http://therealdeal.com/blog/2012/04/30/saft-flees-dewey-for-holland-knight/
http://www.reuters.com/article/2012/04/30/dewey-idUSL1E8FUCEI20120430
http://www.thelawyer.com/ex-dewey-chair-faces-prosecution-over-misconduct-greenberg-deal-shelved/1012374.article
http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202550599673&Patton_Boggs_Adds_4_Lawyers_From_Dewey&slreturn=1
Saft flees Dewey for Holland Knight
The veteran attorney named co-head of the New York real estate practice
April 30, 2012 07:19PM
By David Jones
By David Jones
http://www.reuters.com/article/2012/04/30/dewey-idUSL1E8FUCEI20120430
(Reuters) - Eleven more partners have jumped ship from Dewey & LeBoeuf, as the troubled law firm scrambled on Monday to close a deal with another firm and secure a loan extension as a deadline loomed.
New-York based Dewey is now in discussions with at least two other law firms, including Patton Boggs, according to a person familiar with the matter. The firm, hobbled by high debt and a criminal investigation of its former chairman, disclosed on Sunday that it had ended talks on a potential deal with rival firm Greenberg Traurig.
Between Friday and Monday, Dewey removed at least seven partners' names from its website. On Monday, other firms announced additional defections.
The continuing departures pose a problem for firms considering a merger with Dewey, since they cannot guarantee which lawyers will stay, said Mark Jungers, a recruiter with Lippman Jungers LLC.
The 11 partners include Gordon Warnke, the chairman of Dewey's tax department and a member of the firm's executive committee. Warnke, who joined Linklaters with partner Joseph Pari, could not be reached for comment on Monday. The firm has lost at least 86 of its 300 partners since the beginning of the year.
The most recent departures came as Dewey raced against the clock to avoid defaulting on roughly $75 million in loan debt due on Monday to a bank group led by JPMorgan Chase & Co .
As of mid-afternoon on Monday, Dewey and its lenders were still engaged in meetings in the hope of working out an extension for the deadline, two people familiar with the matter said.
A source said on Sunday that the sides were close to securing a 90- to 120-day extension, but that was before talks with Greenberg Traurig fell through.
That revelation, along with the Manhattan district attorney's ongoing probe into the firm's finances, has complicated negotiations with banks, one of the sources said.
Dewey sent a memo to firm partners on Friday saying that Manhattan District Attorney Cyrus Vance was investigating "allegations of wrongdoing" by former Dewey Chairman Steven Davis. Davis, who was ousted from management positions by the firm on Sunday, has denied any wrongdoing and has retained criminal lawyer Barry Bohrer of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer.
Dewey said on Sunday it was in "discussions with other firms about a possible transaction and will consider those and other options for the firm moving forward."
Those firms include Patton Boggs, which is exploring opportunities short of a full merger, a person familiar with the matter said.
Edward Newberry, managing partner of Patton Boggs, said in a statement that his firm from time to time has "conversations with other firms in connection with our interest in making strategic acquisitions to strengthen our practice.
"We have only the highest regard for the lawyers at Dewey & LeBoeuf," he added.
Dewey spokesman Angelo Kakolyris declined comment on the talks with Patton Boggs.
The New York Times reported on Sunday that Dewey was also in talks with SNR Denton. Jeff Scalzi, a spokesman for SNR Denton, said in a statement that the firm enjoys "strong relationships with many law firms around the world," but does not comment "on rumors about specific discussions" to hire lawyers.
PARTNER LOSSES
Other newly departed partners are Marshall Stoddard Jr., a partner in New York and Los Angeles who was the U.S. head of the firm's bank and institutional finance practice group.
Also leaving Dewey for Morgan Lewis is Charles Moore, a Houston utilities partner and former general counsel of the U.S. Federal Energy Regulatory Commission.
"(A)s every day's events unfolded, it seemed pretty clear if there was a better opportunity somewhere else I should take it," Moore said on Monday.
Covington & Burling announced on Monday that it hired capital markets partners Don Murray and Eric Blanchard in New York.
Clifford Chance said it brought on board two lawyers in New York: Howard Adler, co-chair of Dewey's tax practice, and Gary Boss, an insurance partner.
