Imagine running a business generating more than $2 billion in annual revenue, employing over 1,000 lawyers, with an international reputation built over nearly a century and PEP over $5 million. Then imagine watching that business unravel in a matter of weeks. This is the extraordinary situation facing Weil, Gotshal & Manges, one of the world's most respected international law firms. The irony, it is ranked #2 in Bankruptcy & Restructuring!
Following the departure of several high-profile rainmakers, leadership uncertainty and unsuccessful merger discussions, the firm's management committee has recommended an orderly wind-down. Partners are expected to vote on the proposal shortly. A firm established in 1931, with approximately $2.1 billion in annual revenue, could soon disappear.
There are clearly several factors behind Weil's difficulties. It would be too simplistic to blame everything on departing partners. However, the story raises some uncomfortable questions for law firms everywhere. And I would suggest that mid-tier firms should be paying particularly close attention.
Could your firm survive losing its three biggest rainmakers?
Consider a hypothetical law firm with 20 partners generating £20 million in annual revenue. Four partners are responsible for 45% of that revenue. Now imagine two of them deciding to leave, taking their teams and a substantial proportion of their clients with them. Within a few months, millions of pounds of annual revenue could disappear.
Unfortunately, the rent still needs paying. Salaries remain due. Technology costs continue. The remaining partners are left wondering how to replace the lost income. And then comes another problem. Other partners begin questioning the future of the firm. Competitors start making approaches. Clients become nervous.
What started as the departure of two partners can quickly become something much more serious. Sound familiar? The Weil situation demonstrates that even the largest and most profitable firms are not immune to these pressures.
Who actually owns your client relationships?
This is perhaps the most important question facing managing partners. We regularly hear firms talking about our clients, but how many of those relationships genuinely belong to the firm? In my experience working with more than 250 professional services firms, I have frequently encountered situations where one partner controls virtually every aspect of a major client relationship.
They know the decision-makers. They understand the client's business. They attend the meetings. They identify the opportunities. The rest of the firm may know little more than the client's name. This creates an enormous commercial risk.
Of course, clients have every right to choose their advisers. No firm can guarantee that clients will stay when a partner leaves. But there is a significant difference between a client who knows one partner and a client who has strong relationships with several people across the firm. Which relationship is more likely to survive a departure?
Cross-selling is about more than generating additional revenue
I have long argued that cross-selling is one of the most underutilised opportunities in professional services. Most firms recognise the potential to generate additional fees from existing clients. Far fewer appreciate its importance in protecting the business.
Consider a commercial client who uses your firm for corporate transactions, employment advice, property matters and commercial disputes. If four different partners have developed strong relationships with that client, the departure of one is less likely to result in the loss of the entire relationship.
Compare that with a client who only knows the corporate partner. Cross-selling is not simply a revenue growth strategy. It is also a form of business protection. This is why regular client review meetings, joint client visits and sharing information between practice groups should be part of every firm's business development strategy.
Should we change how rainmakers are rewarded?
The Weil story also raises an interesting debate about partner remuneration. Should firms continue rewarding partners primarily for the revenue they personally generate, or should they place greater emphasis on collaboration and building the wider business? Personally, I am a strong supporter of rewarding individual performance as well as teams. Rainmakers are enormously valuable. They invest time developing relationships, creating opportunities and winning instructions. They should be properly recognised and rewarded for their success.
I have never been particularly convinced by remuneration structures that fail to distinguish between those who consistently generate new business and those who simply service work that arrives through the door. However, I do believe there is an opportunity to reward behaviours that strengthen the entire firm.
Why shouldn't a partner receive recognition for introducing a client to another practice group? Why shouldn't we reward partners who help younger colleagues develop their own networks and win new instructions? And why shouldn't we recognise those who build relationships that extend beyond their own personal involvement?
The answer is not to penalise successful rainmakers. It is to encourage more of them, while ensuring their success contributes to the long-term strength of the firm. Reward individual success. But also reward those who help others succeed.
Are you developing the next generation of rainmakers?
Another question I regularly ask managing partners is how many people in their firm are genuinely capable of winning new clients. Not servicing existing clients. Not responding to enquiries generated by the marketing team. Actually getting out into the market, building relationships and generating new instructions. In many firms, the answer is surprisingly few.
There is often an expectation that talented lawyers will somehow develop business development skills as they progress towards partnership. Unfortunately, being an excellent technical lawyer does not automatically make someone an effective rainmaker. These skills need to be developed.
Senior associates and younger partners should be learning how to build networks, develop referral relationships, identify opportunities and convert conversations into paying clients. A firm with 20 partners who can all contribute to business development is arguably in a much stronger position than one relying on three superstars.
Your CRM should be a commercial asset
Another weakness I regularly encounter is the lack of reliable information about clients and relationships. Many firms have invested considerable sums in CRM systems, yet the quality of the information remains disappointing. Important relationships exist in individual partners' Outlook contacts, mobile phones or simply in their heads. When someone leaves, much of that knowledge can leave with them.
A good CRM should provide a clear picture of the firm's most valuable clients, key decision-makers, existing relationships, upcoming opportunities and potential areas for further work. It should help management identify where the firm is overexposed to individual partners. This becomes even more important when considering succession planning, mergers or potential private equity investment.
What would a potential buyer think?
With growing interest from private equity investors and consolidators, the Weil story offers another important lesson. Investors are not simply buying last year's revenue. They are buying confidence in future earnings.
A firm generating £20 million, heavily dependent on three individuals, may represent a very different investment proposition from one generating the same revenue through a broad client base and a well-developed business development culture. Buyers will want to understand where revenue comes from, how secure client relationships are and whether the business can continue growing without depending on a handful of individuals. A repeatable process for generating new work is far more attractive than relying on the personal networks of a few partners.
Five questions every managing partner should be asking
If I were running a mid-tier law firm today, I would want clear answers to five questions:
What percentage of our revenue is generated or controlled by our five biggest rainmakers?
How many of our top 20 clients have meaningful relationships with more than one partner?
Do we actively reward partners for introducing work to colleagues and developing future rainmakers?
How many of our partners and senior associates consistently generate new business?
Could we maintain profitability if our three biggest rainmakers left within the next twelve months?
If the answers are uncomfortable, perhaps it is time to reconsider how business development operates across the firm.
The real lesson from Weil
I suspect there will be considerable discussion about what went wrong at Weil over the coming months. Leadership, culture, remuneration, competition and succession planning will all come under scrutiny. But for me, the most important lesson is much simpler.
A successful law firm should be bigger than the sum of its individual rainmakers.
Of course, you want to attract, retain and reward exceptional partners. They are essential to the success of any professional services firm. But you also need to build a business capable of surviving their departure. That means developing more rainmakers, sharing client relationships, improving commercial intelligence and creating a culture where business development is everyone's responsibility. Because if a firm generating more than $2 billion in revenue can find itself in this position, what makes the average mid-tier firm think it is immune?
Perhaps the most important question for every managing partner is not how much revenue their biggest rainmakers generate today, but how much of that revenue would remain if they walked out tomorrow.