On Wednesday 28 October, the leaders of Weil, Gotshal & Manges told the firm's lawyers over Zoom that they were recommending an orderly wind-down. They did not take questions. Ninety-five years of history and nearly $2.1 billion in revenue, undone in a matter of weeks. Weil was not losing money. There was no fraud, no scandal, no mountain of debt. Partners left, and once enough of them had left, the rest followed. The arithmetic of a run In Death of a Law Firm, which I published in 2015, I explained in detail why law firms are far more fragile than their profits suggest. The arithmetic is simple. Turnover minus cost is profit, and the profit is paid out in full every year. There are no savings. And the costs, mostly salaries and rent, are almost entirely fixed. Weil had about $2 billion in revenue and a margin of around 46 per cent. That means $1.08 billion of costs had to be paid before any partner saw a dollar, leaving a profit pool of roughly $920 million for 173 equity partners. What matters is not what a partner earns but what they leave behind: their revenue minus their own pay, which is their contribution to covering the firm's costs. Mike Aiello's practice reportedly brought in around $125 million. If he took home $25 million, he contributed $100 million. Christopher Machera and Brian Parness, who left shortly before him, brought in roughly $100 million between them. Assume they were paid $15 million each, and they contributed another $70 million. Three partners were covering $170 million of Weil's costs. Now take them away. Revenue falls by $225 million, about 11 per cent. Costs do not fall at all, at least not in the short term, so the whole of the lost contribution comes out of the profit pool. For the 170 equity partners who remain, that pool shrinks from about $865 million to $695 million. Each of them loses roughly $1 million a year, close to 20 per cent of their income. An 11 per cent drop in revenue becomes a 20 per cent drop in partner pay. That is the leverage of fixed costs, and it works in both directions. Three partners were only the start. By 22 October, the day the ill-fated merger talks with Willkie Farr collapsed, at least 24 other partners had left since August or were reported to be leaving. Each took their contribution with them, and each time the same $1.08 billion of costs came to rest on fewer shoulders. The $1 million loss per remaining partner was a floor, not a ceiling. This is where arithmetic turns into a run. Nearly all of the leavers went to firms that pay their partners more: Cravath, Paul Weiss, Simpson Thacher, Sullivan & Cromwell and Davis Polk. The partners who stayed watched their share at Weil shrink with every departure, while what they could earn across town stayed exactly where it was. Staying became the expensive option. Leaving early is cheaper than leaving late, because the first movers get the guarantees and the best seats. Heller Ehrman, Howrey, Dewey & LeBoeuf, Bingham McCutchen and Stroock all learned this. Each had its own trigger. In each case it was the run that killed the firm. Not a story about greed The arithmetic explains the speed. It does not explain why the first partners left. Here the popular verdict is ready to hand: greedy partners, a mercenary free-agent culture, a profession in which the 'brotherhood' of partnership and loyalty has become a relic of the past. I don't buy it. In my book Law Firm Partner Compensation, which I published earlier this year, our research points the other way. Money is rarely the primary reason a partner moves. Most partners move away from their firm, not towards a particular destination. Partners become open to leaving only once their trust in the platform has eroded: in its strategy, in the quality of their colleagues, in its future. Until then the headhunter's call goes unanswered. Weil fits this pattern closely. By any normal standard it was a healthy firm with a formidable name. Its problem was relative. Its profits per equity partner still grew by about 4 per cent in 2025, but its rivals grew much faster. Weil slipped from ninth in the Am Law profits per partner ranking in 2020 to twentieth in 2026. Its revenue grew by less than 3 per cent last year, against more than 13 per cent on average for the 50 largest US firms. As we show in our book, when a firm's profit per partner falls behind its rivals, discontent sets in even when its own figure is rising. Money is the yardstick by which partners measure whether their firm is winning. And when compensation lags behind the competition, the strategy is usually to blame. That was Weil's real deficit. In September I argued that the firm was stuck in the middle: too large to follow Wachtell or Cravath in staying small and charging for scarcity, not profitable enough to keep pace with the firms bidding for its partners. Weil was instead in the middle of an uncertain leadership transition. Barry Wolf had led the firm for some 16 years. The committee charged with finding his successor was chaired by Aiello. Ramona Nee was chosen in March, and by September she had told partners she would no longer take the job. According to a person familiar with his thinking, Aiello left in part because Weil's leaders failed to set out a convincing long-term vision. When the chairman of your succession committee concludes the firm has no plan, he is not being mercenary. He is reading the room. He was also, by all accounts, already the best-paid partner at the firm. Weil's statement noted, a little sourly, that he was leaving for "a smaller platform". It was meant as a put-down. It