Weil, Gotshal & Manges LLP, a 1,200-lawyer firm that handled the largest bankruptcy in U.S. history, plans to fire 60 salaried attorneys and 110 staff and cut some partners’ pay.
Barry Wolf, executive partner and chairman of Weil’s management committee, yesterday attributed the cutbacks to a falling off in restructuring and litigation work linked to the 2008 financial crisis and to a “new normal” lower market for transaction activity.
“We must now make the adjustments we avoided over the last few years to position the firm to continue to thrive,” Wolf wrote to Weil Gotshal employees and partners.
The firm will deemphasize its complex commercial litigation practice in Houston and Boston, he said in the memo. In addition it will make “meaningful compensation adjustments” for certain partners, which may prompt partners to leave the firm, according to the memo.
The firm was ranked 13th in gross revenue last year by the American Lawyer, a trade magazine, with $1.23 billion. The firm’s profit per partner was $2.23 million, the magazine said.
Wolf said in the memo that the bankruptcy and litigation practices, notably on behalf of Lehman Brothers Holdings Inc., has enabled the firm to not make reductions as a result of the fall off in legal services after the 2008 financial crisis.
Weil has been the No. 1 bankruptcy firm for decades, representing almost every historic restructuring from Enron Corp. to WorldCom Inc.
Weil’s lawyer reductions aren’t the firm’s first since the financial crisis hit. In June 2009, the firm fired 79 staff members in offices across the country and asked summer interns to defer start dates. In 2007, Weil lost a key bankruptcy partner when Martin J. Bienenstock, the lead counsel on Enron, moved to Dewey & LeBoeuf LLP in 2007. Bienenstock is now a partner at Proskauer Rose LLP.
Weil is also not the only prominent law firm to cut lawyers. Patton Boggs LLP fired 65 staff members in March, including 22 associates.
Other firms have been more stealthy about lawyer firings, Peter Zeughauser, a law firm consultant and founder of Zeughauser Group LLC said in an interview.
“It’s been going on at a number of firms all year, but Weil is a significant story because it’s a New York firm and highly successful,” Zeughauser said. “It’s an indication of how pervasive the overcapacity in the industry is.”
Zeughauser says the Weil firings are part of the right sizing that has been going on for some time, as far back as 2009 when Latham & Watkins LLP fired 190 lawyers and 250 staff.
“It’s not just that less is coming in,” Zeughauser said, “It’s a sign of the rising role of LPO’s and contract attorneys that are filling a need that clients have been long demanding, which is they don’t want to pay these kind of prices for first-to third-year associates.”
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Vodafone Reaches $10.1 Billion Deal to Buy Kabel Deutschland
Linklaters LLP advised Vodafone Group Plc (VOD), which agreed to buy Kabel Deutschland Holding AG (KD8) after increasing its bid for Germany’s largest cable company to 7.7 billion euros ($10.1 billion) in the second-biggest takeover of a telecommunications network in Europe this year. Hengeler Mueller advises Kabel Deutschland.
Linklater’s team was led by partners Stepha Oppenhoff, Klaus Marinus Hoenig and Iain Fenn.
The Hengeler Mueller team includes partners Maximilian Schiessl, M&A, Dusseldorf, Achim Herfs, corporate, Munich, Wolfgang Spoerr, regulatory, Berlin and Christoph Stadle, antitrust, Dusseldorf.
Kabel Deutschland’s board is set to recommend the 87-euro per share cash offer, the companies said in separate statements yesterday. The combination will result in synergies in cost and capital spending exceeding 3 billion euros after integration costs, Vodafone said.
Buying Kabel Deutschland would give Newbury, England-based Vodafone access to the German company’s 8.5 million connected households and potential customers for combined packages of phone, Internet and TV subscriptions. The U.K. company has been vying for Kabel with billionaire John Malone’s Liberty Global Plc (LBTYA:US), which last week made its own preliminary offer, said to be valued at 85 euros a share.
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Tenet to Buy Vanguard Health Systems for About $1.8 Billion
Gibson Dunn & Crutcher LLP advised Tenet Healthcare Corp. (THC:US), which agreed to buy hospital operator Vanguard Health Systems Inc. (VHS:US) for about $1.8 billion in cash to grow in new markets as the U.S. health-care overhaul promises to expand insurance coverage to more Americans starting next year. Skadden, Arps, Slate, Meagher & Flom LLP served as Vanguard’s legal counsel.
