A great year for restructurings leads to heightened expectations for Weil
15 March 2010 | By Matt Byrne
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US firm happy to report increased PEP in both London and New York. By Matt Byrne
Weil Gotshal & Manges’ London office posted a drop in overall income, from $89m (£58.94m) to $85m, for the 2009 financial year.
But while total turnover slipped slightly, the all-important average profit per equity partner (PEP) figure rose from around $3m to $3.2m.
“The year turned out better than I’d thought,” says London office managing partner Mike Francies.
Part of the reason for Weil’s relative success in the City last year was down to its impressive track record in restructurings.
“Hardly anyone of our size [in London] will have done as many,” asserts Francies.
Few could argue with Francies on that point. Weil’s London office has bagged roles on major restructurings involving Lehman Brothers, GM, AIG, Icelandic bank Kaupthing, TI Automotive and Premier Foods, as well as several related to structured investment vehicles such as Golden Key.
The work on these projects alone has kept London-based partners, including Francies, dispute resolution partner Matt Shankland and corporate partners Jacky Kelly and Dominic McCahill, busy throughout 2009.
It is fair to say that several also kept restructuring partner Tony Horspool in chargeable hours before he decamped for Ropes & Gray this January (TheLawyer. com, 29 January).
Firmwide, the prominence of Weil on major restructurings was widely expected to see it post some of the healthiest figures of any US firm. Total revenue, though, was all but flat at $1.23bn, while PEP was up 1.8 per cent to $2.2m.
New York-based executive partner Barry Wolf highlights that prominence as the reason why the market’s expectations were a little out of whack.
“We have around 100 restructuring lawyers, but the firm has around 1,250 lawyers overall,” Wolf says. “Of those 1,250 lawyers we have, very broadly, around 500 in corporate and another 500 in litigation. That’s a lot of corporate lawyers - and there haven’t been a lot of deals.”
So the market might be somewhat surprised by Weil’s results, but those 100 lawyers leverage a lot of business for the firm, arguably creating an impression of a firm busier than in fact, as a whole, it is.
In the US the restructuring work in relation to Lehman and GM in particular has thrown off a reasonable quantity of corporate, financing and real estate work. But Wolf readily admits that the lower levels of transactional work felt by the firm’s competitors have also been felt by Weil.
“There’s also some new money activity,” adds Wolf, “but not enough. But when you put it all together there’s enough to keep people busy and you don’t need to do a layoff.”
That latter comment is another key to unravelling Weil’s year-end results. While the firm has not shied away from cost-cutting measures, including deferrals, it has resisted embarking on the kind of widespread layoff programmes seen at many of its rivals.
“Overall our headcount was up a bit,” says Wolf. “We didn’t have associate layoffs and we didn’t cut partner numbers to decrease the denominator and therefore raise PEP. We were proud of the result.”
Now, like most of its top-tier rivals, Weil’s attention is turning to the future. High up the list of priorities in terms of practice area investment is dispute resolution.
“Litigation is one place we’ll be looking to invest,” confirms Wolf. “But top of the list is Asia in terms of numbers of lawyers.”
As regards Asia, Weil has three offices in China, two on the mainland and one in Hong Kong.
“In Europe we have around 250 lawyers, a number that we’ve built over time and which has been very successful,” says Wolf. “We expect similar things - though not necessarily similar numbers - in Asia.”
It looks as if Weil is unlikely to have a 25-lawyer offering for long.