was the point. Partners do not choose platforms by size. Why money cannot stop a run For the same reason, compensation cannot stop a run once it has started. Higher pay, deferred distributions and bad leaver clauses, the financial handcuffs we describe at length in the book, raise the price of leaving. They do not restore the reason to stay. A higher package soon becomes the new normal, and there will always be a competitor offering more. The greed narrative also gets the sequence wrong. Weil's partners did not discover the lateral market in August 2026. What changed was not their appetite but their confidence. Distrust opened the door; the arithmetic of fixed costs then pushed everyone through it. That is not greed. It is the logic of a partnership in which every remaining partner carries a larger share of costs that nobody can cut. The lesson A run is not prevented by compensation design or golden handcuffs. It is prevented years earlier, by a credible and compelling strategy: one that partners understand, believe in and can see working. A surprisingly large number of law firms do not have one. They float along on reputation and a rising market, and as long as profits grow nobody asks where the firm is heading. Weil floated for years, until its partners noticed that the firms they compared themselves with had moved on. Fixing that is hard, and very few law firm leaders manage it on their own. They are partners first, elected by the people whose practices a real strategy would have to change, and too close to the firm to see it as the market does. The clever firms bring in outside help, not to write the strategy for them, but as a guide and a sparring partner who asks the questions nobody inside the partnership wants to ask. Weil had excellent lawyers, loyal clients and one of the best-known names in the business. What it no longer had was a reason for its best partners to believe. Once that was gone, the arithmetic did the rest. This article is part of a series drawing on the themes of Law Firm Partner Compensation by Jaap Bosman and Jaime Fernández Madero. If you would like to know more about this topic, read the book. Our book Law Firm Partner Compensation is available worldwide on Amazon, national online book sellers, and can be ordered at your favorite bookstore

When Michael Aiello told Weil, Gotshal & Manges earlier this month that he was leaving for Cravath, taking five M&A partners with him, the firm’s statement came with a sting. Aiello and his team, Weil said, were “leaving the firm for a smaller platform”. Cravath. A smaller platform. A week later Bloomberg reported that Weil was weighing its options, a merger with a competitor among them. According to people familiar with the matter, the firm’s leaders had grown more open to a combination, some had held informal talks to test the water, and the firm was canvassing its own partners. Weil’s answer was short: it “is not engaged in merger discussions with any firm”. Reuters, Above the Law and eventually the Financial Times picked up the story. Almost all of them were repeating Bloomberg. Read the denial slowly and it denies very little. But the rumour itself rests on one set of anonymous sources. Partners leave firms. That is not news. Wachtell lost its litigation co-chair and five colleagues to Gibson Dunn this summer and has seen around a dozen partners go this year. Cravath has lost about a dozen too. Nobody suggests either should go looking for a merger partner. What sets Weil apart is not the count but who is leaving. The co-head of private equity went to Paul Weiss in August, and a group of his colleagues followed. The co-head of private funds went to Simpson Thacher. The London co-managing partner went to Sullivan & Cromwell. Then Aiello, chair of the corporate department and of the committee set up to steer the firm through its leadership succession. The Financial Times counts 23 partners gone since April. These are not partners drifting off the edges. They come from the centre. The problem for Weil is not a handful of big names walking out. It is that partners are losing faith in the platform. In my 2015 book Death of a Law Firm I described how the departure of one or more major rainmakers can set off a run on the bank. It undermines morale, erodes confidence and pushes other partners to start looking elsewhere, long before the damage shows up in the revenue figures. A bank run does not need an insolvent bank. It only needs depositors who begin to wonder whether everyone else is about to leave. Every departure makes the next one a little more rational, and the partners who can move most easily, those with portable clients, move first. In Chapter 9 of my recent book Law Firm Partner Compensation, I look at why partners move. Money is rarely the main reason. Most laterals move away from their firm rather than towards a particular destination, and what sets them in motion is a loss of faith in the platform: doubts about the strategy, about the calibre of the colleagues, about whether the firm will ever achieve greatness. When partners feel their pay lags the competition, the strategy is usually to blame. Which is why paying a wavering partner more rarely keeps them. It treats the symptom, not the cause. The firms most exposed are the personality-driven ones, where the departure of one or two key individuals triggers a talent cascade that the compensation system has no mechanism to arrest. So would a merger stop the run? I do not see how. Weil is too large and too profitable to be rescued by a combination. It earned roughly $2 billion