The spectacular unraveling of Weil Gotshal, a storied $2 billion law firm, stemmed from a failure to adapt to the "eat-or-be-eaten" ethos of Big Law. While the 95-year-old firm was once elite, it declined as top law firms intensified a profitability arms race, aggressively poaching partners, raising prices, and investing in data and technology. This winners-take-most competition left Weil outside the winner's circle.
Last year, the most profitable firms across the country saw profits rise by nearly 20 percent on average, compared to less than 5 percent a decade earlier. Weil's profits grew by only 8 percent—a respectable figure circa 2015 but middling by current standards. The article notes that top 20 companies in the S&P 500 now account for about half the index's market value, up from one-third a decade ago.
This shift mirrors a broader economic trend where the largest, most profitable firms pull away across industries. In the legal profession, rising profits have become the glue holding firms together, replacing traditional partnership bonds. When profit growth is modest and concentrated in a few partners or practices—as was the case at Weil—firms become vulnerable to setbacks.
A consultant warns that a few key departures can quickly turn a stable firm into one that is reeling.
Source: New York Times Business · Summarized by HeadlinesBriefing