Meanwhile, Gibson, Dunn & Crutcher announced on Sunday that it hired Peter Gray, a Dubai-based Dewey partner focused on international litigation and international arbitration.
Gary Apfel, the Los Angeles co-chair of Dewey's consumer financial services group, joined Pepper Hamilton on Monday. Apfel left Dewey on Wednesday, according to Dewey spokesman Duncan Miller.
Dewey separately removed New York corporate partner Linda Ramson from its website. Miller could not confirm she left the firm and calls and e-mails to her office at Dewey were not returned.
and....
http://www.bloomberg.com/news/2012-04-30/dewey-leboeuf-is-said-to-be-near-extending-credit-deadline-1-.html
Dewey & LeBoeuf LLP, which is preparing for a possible bankruptcy after losing about 80 lawyers, is nearing an agreement with banks about the deadline for a line of credit, a person familiar with the talks said.
The extension, giving the New York law firm more time to keep operating and collecting bills from clients, would be for a couple of weeks, much less than the 120 days envisaged this weekend before Dewey’s talks with Greenberg Traurig LLP about a partial combination ended, said the person, who declined to be named as the talks were private.
An accord between Dewey and lenders, including JPMorgan Chase & Co. (JPM) and Citigroup Inc., wasn’t yet signed, the person said.
* * * *
The turmoil at Dewey has upended the firm’s plans to find a merger partner and sent prices of its bonds reeling. The privately placed debt, issued in 2010 to refinance older bank loans and once valued at 100 cents on the dollar, were seen to trade April 27 in the 60s, said Kevin Starke, an analyst at CRT Capital Group LLC.
Valuation of Receivables
“If the firm reorganizes, the loan and the notes could be money good, but if it liquidates, it will come down to the valuation of accounts receivable,” he said, referring to Dewey’s bills to clients for legal services. CRT, which trades distressed debt, didn’t handle the sale of Dewey bonds by an investor last week, he said.
No single firm currently appears willing to buy all of what is left of Dewey, according to a person familiar with the situation. Dewey now is talking with several firms who might take parts of its specialized practice groups, as part of a bankruptcy plan devised with lenders’ consent, said the person, who declined to be named because the talks are private.
Patton Boggs
Washington-based Patton Boggs LLP is among the firms conferring with Dewey, said the person. Under Dewey’s plan, different firms might pay to acquire receivables generated by lawyers they took on, he said. The law firm does have something to sell -- groups of strong practices, he said.
Dewey’s most profitable practices include bankruptcy, corporate law, litigation and public policy, the firm has said.
The plan remains uncertain because firms considering taking some of Dewey’s lawyers might do better to pick up the pieces after a bankruptcy filing, the person said.
Patton Boggs wouldn’t say if it will take on some of Dewey’s lawyers.
“From time to time we have conversations with other firms in connection with our interest in making strategic acquisitions to strengthen our practice,” said Patton Boggs Managing Partner Edward Newberry. “We have only the highest regard for the lawyers at Dewey & LeBoeuf. They have a legacy of being among the very best in the areas in which they practice.”
* * * *
Bonds
In addition to the bank deadline, the firm has $125 million in bonds sold to insurance companies in 2010 to refinance previous bank loans.
The bonds, placed by New York-based JPMorgan, come due from next year to 2020, Dewey said at the time. The firm’s revenue last year was $782 million, compared with about $760 million in 2010, according to the American Lawyer, a trade magazine that tracks law firm results. The publication lowered its numbers for Dewey this month after getting what it called “newly obtained information.”
Rich Shutran, head of the corporate department at Dewey and a member of the chairman’s office, told Bloomberg in March that the firm earned about $250 million last year. American Lawyer’s revision of its report on Dewey’s 2011 results came after that.