last year and $5.6 million per equity partner, twentieth in the Am Law 100. Compare that with the two firms that did go down this road. In the last year it reported as an independent firm, Shearman & Sterling took in $907 million and $2.5 million per equity partner, both down sharply on the year before. Cadwalader, in its final year of independence, took in $616 million and $3.5 million per equity partner, also lower than a year earlier. Weil is more than twice the size of either and far more profitable. Those firms needed a merger. Weil would have to go looking for one, and almost any plausible partner would dilute the income of exactly the people it can least afford to lose, the ones Paul Weiss and Simpson Thacher are already calling. As I wrote in my book, US partners in a high-margin practice do not leave a transatlantic merger for more money. They leave because they refuse to subsidise a global infrastructure that does nothing for their practice. The recent precedents are not encouraging. Shearman & Sterling went into its merger with Allen & Overy with falling revenue, falling profits and a partnership that had shrunk by 40% in ten years. After the deal the combined firm cut a tenth of its partners and closed offices to lift profitability. By October last year more than 170 legacy partners of the two firms had left or retired. Two years on, profit per equity partner is back where Allen & Overy stood before the merger. Not ahead of it. Back. Cadwalader lost about 30 partners before it agreed to join Hogan Lovells, and at least 17 more in the two months after the deal was announced, many of them litigators conflicted out by Hogan Lovells clients. Conflicts are never optional in a merger. Somebody always has to go. Nor is there much evidence that the combined firm does better later. Bloomberg Law looked at the 18 largest US law firm mergers of the past fifteen years. Two thirds of the merged firms grew profit per partner and revenue per lawyer more slowly than their competitors afterwards. A merger buys size. Weil already has size. What Weil lacks is a reason for its best partners to stay. It could be leadership. The firm is in the middle of a handover, with Ramona Nee taking over from Barry Wolf in January, and the committee built to manage that handover has just lost its chair. But I think the deeper cause is structural. Weil is stuck in the middle. It is too big to behave like Wachtell or Cravath, which have chosen to stay small and charge for scarcity. And it is not profitable enough to pay what Kirkland ($11.1 million per equity partner), Paul Weiss ($8.6 million) or Simpson Thacher ($8.6 million) pay, which are precisely the firms bidding for its people. Plenty of large firms earn less per partner than Weil. Few of them compete for the same clients and the same rainmakers against rivals paying half as much again. As I wrote in Requiem for a Lockstep, a compensation system only holds as long as the trust and shared ambition beneath it are renewed. Once partners start doing the arithmetic on the offers their neighbours are getting, no formula survives for long. Can it be fixed? Yes, though if it were easy everyone would do it. Paul Weiss is a classic example that shows what it takes. In 2009 it was a firm best known for litigation, with revenue under $700 million. Chairman Brad Karp decided it needed private equity, public M&A and restructuring work. It built on its relationship with Apollo, brought in seven private equity partners from O’Melveny & Myers in 2011 and, in 2016, lured Scott Barshay from Cravath with pay his old firm would not match. In 2024 it broke its modified lockstep and added a non-equity tier. Last year it took $3.26 billion in revenue and $8.6 million per equity partner. It took the best part of fifteen years. I am not holding Paul Weiss up as a model of culture. I am holding it up as proof that a deliberate strategy can change a firm’s economics. There is an irony in it too. The firm now hiring Weil’s private equity partners might be the one showing Weil the way out. Weil was right about one thing. Cravath is a smaller platform. The trouble is that partners do not choose platforms by size. This article is part of a series drawing on the themes of Law Firm Partner Compensation by Jaap Bosman and Jaime Fernández Madero. If you would like to know more about this topic, read the book. Our book Law Firm Partner Compensation is available worldwide on Amazon, national online book sellers, and can be ordered at your favorite bookstore

Management Summary Latham & Watkins has spent several years and put a 900-person technology division to work on its own AI infrastructure: Nvidia GPU servers in data-centre space only Latham staff can enter, running an open-weight model the firm fine-tunes itself. It will be reported as an infrastructure story. It is really a custody story. The trigger is concrete, not theoretical. Days before this article, OpenAI admitted it “cannot rule out” that a customer’s own data had shaped one of its models, a sentence OpenAI didn't volunteer lightly. Latham’s CIO has said plainly that confidentiality, and the cost of paying a vendor by the token, are what owning the model buys back. Open-weight means Latham owns the model rather than renting access to one. Which size it runs is not public. Reinforcement learning lets the firm keep training it against its own checkable outcomes, narrowing the reliability gap with Kirkland’s approach without closing it: Kirkland's rule engine cannot hallucinate, a trained model still can. Kirkland bet on data and judgement. Latham