Roll over McKinsey, as we give the US firm the benefit of a free strategic review.
Ever since Barry Wolf took up the reins as Weil Gotshal & Manges executive partner at the start of this year it has been on the cards that the corporate partner would seek to stamp his authority on the role.
A wholesale strategy review can be risky, but get it right and Wolf will have successfully put some distance between himself and the man he effectively succeeded, Steve Dannhauser, chief executive at Weil from 1989 until last year, and now non-executive chairman.
In fact, for Wolf getting it wrong is not an option – a fact that may explain why Weil, in a move thought to be spearheaded by Wolf, has hired management consultancy McKinsey & Company to rubber stamp the review.
“That’s why you hire consultants,” says one former partner. “You give them a brief, tell them what you want them to say and then get them to say it. It carries more weight if it comes from outside the firm. We’ve all done that. And the more you pay, the more weight it carries.”
A Weil insider echoes this when he admits: “Barry’s still the new guy. Weil’s far more democratic than it was before. Seriously, there was some concern when he took over that he might be too nice a guy for the job.”
Wolf, who declined to be interviewed for this piece, is understood to be confident that the appointment of McKinsey will help him pinpoint the next stage in Weil’s global development.
The consultancy is believed to be due to report in January, delivering research that is thought to be costing Weil around $2m (£1.24m).
So, in a spirit of pre-Christmas generosity, The Lawyer is offering to save Weil a bit of cash – times are hard, after all – and provide its own consultation, free of charge.
So what needs doing? Well, the financials for 2009 – revenue flat at $1.23bn and average profit up slightly at $2.3m – showed that, despite having arguably the world’s leading bankruptcy practice during the biggest downturn in decades, there was still enough slack in Weil’s transactional teams to drag down profits.
Wolf himself admitted as much when earlier this year he told The Lawyer (15 March): “We have around 100 restructuring lawyers, but the firm has around 1,250 lawyers overall. 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.”
The presence of McKinsey, not known for being shy about suggesting cuts, might be giving some of those transactional lawyers pause for thought. As one wag puts it: “McKinsey does the same thing for every client.” In other words, cuts.
The flipside of cutting is investing, not something Weil has ever been accused of being overly enthusiastic about.
“The key question will be whether or not Weil’s willing to invest,” says one former Weil partner. “They say they are, but they rarely do, and Asia, currently in what should be an investment stage, is a tough place. Weil’s historically been cautious about investing.”
But there may be deeper issues for McKinsey and Wolf to address. One former Weil partner claims that Weil’s international offices – the focus of the review – are characterised by a “silo” mentality, whereby star partners hang on to deals and clients. Shifting that culture should be a priority.
Weil’s overseas offices have been built on a similar model – independent local offices, managed and run by local lawyers, competing with local firms in every jurisdiction. Of London’s 100 or so lawyers, for example, only around five are Americans.
Each of the firm’s overseas offices has historically been built around high-profile individuals. Think Maurice Allen and now Mike Francies in London, Gerhard Schmidt in Germany and Claude Serra in France (or “Fortress France”, as one former Weil lawyer describes it).
“The cult of personality runs through Weil and it always has,” says another former partner. “There’s never been too much of an attempt to institutionalise relationships. The only real exception to that is GE.”
The accusation of a lack of a fully integrated partnership is echoed by another former partner.
“The number one question for McKinsey should be how Weil can incentivise people to make proper integration happen,” says the ex-partner. “Nobody’s taking the initiative to bring it all together. It’s been like this for years. It’s similar with Poland and the Czech Republic – they’re small offices, but they’re isolated. It’s tough to fix.”
Weil’s remuneration system may be in line for a review if these comments are on the mark.
But McKinsey is also expected to be helping Wolf with some even more fundamental issues – namely, which jurisdictions and practice areas it should be targeting for growth. Further growth in Asia is a given, assuming Weil can find the right talent.
As far as practices go, in the US Weil has enjoyed first-mover advantage in areas such as bankruptcy, IP litigation and, to a lesser extent, private equity. If it is to target any new area for launching or expanding (projects and international arbitration have been mentioned by sources close to the firm), there will be no first-mover advantage this time around.
“If we go with projects – and no decision has yet been taken – we’ll describe it externally as a ramping up, but in reality it’ll be launching something new in terms of having a specialist capability,” says one current Weil partner. “The projects we’ve done so far have been in places like Warsaw and the Czech Republic, where we don’t have specialist lawyers – they’re local generalists. With international arbitration we already have a practice, but we’d like a bigger one.”
Of course, beefing up in any of these areas may be just wishful thinking. As a partner at a rival firm puts it: “Weil has a great name and brand and the profitability to buy itself a team. But if they think they can hire one or two partners and say they have a top-tier projects practice, they’re kidding themselves. It won’t work.
“That’s why the UK firms are so good at it – they have huge teams. You can’t just flip into project finance.”
Now that Wolf is coming to the end of his first year as executive partner, a role for which he was hand-picked to inject some new vision and fresh blood into Weil’s senior management, crunch time is approaching. The success of his strategy, which is set to be unveiled at the start of next year, will define whether his tenure is deemed a success or a failure.