Gibson, Dunn’s lead lawyers are New York corporate partners Barbara Becker and Dennis Friedman. The team includes New York finance partner Aaron Adams.
The Skadden team includes partners Joseph Coco and Peter Serating, M&A; John Rayis, tax; and Regina Olshan, executive compensation and benefits.
Simpson Thacher & Bartlett LLP is representing The Blackstone Group in connection with the announced merger of Vanguard. Corporate and M&A partner Wilson Neely is leading the team.
Tenet, the third-biggest publicly traded U.S. hospital chain, will pay $21 a share, the companies said in a statement yesterday. That’s 70 percent above the June 21 closing price of $12.37 for Nashville, Tennessee-based Vanguard Health on the New York Stock Exchange. Tenet also will assume $2.5 billion of debt, according to the company statement.
The purchase gives Dallas-based Tenet 28 hospitals in regions including the Chicago, Phoenix, Detroit, Boston and San Antonio, Texas metropolitan areas. The combined company will operate 79 hospitals and 157 outpatient treatment centers, and be able to save $100 million to $200 million a year, according to the statement. It is expected to add to earnings in the first year, the companies said.
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Patton Boggs Partners to Open Holland & Knight Dallas Office
Seventeen partners are leaving Patton Boggs LLP, including a group who will open an office in Dallas for Holland & Knight LLP, the firms said.
“I can’t give any specifics about how many and who at this time,” Linda Butler, a Holland & Knight spokeswoman, said in a phone interview, confirming the new Dallas office.
Patton Boggs said 17 partners have announced their intention to leave the firm without providing information about where they are going.
“Movements of this kind are a regular occurrence in an industry where the competitive environment has changed, and many leading firms are transitioning their work forces to compete more effectively,” Patton Boggs said in a statement. “Although we regret partner departures, we, too, need to change to remain competitive. Patton Boggs has a sound underlying practice and a strong brand. We will continue to strengthen our firm through strategic hirings and acquisitions where they make sense.”
In March, Washington-based Patton Boggs fired 22 associates. Gross revenue fell 6.5 percent from the $339.7 million posted in 2011, according to a survey by the American Lawyer magazine on the wealthiest U.S. law firms.
Patton Boggs, with 550 lawyers, has 10 offices in the U.S. and the Middle East, with more than 85 lawyers in its Dallas office.
Holland & Knight has 1,000 lawyers in 17 U.S. offices as well as Abu Dhabi, Beijing, Bogota and Mexico City.
Michele Alexander Joins Lowenstein Sandler’s Tax Group
Lowenstein Sandler LLP announced that Michele J. Alexander has joined the firm as a partner in its business tax counseling and structuring practice. She was previously with Wachtell, Lipton, Rosen & Katz.
Alexander will focus on complex corporate and business tax issues, particularly involving mergers and acquisitions and the structure of transactions involving private equity and hedge funds, the firm said.
“Lowenstein Sandler is the ideal firm for an entrepreneurial lawyer like Michele to build her sophisticated tax practice and support our active M&A practice,” Marita Makinen, partner and head of Lowenstein Sandler’s mergers and acquisitions group said in a statement.
She has represented PVH Corp. in its $2.2 billion acquisition of Tommy Hilfiger and Ticketmaster Entertainment, Inc. in its merger with Live Nation, Inc.
Lowenstein Sandler has almost 300 lawyers in offices in New York, New Jersey and California.
Snowden Left Hong Kong Because of Uncertainties, Albert Ho Says
Edward Snowden, the former intelligence contractor who disclosed U.S. government surveillance activities, decided to leave Hong Kong because of uncertainties about the conditions of his stay, Albert Ho, a lawyer and legislator who acted on Snowden’s behalf in Hong Kong, told reporters in the city.
Snowden was concerned that he might be put under police custody or surveillance, and may not be able to “do the work that he wanted to do” if he stayed in Hong Kong, Ho said.
The U.S. criticized China and Russia for letting former intelligence contractor Edward Snowden transit through Moscow as Ecuador considered his bid for asylum.
“Appropriate legal channels” are being pursued to bring Snowden back to the U.S., President Obama told reporters at the White House yesterday.
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