A senior partner at
Weil, Gotshal & Manges LLP, one of the world’s most
prestigious law firms, is at the center of an international controversy involving investments in the Israeli spyware company NSO Group. The revelation has cast a spotlight on ethical issues within major law firms, raising questions about conflict of interest, due diligence, and professional accountability.
The Controversy Unfolds
Gerhard Schmidt, co-managing partner of Weil’s German offices, reportedly invested approximately €5 million in a private equity fund managed by London-based Novalpina Capital. That same fund would later acquire NSO Group — the developer of Pegasus spyware — in 2019. Pegasus has been linked to widespread allegations of government surveillance, including targeting journalists, activists, and political figures.
At the time of the investment, Schmidt not only served as
Weil’s co-managing partner in Germany but also acted as legal adviser to Novalpina during its acquisition of NSO. This dual role — as both an investor in and adviser to the same fund — has raised serious concerns regarding potential conflicts of interest. Reports indicate that Schmidt may have received favorable investment terms due to his close relationship with the fund’s founders, further complicating his position.
Weil Gotshal confirmed that Schmidt will be leaving the firm by the end of 2025, concluding more than two decades of service. However, the firm has not publicly commented on whether his departure is directly related to the ongoing controversy.
NSO Group and the Pegasus Problem
NSO Group is no stranger to scrutiny. The company gained international infamy for developing Pegasus, a sophisticated spyware tool that can infiltrate smartphones, enabling clients to access messages, emails, photos, and even activate cameras and microphones without the user’s knowledge.
While NSO maintains that Pegasus is sold only to governments for legitimate law enforcement and counterterrorism purposes, investigations by media outlets and human rights organizations suggest otherwise. The spyware has allegedly been used by authoritarian regimes to surveil dissidents, journalists, and political opponents.
In November 2021, the U.S. Department of Commerce placed NSO on its trade blacklist, citing its involvement in “transnational repression.” The move effectively barred American companies from doing business with NSO and tarnished the firm’s already controversial reputation.
Boardroom Ties and Ethical Implications
Documents show that Schmidt’s involvement went beyond mere investment. He reportedly sat on the board of a holding company overseeing NSO and participated in decision-making at critical moments. One such decision involved restoring Pegasus access for Saudi Arabia shortly after the murder of journalist Jamal Khashoggi — a move that sparked international outrage and deepened the company’s moral quagmire.
For a senior partner at a
top global law firm, these associations carry serious ethical implications. Legal professionals are held to strict standards of independence and fiduciary duty, particularly when advising clients in matters where they hold a personal financial interest.
The allegations against Schmidt have prompted wider discussions within the legal community about transparency and internal governance. Critics argue that major firms must implement stricter rules to prevent partners from investing in entities connected to their clients or cases.
Financial Fallout
The private equity fund in question, managed by Novalpina Capital, has also suffered financially. According to reports, an Oregon public pension fund that invested in Novalpina’s vehicle valued its stake at just 57 cents on the dollar, reflecting a 15.3% negative internal rate of return as of mid-2025. The fund’s losses are attributed not only to market volatility but also to the controversies surrounding NSO and governance disputes within Novalpina itself.
Legal proceedings are ongoing in Luxembourg regarding control over the fund’s assets, with Weil’s name appearing in related filings due to its advisory role. The firm could face additional scrutiny if courts determine that conflicts of interest influenced legal advice provided during the acquisition or management of NSO.
Broader Implications for Law Firms
The scandal serves as a cautionary tale for the legal industry. Large firms increasingly advise private equity and technology clients whose operations intersect with sensitive sectors such as defense, cybersecurity, and surveillance. When partners hold personal stakes in these ventures, it can blur the line between legal counsel and financial interest — undermining client trust and professional credibility.
Experts warn that the incident could prompt bar associations and regulatory bodies to revisit ethical guidelines governing outside investments by lawyers. Firms may also review internal compliance systems to ensure that partners disclose all financial interests that could pose conflicts.
For Weil Gotshal, the damage may extend beyond one partner’s reputation. The firm’s clients — many of whom are multinational corporations and institutional investors — may question whether similar conflicts exist elsewhere within the organization. Even if Schmidt’s investment was technically legal, the optics of a Weil partner benefiting financially from a spyware deal could erode confidence in the firm’s ethical standards.
The Road Ahead
As Schmidt prepares to exit the firm, Weil faces the difficult task of rebuilding trust and reinforcing its commitment to integrity. Industry observers expect the firm to introduce new conflict-of-interest protocols, enhance transparency regarding partner investments, and distance itself from any dealings connected to NSO or similar companies.
The controversy underscores a broader truth: in an era of heightened scrutiny and global interconnectivity, even perceived conflicts of interest can have serious professional and reputational consequences. Law firms, particularly those engaged in high-profile cross-border transactions, must ensure their partners’ private financial activities do not compromise client confidence or public trust.
For now, Weil Gotshal’s leadership remains silent on the full extent of Schmidt’s involvement or the firm’s internal response. But the message to the legal community is clear — in matters of ethics and transparency, reputation is a law firm’s most valuable asset, and even a single misstep can have lasting repercussions.
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