Weil, Gotshal, and Manges managed to do well for themselves in lean times by the logic that during a plague, the gravedigger feasts: they’ve managed to avoid suffering under the 2008 financial crisis by helping other firms manage their own struggles. But the hey day is over, according to Barry Wolf, the managing partner of the firm, who said, as reported by AM Law Daily, that the drop in demand for premium legal services constitutes a “new normal” requiring an associate head count cut of 7 percent. He’s also laying off 110 non-lawyers, while some partners get the joy of some “meaningful compensation adjustments,” or in other words, pay cuts, as the firms in Houston and Boston are fitted and vetted for a leaner take on leaner times.
“As the restructuring and litigation work related to the 2008 financial crisis winds down, and as the overall, market for transaction activity remains at the lower levels which we believe is the new normal, we must now make the adjustments we avoided over the last few years to position the firm to continue to thrive,” said Wolfe in a company memo on Monday. Though the firm “will continue to take significant steps to further increase our market share…the market for premium legal services is continuing to shrink” meaning that “actions to enhance revenue alone will not be sufficient to position the firm as necessary for these new market conditions.”
In other words, time to cut the fat, because there are fewer corpses to bury. That’s not to say the firm is exactly doing bad. The gross revenue remained essentially flat last year, according to AM Law 100 data, and there was a decline in profits when the firm added 20 later partners in at the end of 2012. The year wasn’t that bad, for though profits were down a little bit, demand has increased by 3 percent, year to year. “Our PPP is down, but in our view, that’s all just math. We did not draw down inventory simply to make results look stronger.”