A feature article by Rick Archer with commentary by Tripp Scott Director Chuck Tatelbaum as published in:
Weil Gotshal & Manges LLP leaders may have every reason to agree to an out-of-court wind-down, but dissolving such a storied law firm, which announced Wednesday it intends to shut down following an exodus of attorneys, is not as simple as a handshake among partners, experts said in interviews with Law360 on Wednesday.
Weil's Silicon Valley Office is seen in Redwood Shores, California, in 2020. The law firm, which was founded in 1931, abruptly announced Wednesday it would shut down permanently. Since early 2026, dozens of partners have left the firm.
The wind-down may face complications ranging from lease liabilities to collecting accounts receivable, although the process is less of a tangle than taking a firm into bankruptcy court, if the recent end of Stroock & Stroock & Lavan LLP is any example.
"It's much smoother that way, and the partners appreciated it," Hogan Lovells Cadwalader partner Erin Brady said. She expects Weil to follow in the footsteps of Stroock, which wound down out-of-court in 2023, also following a failed merger and a mass exit of its lawyers.
The sudden collapse of 95-year-old restructuring giant Weil, the announcement of which followed failed merger talks with Willkie Farr & Gallagher LLP and the departures of multiple top attorneys, shocked the legal world.
Like dissolving other partnerships, unwinding Weil's legal partnership will likely involve having the partners meet according to the terms of their agreement, coming to a consensus to end the tie-up, paying off ordinary expenses and dividing up the equity and remaining assets on a pro rata basis.
A potential wrinkle is the need to sort out what is owed to partners who have previously left the firm, Brady noted.
The firm's clients are, by bar association rules and legal precedent, free to retain any of the firm's soon-to-be ex-lawyers or none, and that can be a problem when it comes to collecting the accounts receivable, which are generally a dissolving firm's biggest asset, said Charles Tatelbaum, a director at law firm Tripp Scott.
The lawyers have a fiduciary duty to collect those accounts, but they will also have a personal interest in not pressing their clients so hard that they leave, Tatelbaum said.
"They have a real divided loyalty," he said of Weil's attorneys. In a statement announcing its closure Wednesday, Weil said it will continue serving clients.
However, losing clients may be what is called for because continuing to work on their matters in an office whose employees will likely be jumping ship could create malpractice risk, Brady said.
"They're going to want people to go now and take significant matters with them," she said.
Better Than a Bankruptcy?
Weil's sudden collapse does not appear to be financial, so like many law firms, it doesn't seem to have large amounts of funded debt with which to contend.
Most firms' major liabilities relate to employees and lease obligations. Typically, an individual or committee is appointed to sort through and settle those claims, Tatelbaum said.
Landlord claims for damages for early lease terminations can be a serious issue for global firms like Weil, which has offices in Boston, New York, Miami, Houston, Los Angeles, and several other U.S. cities, as well as London and other international centers, said John Thompson, a partner at Akerman LLP.
"They've got a pretty sort of massive long-term tail in the pension liabilities," he added.
Thomas noted an out-and-out bankruptcy filing is usually reserved for the rare firms with funded debts approaching their equity value, as a filing exposes partners to clawback of payments they received after the firm became insolvent and can start lengthy and expensive litigation.
"It's going to take, best case scenario, $40 million to $50 million out of their pockets," Brady said, referencing the legal fees the firm would likely have to pay if it had filed for bankruptcy.
Compared to Stroock's out-of-court wind-down, Dewey & LeBoeuf LLP's bankruptcy stands in stark contrast. The firm had racked up $245 million in liabilities when it filed for Chapter 11 protection in 2012.
The bankruptcy proved to be a contentious case. The firm filed the Chapter 11 petition and then liquidated in 2013, after it struck a deal to claw back $71.5 million in payments made to partners. However, attempts to retrieve additional payments, collect unpaid fees and deal with claims from laid-off workers stretched for years.
More recently, in 2019, LeClairRyan sought Chapter 11 relief with not nearly as much debt. But its case wound up being converted to a Chapter 7 liquidation overseen by a court-appointed trustee, who then sued former partners, alleging they had drained millions of dollars from the firm.
Those claims were settled, but the bankruptcy remains open to this day. The most recent action on the docket of that case was a court order allowing the trustee to dispose of office furniture, obsolete electronics and unused promotional materials that are all that remain of the firm's assets.
Tatelbaum said one result of either wind-down path is the dissolution of the bonds holding the partners together, saying he saw it in action while serving as counsel for the trustee in the Chapter 7 of a Florida law firm.
"I took 32 partner depositions, and there was amazing finger-pointing," he said.
An unfortunate effect of the end of a firm can be to give free rein to years of disagreements between now ex-partners, Tatelbaum added.
"It changes the whole tenor of the wind-down," he said.