A team led by partners Bienenstock and Bruce Bennett was weighing a so-called prepackaged bankruptcy, one of the people familiar with the firm said. A bankruptcy plan approved in advance by creditors could lead to a merger with another U.S. firm, said the person, who didn’t want to be identified because they weren’t authorized to discuss the plans.
and as to the buyers of the bonds , here's the largest fish on the hook...
http://online.wsj.com/article/SB10001424052702304050304577374040928041960.html
The firm also owes at least $145 million to at least seven insurance companies that purchased a private bond the firm floated in 2010, according to 2011 filings with U.S. state insurance departments analyzed by the research firm SNL Financial and some of the insurers.
Some insurers turned down the opportunity to invest in the Dewey bonds. One big insurer said it declined because, in general, it steers clear of investments in "elevator-asset" companies—those where key employees can walk out the door and trigger financial problems.
The insurers with the biggest exposure are Hartford Financial Services Group Inc.,HIG -1.06% at $40 million; British insurer Aviva AV -2.62% PLC, $35 million, and Dutch company Aegon NV, AEG -2.09% $25 million, according to figures from SNL and people familiar with the matter. While some insurers confirmed their holdings, all declined to discuss the investment or to say if Dewey recently has discussed any of its plans with them.
http://www.thelawyer.com/ex-dewey-chair-faces-prosecution-over-misconduct-greenberg-deal-shelved/1012374.article
Ex-Dewey chair faces prosecution over 'misconduct', Greenberg deal shelved
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Dewey & LeBoeuf’s former chairman Steve Davis has become the subject of a criminal investigation by the Manhattan district attorney’s office, with the news coming amid reports that the US firm has called off talks about a possible merger with Greenberg Traurig.
Steve Davis
Davis has been ousted from his position in the so-called office of the chairman after state prosecutors launched the probe against the firm’s former chief, according to US press reports.
A group of partners at the embattled firm presented evidence to the district attorney about alleged financial misconduct by Davis, according to the reports.
The firm informed partners of the investigation in a memorandum on Friday, announcing that it has instructed Dewey New York litigation partners Harvey Kurzweil and Seth Farber to act as counsel to the firm and conduct an internal investigation.
Kurzweil’s experience includes acting for the receiver of Chicago-based WexTrust Capital, which collapsed in 2008 following accusations that two of its executives had run a $255m Ponzi scheme.
Davis announced his removal from his management position in an email to the firm yesterday, with the memorandum also revealing that the firm had ended widely reported discussions over a potential deal with Greenberg Traurig.
Davis, who led the 2007 merger of Dewey Ballantine and LeBoeuf Lamb Greene & MacRae on the LeBoeuf side, was effectively removed from his senior position as chairman a month ago when the role was transformed into a five-partner ‘office of the chairman’ consisting of Davis and four key practice and office heads (28 March 2012). The latest revelation sees him removed from that group altogether and from the executive committee.
The Lawyer reported earlier this month that senior bankruptcy partners at Dewey were working on a potential merger or sell-off of the firm (19 April 2012).
Separately, corporate partner Gary Apfel has become the latest high-profile departure from the firm and the 73rd partner to leave in 2012, with the Los Angeles lawyer quitting late last week for an unknown destination.
2012 departures have now risen to 75, with New York finance partner Marshall Stoddard joining Morgan Lewis & Bockius and Dubai disputes partner Peter Gray leaving for Gibson Dunn & Crutcher. Gray was the firm’s last-remaining Dubai partner following the departure of Gavin Watson and Chris Sioufi for Dechert (16 April 2012).
and..
http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202550599673&Patton_Boggs_Adds_4_Lawyers_From_Dewey&slreturn=1
Patton Boggs Adds 4 Lawyers From Dewey
New York Law Journal
April 30, 2012
Patton Boggs has expanded its insurance dispute practice with the addition of four lawyers from Dewey & LeBoeuf. John Nonna, Larry Schiffer, Eridania Perez and Suman Chakraborty have joined the firm's commercial litigation practice as partners. Nonna, Schiffer and Perez were partners at Dewey; Chakraborty was counsel. Nonna, who was chair of Dewey's insurance and reinsurance dispute resolution practice, now leads Patton Boggs' practice in the area.
With the addition of the four, the firm has seven partners in its insurance and reinsurance dispute resolution practice. Patton Boggs did not have a reinsurance dispute practice until the four arrived, Schiffer said. "The whole point in coming here was to reinvigorate our practice and to use the resources and synergies with other members of Patton Boggs to continue to expand the practice," he said.