has bet on the model and the infrastructure beneath it. Both are the same wager: the technology between a client’s problem and the firm’s answer is now too important to rent. Harvey, the leading vendor, is already building the same architecture for itself. This is a market direction. For everyone below this tier, particularly national champions who cannot match the spend, judgement alone, once sufficient, no longer is. Firms left renting will either lose their best mandates or become subcontractors to the firms that build. Latham & Watkins takes AI in house Latham & Watkins has spent several years and put a technology division of more than 900 specialists to work, on something almost no other law firm has attempted: its own AI infrastructure. Multiple Nvidia GPU servers now sit in leased data-centre space that only Latham staff can enter, running Nvidia’s open-weight Nemotron 3 models, which the firm’s own engineers fine-tune under its own roof. This is not a subscription. Latham did not rent intelligence from a vendor. It bought the compute and brought the model in-house, joining a very small group of firms now choosing to own the technology stack rather than lease it. Why a firm with $8.3 billion in revenue would choose to build rather than rent comes down to two things its CIO, Rene Mendoza, has been plain about: confidentiality and cost. “Sometimes we may have information that is so sensitive, client information that we really want to protect, we don’t want to put it to any cloud vendor,” Mendoza has said, alongside concerns about the “consumption costs” of paying a vendor by the token as usage climbs. The first concern got a vivid illustration on 8 September, when OpenAI announced it had solved one of mathematics’ six remaining Millennium Prize Problems. Two academics had reached a closely related result using several AI models, Claude and OpenAI’s own Codex among them, and OpenAI’s own model arrived at its answer within days of first hearing rumours about their progress. Asked whether that work had shaped its system, OpenAI wrote a sentence it presumably wishes it hadn’t had to: “While unlikely, we cannot rule out that de-identified data derived from their usage of our products helped improve our models.” (OpenAI) Read as a lawyer rather than a mathematician, that sentence is the whole argument for owning your own infrastructure in one line. A vendor with every incentive to say no, could not quite bring itself to. Open-Weight “Open-weight” is what makes Latham’s approach different from simply choosing a cheaper vendor. GPT and Claude are closed: a firm which has a subscription gets an API and a promise, and every query still leaves the building. Nvidia published Nemotron 3’s actual weights, the trained parameters themselves, for anyone to download, and the Nemotron family shares a mixture-of-experts (MoE) design that routes each fragment of text to a handful of specialist sub-networks rather than the whole model, and a hybrid architecture that threads the usual attention mechanism through faster Mamba layers to handle very long documents. Latham has not said which size it runs, and the difference matters: Nvidia’s largest Nemotron 3 variants carry well over a hundred billion parameters with only a fraction active on any query, while the smallest is a fraction of that again and would suit a firm optimising for query volume over raw capability. What is public either way is that the weights are open, which means Nvidia’s own training method, extensive reinforcement learning against verifiable, checkable rewards rather than simple imitation of examples, is available to Latham’s engineers too. That lets the firm keep training its own copy of the model against outcomes it can check itself, whether a citation is real, whether an extracted clause matches the source document, a genuine step toward reliability, not just confidentiality, though still a different step from the one Kirkland & Ellis took. Compared with Kirkland & Ellis Kirkland committed $500 million to Palantir to turn decades of messy fund paperwork into structured, linked data, and then handed the judgement calls to a deterministic engine rather than a language model. “The probabilistic engine reads. The deterministic engine judges. That division of labour is the whole game,” as I wrote here in an earlier article. A rule either passes or it does not; there is no probability distribution to be wrong within. [read more here] If Latham is also grounding its model in its own archive of matters and precedent, a technique called retrieval-augmented generation rather than training in the strict sense, that closes part of the gap with Kirkland: the model answers with institutional knowledge no rented vendor model has access to, a real echo of Kirkland’s proprietary-data advantage. But retrieval only changes what the model reads before it answers. The answer itself is still generated, still probabilistic, and can still misstate or blend what it retrieved in a way no deterministic check would allow. Training a model to be right more often, however it is trained, is not the same as building a system that cannot, by construction, be wrong. Kirkland remains superior on raw accuracy for exactly that reason. That difference is relevant, but it is also points at the same underlying bet. Neither firm is buying software off the shelf, and the rest of the market is starting to notice, even Harvey, the leading vendor, is now training its own model, called Tenet, on an open-weight foundation with a native one-million-token context window, run on Harvey’s