On Monday, October 26, partners at Weil, Gotshal & Manges were calling their summer associates to tell them Weil would be alright. By Wednesday the 28th, the board had voted to dissolve the nearly-100-year-old New York firm. What happened?
Yale professor John D. Morley has a theory, something he calls the Run on the Bank hypothesis. In a recent podcast discussing Weil’s collapse, he explained that law firms have unique structural features that make them vulnerable to “partner runs.”[1] In contrast to most businesses, which are owned by their investors, law firms are owned by their workers—the partners—who are free to leave at any time due to ethical rules against noncompetes. Those partners are “acutely sensitive” to declines in profits.
“[W]hat really matters is not debt or insolvency. What matters is relative profitability [compared to peer firms],” said Morley. “Relative profits matter because the key driver of a law firm collapse is lateral movement. If you can get paid more at Simpson Thacher, [it] doesn’t matter whether you’re making five or ten or fifteen million dollars a year at Weil, if you can make more at Simpson Thacher, you will move.” The partners that receive lateral offers are often the most productive partners—those who subsidize other partners’ pay. When they leave, the firm’s ability to pay other partners goes down, and those partners are then incentivized to leave. This becomes the “run on the bank,” a “spiraling cycle of withdrawals.”[2]
The Law Weekly reached out to Jack Wiley ’27, who was slated to return to Weil after summering there in 2025 and 2026. “Weil [with its large bankruptcy practice] was reliant on the economy going bad sometimes. . . . When a lot of law firms after 2008 stayed big, we downsized a bit, and assumed that the deal market was not going to increase as rapidly as it did,” Wiley said. Morley backed this up. “Weil entered the financial crisis in a pretty strong position,” he commented, “but it didn’t make the investments in private equity that other top-tier transactional law firms were making after the financial crisis. For that and for other reasons, its relative profitability steadily declined.”
Weil also “had an unhappy governance culture. . . . Highly centralized around a couple of players, Mike Aiello [who left the firm for Cravath in September, triggering the collapse] and [firm chair] Barry Wolf,” said Morley. “There was a lot of tension around expansion strategy.”
Wiley weighed in: “I think some of the PE partners [likely Wolf and Ramona Nee, chair heir apparent] really wanted to expand the platform, and were exploring a merger even before Mike left. . . . [The disagreement got so bad that the PE and M&A groups] were no longer willing to share resources and associates. PE is all about growth—you want market share, kind of like Kirkland and Latham—just eat as many deals as you can. Whereas Mike [in public company M&A] was more focused on a reputation of ‘we can only do X, Y, Z-type deals.’” Also, Wolf’s pay package stipulated he was to be paid as much as the firm’s top-earning partner—in this case, Aiello. Both Wolf and Aiello earned over $20 million a year, though Wolf was not actively practicing law.
Source: Author
Weil seemed to suffer from, and ultimately fell to, two co-morbid diseases: a decline in relative partner profits and an unhappy culture. Contrast Weil with Wachtell, which, despite suffering recent partner departures—including firm co-chair Bill Savitt—to Gibson Dunn this July,[3] “is not in any serious risk of collapse,” said Morley. Wachtell maintains the highest profit per equity partner as ranked by The American Lawyer. “It’s always been the most profitable firm for a long time, and it continues to occupy that position. . . . Partners at Wachtell are making so much that there aren’t many other firms that could offer to pay them more. Its relative profitability is still quite strong. The other thing is that Wachtell still has a strong culture. Still just has one office,” continued Morley.
When the dominoes ultimately fell, Wiley said the race to re-recruit was very fast. “I had my first screening interview with the job I ultimately accepted on Thursday. So literally the day after [Weil’s board voted to dissolve].” Wiley said he felt tremendous support from the Office of Private Practice, his old team at Weil, the Law School foundation, and the UVA community at large. “The UVA community really came together. It’s nice to know what we say in the brochures is upheld. Every single person—people who knew me or didn’t know me—was willing to send my resume to the recruiters.” Wiley even secured a screener interview through a referral from someone on Reddit. He had back-to-back interviews for the entire weekend after Weil collapsed. At one point, he had only thirty minutes between an in-person interview and a virtual one—too little time to get back to his hotel—so he rented a WeWork-style office. At the end of it, he got an offer. Jack Wiley will be starting at Sullivan & Cromwell’s New York office in 2027, hopefully doing M&A.
While almost every ex-summer and lawyer is finding a place to land, it may be harder for others. “I think everyone with a J.D. will shake out fine. The staff—that’s probably the hardest one to say. When law firms grow the headcount of attorneys, it doesn’t necessarily scale proportionately with staff.” Ex-summers-to-be are also in a difficult spot. But if this hiring season has shown anything, it’s that 3L recruiting is on the rise.
As for firms, partners may be in for a shake-up. Morley recommends that firms “take a careful look and make sure you don’t have people who are being overpaid or underpaid. If you have people who are being underpaid, there’s flight risk.” The co-host of the New Law Order podcast, Joel Cohen, suggested that partners may be subject to “an avalanche of true-ups in partner pay” next year, whether that be haircuts or raises. That, in turn, may cause more movement. And, this cynical reporter thinks, may be part of the reason behind Kirkland’s recent decision to stop publishing its profit numbers.
[1] Nᴇᴡ Lᴀᴡ Oʀᴅᴇʀ: John Morley (Yale Law): The Fall of Weil (Apple Podcasts, Oct. 29, 2026).
[2] John Morley, Why Law Firms Collapse, 75 Bᴜs. Lᴀᴡ. 1399, 1399 (2020).
[3] Oliver Barnes & Sujeet Indap, Wachtell Lipton Co-Chair Who Grilled Elon Musk Departs for Rival Gibson Dunn, Fɪɴ. Tɪᴍᴇꜱ (July 28, 2026), https://www.ft.com/content/65731780-37da-4e4f-b5f4-eeaed28bcea2 (“The group of defectors would have included Wachtell partner Nathaniel Cullerton, but his hiring was scrapped after he was filmed in a viral TikTok video in an apparent romantic embrace with a colleague last week.”).
Author: Bradley Berklich (jqr9gh)