Nonna litigates complex commercial disputes, particularly those involving insurance and reinsurance. Schiffer practices in commercial, insurance and reinsurance litigation, arbitration and mediation. Perez practices in commercial litigation and arbitration. Chakraborty helps clients resolve international commercial disputes.
and...
http://www.bloomberg.com/news/2012-04-28/dewey-said-to-be-subject-of-probe-as-deadline-nears.html
Dewey LeBoeuf Said to End Greenberg Traurig Merger Talks
By Linda Sandler - Apr 30, 2012 12:00 AM ET
Dewey LeBoeuf LLP, the New York law firm struggling to survive after more than 70 lawyers left in recent weeks, has ended possible merger talks with Greenberg Traurig LLP, according to two people familiar with the matter.
The firm told members of the end of negotiations in an internal memorandum that also announced that Steven Davis, its former chairman, has been terminated as a member of the five- person chairman’s office and the executive committee.
Neighboring buildings are reflected in 125 W. 55th Street, home to the offices of Dewey & LeBoeuf LLP, in New York. Photographer: Daniel Acker/Bloomberg
The firm plans to continue merger talks with other firms as it faces a deadline today with banks over whether to extend a $100 million line of credit, according to the memo, which was obtained by Bloomberg News. The firm will continue as usual today without disruption to its work, the memo said.
The New York-based firm is said to be the subject of a criminal probe by state prosecutors related to whether managers misled partners about payments due them, another person familiar with the matter said.
Manhattan District Attorney Cyrus Vance Jr.’s investigation is in a preliminary stage, said the person, who declined to be identified because the matter isn’t public. Prosecutors, tipped by disenchanted Dewey partners, are probing whether some attorneys were wrongly shut out of pay as the firm’s profits shrank while others received guaranteed packages. Vance seeks to ensure documents and other evidence is preserved ahead of any bankruptcy, merger or dissolution, the person said.
Pay Complaints
Partners have been leaving Dewey, the No. 3 law firm adviser to banks handling merger deals, amid complaints about pay and a plan to restructure the firm. It has drawn about $75 million of a $100 million credit line from banks including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), according to a person familiar with the firm’s finances. The banks extended an initial April 16 deadline to come up with a plan, according to another person who is familiar with a merger proposal that Dewey presented to other law firms.
There was no extension of the line of credit deadline as of 6.30 p.m. yesterday, said a person familiar with the talks. Bankers discussed, but didn’t grant, an extension giving Dewey as long as 120 days to continue financing talks, the person said.
Erin Duggan, a spokeswoman for Vance, declined to comment. Angelo Kakolyris, a spokesman for Dewey, didn’t return an April 27 call seeking comment on the probe. On April 26, he declined to comment on the deadline.
In a copy of an internal memorandum obtained by Bloomberg News and dated April 27, the law firm said it’s aware of an investigation by Vance into one Dewey attorney involved in the firm’s management. The firm said in the memo that it has begun an internal probe and plans to cooperate with Vance’s office. Harvey Kurzweil and Seth Farber, as counsel to the firm, were asked to conduct the internal investigation, the memo stated.
Defections Mounted
Last month, as defections mounted, Dewey restructured its chairman’s office to include the heads of four practice groups in addition to Davis. The group includes Martin Bienenstock, who runs the firm’s restructuring group; Rich Shutran, head of the corporate department; Jeffrey Kessler, head of litigation; and Charles Landgraf, who runs the Washington office and the legislative and public-policy group.
The firm said last week that it was considering “various paths including continuing to operate as an independent global law firm and a strategic combination with another leading law firm.” A possible partner was Greenberg, which has ended its discussions with Dewey.
“Dewey is a firm we hold in high regard, with many fine lawyers, though we never considered a merger,” said the firm’s CEO, Richard A. Rosenbaum, in a statement sent today by Jill Perry, a spokeswoman for the firm.
Special Deals
Dewey partners, who were getting less pay than expected as profit fell, learned at a partnership meeting in Manhattan that the firm had struck special deals with some partners who would have to be paid before others, according to a person familiar with those events.