own infrastructure rather than through third-party APIs, while Legora continues to route tasks across whichever outside model does the job best. Harvey’s move is similar architecture as Latham has built, at the vendor level rather than the firm layer. The difference that survives is custody. Latham owns the infrastructure its model runs on. A firm using Harvey is trusting Harvey’s custody of it instead of its own, however open the weights underneath. This signals a bifurcation Chapter 14 of my book on partner compensation asks why an exceptional partner, once AI lets them work with a small team, still needs the firm at all. Among the honest answers it gives is “the AI platform itself, which at enterprise scale requires investment that individuals cannot make alone.” Latham and Kirkland are that answer made concrete, at a price no partner, no boutique, and increasingly no vendor relationship alone can meet. That is what makes this a bifurcation rather than an upgrade cycle. A small number of firms are converting capital into an institutional asset no lateral can replicate by switching firms. Everyone else, including the national champions who are the obvious first call in their own market, is left competing on judgement alone, which was always necessary but is no longer sufficient. They will never be able to match this spend and cannot ignore it without watching their best clients notice the gap. Two outcomes follow, and neither is comfortable: lose the mandate outright, to a firm that can now offer more reliable answers, tighter confidentiality, or a lower cost per query, or keep it by accepting a smaller share, doing the execution work underneath a firm like Kirkland or Latham rather than owning the client relationship. Being the best lawyers in the room stops being enough as a smal number of elite firms will employ superior technology. This article is part of a series drawing on the themes of Law Firm Partner Compensation by Jaap Bosman and Jaime Fernández Madero. If you would like to know more about this topic, read the book. Our book Law Firm Partner Compensation is available worldwide on Amazon, national online book sellers, and can be ordered at your favorite at your favorite bookstore

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TGO Consulting - Award winning strategy consultants for the legal sector. Serving a global clientbase. Enhancing law firm profitability. what we do TGO Consulting are award winning business consultants focusing on the legal sector. We have a strong client base spanning most of Asia, Europe and the Americas. Our approach is fact based and result driven. We help our clients to maintain or improve their profitability. We work on the basis of a Financial Business Analysis© for which we have developed our own unique standardized model. This FBA© will highlight low hanging fruit and provide a benchmark against the market. Having decades of experience in the legal industry, we know the dynamics of partner groups inside out. During the process this will help overcome resistance and create buy-in. "everything must change for things to remain the same" - Guiseppe Tomasi di Lampedusa - Latham & Watkins vs Kirkland & Ellis? Back in the office Requiem for a Lockstep articles of interest about us If it comes to serving a global client base and experience in working in different jurisdictions across the world, TGO Consulting is second to none. While understanding your home market and culture, we bring a wealth of experience in best market practice around the world. We know the legal industry inside out, past, present and future. We know your competitors and we know your clients. we strongly focus on enhancing our clients’ profitability the power of truly offering global best practice our new book - LAW FIRM PARTNER COMPENSATION - is the most complete and authoritative treatment of the subject ever written. The book covers every major compensation system — lockstep, eat-what-you-kill, modified lockstep and black box — alongside the psychology, culture and strategic dimensions that formal analysis almost always misses. It addresses the impact of AI and private equity on compensation models, includes a dedicated chapter on China, and draws on insights from the US, Europe, Latin America and Asia. Co-authored with Jaime Fernández Madero. Available on Amazon and through bookstores worldwide. Order on AMAZON a new concept There is no linear relation between time and value. We created the Creation-Production-Divide Concept©, a revolutionary new way to explain where the value is. This concept will fundamentally change the business of law. we strongly believe being a lawyer is about human skills a human-centric approach Being lawyers ourselves and having gained almost two decades of experience in private practice and in-house, we understand the dynamics of the partner group like few others. Although we always focus on our clients’ financial performance, we are strongly aware that the business of law is a human business before anything else. Understanding peoples’ drivers and behaviours is key to achieving lasting results. power curve Succession remains a sensitive and complex topic. The TGO power curve© analysis immediately shows succession and leadership vulnerabilities in the firm. This is just one of our data-based models in use. in the press 1/1 Interview on legal technology in La Gazette du Palais 未来十年，律师事务所的五大趋势 Article on the future of the legal profession Feature article in ACC Docket on how to prioritize for inhouse lawyers

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