Legal experts predict lawsuits will follow. Bankruptcy administrators for failed firms often sue former partners to recover money paid out before the firm went under. They also target law firms where ex-partners from a dissolved firm go, taking unfinished legal work with them, under the theory that profits from that business rightly belong to the old firm.
By the end of May some two-thirds of Dewey & LeBoeuf's roughly 320 partners had left, and the Manhattan District Attorney's Office had launched a criminal investigation into activities at the firm. Regulators have sued to take over its pension plans, which they say are underfunded by $80 million.
The firm has essentially been in wind-down mode for several weeks. It has closed most offices, sold off some overseas branches and dismissed hundreds of staff and associate attorneys. At Dewey's New York headquarters, a skeleton crew working with lenders and bankruptcy consultants has been trying to collect outstanding client bills.
The firm enters bankruptcy owing approximately $315 million to a list of more than 5,000 creditors, including secured lenders, landlords, vendors and employees, according to papers filed in support of the petition.
The firm has assets of approximately $13 million in cash and approximately $255 million in accounts receivable and ongoing legal work, according to papers accompanying the filing. Funds should be available to unsecured creditors, the filing said.
Dewey's secured creditors include J.P. Morgan Chase & Co.—the lead agent for a bank syndicate that lent the firm $75 million through a revolving credit line.
The filing represents an ignominious end to the firm, the product of a 2007 merger between Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP, two old-line New York law firms that date to the early part of the last century.
In the years before the merger, LeBoeuf Lamb's senior-most executives, including former Chairman Steven Davis, started luring top partners from other firms with outsize pay packages, some of which guaranteed millions to lawyers for a number of years, according to current and former Dewey partners.
The firm's leaders used similar tactics to keep lawyers from both Dewey Ballantine and LeBoeuf Lamb from bolting when the firms merged, a strategy some partners questioned. Last year, despite deepening debt and mounting questions over the firm's financial stability, firm heads stepped up the practice, bringing in dozens more splashy lateral hires with big pay packages.
Ultimately, the deals left little money for hundreds of rank-and-file partners. More recently, even some with the deals started getting shortchanged by the firm, according to current and former partners, prompting a trickle of defections that by May became a flood.
While the firm is in bankruptcy, the earnings of some partners could be subject to clawbacks from creditors, as happened after the failures of the California law firms Heller Ehrman LLP and Brobeck, Phleger & Harrison LLP several years ago.
Lawsuits could also pile up between Dewey partners, legal experts say, as divisions form between those who had the special pay packages and those who didn't.
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Legal experts predict lawsuits will follow. Bankruptcy administrators for failed firms often sue former partners to recover money paid out before the firm went under. They also target law firms where ex-partners from a dissolved firm go, taking unfinished legal work with them, under the theory that profits from that business rightly belong to the old firm.
By the end of May some two-thirds of Dewey & LeBoeuf's roughly 320 partners had left, and the Manhattan District Attorney's Office had launched a criminal investigation into activities at the firm. Regulators have sued to take over its pension plans, which they say are underfunded by $80 million.
The firm has essentially been in wind-down mode for several weeks. It has closed most offices, sold off some overseas branches and dismissed hundreds of staff and associate attorneys. At Dewey's New York headquarters, a skeleton crew working with lenders and bankruptcy consultants has been trying to collect outstanding client bills.
The firm enters bankruptcy owing approximately $315 million to a list of more than 5,000 creditors, including secured lenders, landlords, vendors and employees, according to papers filed in support of the petition.
The firm has assets of approximately $13 million in cash and approximately $255 million in accounts receivable and ongoing legal work, according to papers accompanying the filing. Funds should be available to unsecured creditors, the filing said.
Dewey's secured creditors include J.P. Morgan Chase & Co.—the lead agent for a bank syndicate that lent the firm $75 million through a revolving credit line.
The filing represents an ignominious end to the firm, the product of a 2007 merger between Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP, two old-line New York law firms that date to the early part of the last century.
In the years before the merger, LeBoeuf Lamb's senior-most executives, including former Chairman Steven Davis, started luring top partners from other firms with outsize pay packages, some of which guaranteed millions to lawyers for a number of years, according to current and former Dewey partners.
The firm's leaders used similar tactics to keep lawyers from both Dewey Ballantine and LeBoeuf Lamb from bolting when the firms merged, a strategy some partners questioned. Last year, despite deepening debt and mounting questions over the firm's financial stability, firm heads stepped up the practice, bringing in dozens more splashy lateral hires with big pay packages.
Ultimately, the deals left little money for hundreds of rank-and-file partners. More recently, even some with the deals started getting shortchanged by the firm, according to current and former partners, prompting a trickle of defections that by May became a flood.
While the firm is in bankruptcy, the earnings of some partners could be subject to clawbacks from creditors, as happened after the failures of the California law firms Heller Ehrman LLP and Brobeck, Phleger & Harrison LLP several years ago.
Lawsuits could also pile up between Dewey partners, legal experts say, as divisions form between those who had the special pay packages and those who didn't.
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