Davis said at the meeting that the special deals requiring Dewey to defer pay for most partners involved fewer than 100 lawyers, the person said. Pay at the firm ranged from about $300,000 for junior partners, to as much as $5 million to $6 million for a handful of Dewey’s top lawyers, with base pay of about $25,000 a month, the person said.
Dewey’s executive director, Stephen DiCarmine, had a deal putting his salary and bonus at $2 million a year, said the person, who wasn’t authorized to comment on these matters and didn’t want to be named.
Davis didn’t return phone or e-mail messages on April 27 seeking comment on the probe or the firm’s finances.
Bonds Sold
In addition to the bank deadline, the firm also has $125 million in bonds sold to insurance companies in 2010 to refinance previous bank loans.
The bonds, placed by New York-based JPMorgan, come due between next year and 2020, Dewey said at the time. The firm’s revenue last year was $782 million, compared with about $760 million in 2010, according to the American Lawyer, a trade magazine that tracks law firm results. The publication lowered its numbers for Dewey this month after getting what it called “newly obtained information.”
Rich Shutran, head of the corporate department at Dewey and a member of the chairman’s office, told Bloomberg in March that the firm earned about $250 million last year. American Lawyer’s revision of its report on Dewey’s 2011 results came after that.
A team led by partners Bienenstock and Bruce Bennett was weighing a so-called prepackaged bankruptcy, one of the people familiar with the firm said. A bankruptcy plan approved in advance by creditors could lead to a merger with another U.S. firm, said the person, who didn’t want to be identified because they weren’t authorized to discuss the plans.
Money Back
The team also explored what might happen if the firm shut down, the person said. Closing Dewey would make it much more difficult for members of the firm’s limited liability partnership and creditors to get any money back, the person said.
Bienenstock, whose restructuring team represented Los Angeles Dodgers LLC in its sale to a group including former professional basketball player Magic Johnson, didn’t respond to calls and e-mails seeking comment on plans for Dewey.
Dewey ranked third among legal advisers to investment banks advising companies on mergers this year, according to data compiled by Bloomberg. The firm placed 28th in American Lawyer’s ranking of the largest 100 law firms, with 190 partners and 2011 revenue of $782 million.
Most large law firms that fail don’t come out of bankruptcy, said Chip Bowles, a bankruptcy lawyer with Bingham Greenebaum Doll LLP in Louisville, Kentucky. Instead, they liquidate, he said, citing New York-based Finley Kumble, which went bankrupt in 1988. The firm had almost 200 partners, according to the American Lawyer.
Cherry Picking
Dewey might struggle to find a merger partner because many rivals prefer to select only the partners they want, Bowles said. The serial defections suffered by Dewey were “a form of cherry picking with groups of partners leaving,” he said.
While a pre-packaged bankruptcy “in theory could work,” Dewey’s challenge would be to keep control of the firm’s assets, which are mainly its partners, Bowles said. “The money is in the books of business of the productive partners.”
Dewey’s defections began in March with the departure of a group of 12 insurance and regulatory lawyers for Willkie Farr & Gallagher LLP. The firm has since lost lawyers to DLA Piper LLP, Reed Smith LLP, Patton Boggs LLP, Hunton & Williams LLP and Pillsbury Winthrop Shaw Pittman LLP.
In Dewey’s international network, the 42-lawyer Moscow outpost was recently assessing its options after approaches from firms including King & Spalding LLP, said a person familiar with the negotiations. The Russian office focuses on energy and corporate law.
In April, Dechert LLP took a five-partner corporate and securities team from Dewey’s Dubai office to open in the city.
Dewey’s Rome office head, Stefano Speroni, has said the Italian business wasn’t negotiating with anyone to leave.
Revenue for the first two months of this year rose 28 percent from a year earlier, and so-called billable value increased 13 percent, according to a letter to the partners obtained by Bloomberg News last month. Revenue for the 12 months through Feb. 29 grew 6 percent with an increase in billable value of 9.7 percent, according to the letter.
To contact the reporters on this story: Linda Sandler in New York atlsandler@bloomberg.net;
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