have a significant amount of market share is in the restructuring arena, and that clearly had its impact in 2019," said Wolf. "We're not in a recession, but we're clearly in a marketplace where there's disruption in certain industries."
The firm's mergers and acquisitions lawyers still grew their contribution to the firm's top line, Wolf said, but transaction activity was "spotty" owing to uncertainty around U.S.-China trade relations and Brexit. "M&A and private equity were just not up as much as they had been, year-over-year, in years before," he said.
Head count rose by under 1% from 2018 to 2019 and the equity partner ranks saw a net loss of one, to 168.
Weil closed its Warsaw, Poland office, last year, and the office's lawyers spun off into a new firm. Some firms simply shutter an office and pay out severance, Wolf said, but Weil made sure its Polish lawyers, now operating as Rymarz Zdort, could stand on their own by covering certain expenses for a period of time. The Prague office, spun off in 2018, has a similar arrangement, he said.
"Culturally, we thought it was important that we make sure that all of our people ended up on their feet with jobs," he said. "These were all loyal, successful people."
In London, revenue contracted about 1.65%, from $188.1 million in 2018 to $185.0 million last year, but Wolf said that was because of fluctuations in the dollar-pound exchange rate. Controlling for those, the office's revenue would have been up "about five or six million dollars," he said, to about $193 million. He said the firm continued to invest in the office, making hires like corporate star David Avery-Gee and restructuring partner Neil Devaney in the second half of last year.
Total hours billed by lawyers fell about 3.8%. Wolf attributed the drop to the "choppiness" in M&A and explained that rates didn't have to rise that sharply to help the firm grow its revenue as much as it did. The firm's pullback in Central Europe, and its growth in higher-rate markets meant that more revenue could be derived from a similar number of hours, Wolf said.
Some of the firm's biggest accomplishments don't appear on its balance sheet, he said, noting its partner class of 16 was the most diverse in the firm's history, with more than half women and four attorneys of color. He also highlighted the firm's rollout of adoption and fertility benefits and its development of a program with Columbia University to teach junior associates about business.
Culture "is something that I know doesn't necessarily go to the financial results for 2019, but it's something we spend a lot of time and effort on," Wolf said.
Last year was Weil's first year for its new partnership and counsel track. He said the effects of it won't be apparent for several years. The firm's nonequity partner count fell last year from 95 to 92.
In restructuring, Weil represented debtors in several major cases filed last year. Besides PG&E, the California utility wracked with fire-related liabilities that has paid big bucks to several major law firms, Weil also represented home loan company Ditech Holding, which it billed more than $17 million, and oil driller EP Energy Corp., from which it has sought $7.9 million in fees for work done in 2019.
The firm said it represented debtors or creditors in more than half of 2019's 10 biggest bankruptcy cases. There's also a long tail of cases, including creditor representations, that don't make as many headlines but keep the practice going strong, Wolf said.
Weil litigators also had major cases. They helped Morgan Stanley and Brazilian financial giant BTG Pactual through major leveraged buyout and merger-related disputes, beat a $3 billion copyright infringement case targeting Getty Images, and helped HP and its customers win at summary judgment—and attorneys' fees—in a sprawling patent infringement dispute with tens of millions on the line.
Weil's corporate lawyers also went to work for several big clients. The firm said it worked on more than 80 transactions worth over $1 billion, including representing oilfield equipment and technology firm Apergy in a $7.4 billion combination with ChampionX and helping Brookfield Asset Management put together a $20 billion global infrastructure fund. It also helped MGM Resorts team up with Blackstone Real Estate Income Trust to acquire the Bellagio.
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