Dewey & LeBoeuf update -Tuesday evening update - Looks like the London office may be wound down - which may also cover Dewey's Paris office as well. Partner departures up to approximately 92 so far - new names include Ilan Nissan , Christian Nugent , Lyle Roberts. ven as the Executive Committe and four member office of the Chairman will remain in their positions , they are also considering other opportunities - and so it goes...... Tuesday morning edition ... it would appear Dewey & LeBoeuf is heading to bankruptcy and an attempt to obtain an orderly wind up ! Encouraging partners to seek other opportunities is the clearest sign that any hopes for a merger have gone by the boards and any loan by the lenders will be made to maximize collection of bills.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/01/bloomberg_articlesM3CIAE6KLVR501-M3CK3.DTL


May 1 (Bloomberg) -- Dewey & LeBoeuf LLP, the law firm that has lost more than 80 lawyers and is in talks with banks on extending its credit line, is preparing for liquidation of its U.K. business, two people familiar with the situation said.

A committee, which includes London-based restructuring lawyer Mark Fennessy and banking lawyer Bruce Johnston, was appointed to review the London office's options including winding down the business, said the people, who declined to be named because the matter is private.

Dewey's U.K. partnership, which also covers its Paris office, is a separate legal entity to the firm's U.S. limited liability partnership, so a decision on whether to file for administration can be made separately. More than 25 partners work at Dewey's London operation, said one of the people.

The New York-based firm is near an agreement with banks about extending its line of credit of which it has drawn about $75 million of a $100 million, another person familiar with the talks said.

Angelo Kakolyris, a spokesman for Dewey, didn't return a call seeking comment. Calls and e-mails to Fennessy and Johnston weren't immediately answered. Peter Sharp, the managing partner of the London office, didn't reply to requests for comment.

and additional departures among the partner ranks....


http://abovethelaw.com/2012/05/dewey-know-whats-going-to-happen-next-lawyers-and-staff-face-uncertain-future/#more-155110

We’ll start with the hard news and get progressively softer. First, partners are still partner leaving in droves. We mentioned almost a dozen of them yesterday (see here, including all the updates). Now there are more, as reported by Thomson Reuters News & Insight:

[P]artner defections continued, bringing the total to at least 92 since the start of the year.

Holland & Knight said on Tuesday that it had hired Stuart Saft, a New York real estate partner at Dewey, and Goodwin Procter announced it had hired Dewey lawyers Ilan Nissan and Christian Nugent as private equity partners.

We mentioned the hiring of Saft, former chair of Dewey’s global real estate practice, in an update to yesterday’s story. The news about Ilan Nissan and Christian Nugent is new, though. If their names sound familiar, they should be: we wrote about them last June, when they left O’Melveny & Myers to join Dewey. At the time, OMM was experiencing significant partner attrition — but it seems to have righted itself, while the S.S. Dewey has taken on water. So Nissan and Nugent had to move on to the good ship Goodwin.

Back to Reuters:

Cooley LLP also said Tuesday that it had hired Dewey partner Lyle Roberts as a partner in its securities litigation practice in Washington.

and.....



http://allbusinessnews.org/dealbook-dewey-leboeuf-said-to-encourage-partners-to-leave/

DealBook: Dewey & LeBoeuf Said to Encourage Partners to Leave

May 1, 2012 By admin Leave a Comment

11:47 p.m. | Updated

Dewey LeBoeuf, the New York law firm crippled by financial mismanagement, an exodus of partners and a criminal investigation of its former chairman, encouraged its partners on Monday evening to look for another job, according to an internal memo.

The firm’s leadership has been scrambling in recent days to stave off failure by merging with another law firm and persuading its lenders not to push it into liquidation. “All partners,” said the memo, which was reviewed by The New York Times, “are encouraged to seek out alternative opportunities.”

The memo represents the latest chapter in a tumultuous period for Dewey, which has come apart after disappointing profits forced its leadership to slash partners’ compensation. An accelerating wave of partner defections since January — more than 85 of its 300 partners have left, including at least 11 on Monday — imperiled the firm.

Last week the firm announced that the Manhattan district attorney had begun a criminal investigation into allegations of wrongdoing by Steven H. Davis, the firm’s former chairman, who was stripped from his leadership posts this past weekend.

If Dewey were to file for bankruptcy, it would most likely lead to the firm’s dissolution, industry experts say. Unlike an operating company with physical assets that can reorganize in a bankruptcy, Dewey — a private partnership whose only real assets are lawyers — will be left with nothing to restructure once its lawyers walk out the door.

“There are no plans to file bankruptcy,” Martin Bienenstock, the head of Dewey’s restructuring practice and a member of the office of the chairman, said late Monday. “And anyone who says differently doesn’t know what they’re talking about.”

Before the recent departures, Dewey employed about 2,000 people — roughly 1,000 lawyers in 25 offices across the globe and the other half support staff including legal secretaries, mailroom clerks and paralegals.

Dewey was formed through the 2007 merger of Dewey Ballantine and LeBoeuf, Lamb, Greene MacRae. The two firms created a 1,300-lawyer behemoth with about 25 offices across the world and revenues of about $1 billion, making it the largest law firm merger in history.

Driving the deal was Mr. Davis, a Yale-educated energy-industry lawyer who had spent his entire career at LeBoeuf and had ascended to its chairmanship. A genial and low-key leader, Mr. Davis had a vision to create a firm with the size and international footprint to compete in an increasingly competitive marketplace.

“You have to be bigger,” Mr. Davis said in an interview at the time.

They called the new partnership Dewey LeBoeuf, honoring a commitment that Dewey Ballantine had made to the estate of Thomas E. Dewey, the former New York governor who once ran the firm. When Mr. Dewey died in 1971, his will said that the firm could no longer use his name. The firm struck a deal with the estate to continue to use “Dewey,” so long as it always appeared first.

When the combination was struck, the partners had a saying that “LeBoeuf married up, and Dewey married rich.” The century-old Dewey, a storied firm with a strong mergers-and-acquisition practice, was hurting financially after numerous partners left after a failed 2006 merger with Orrick, Herrington Sutcliffe. LeBoeuf, on the other hand, was financially sound, churning out lucrative work in its leading practices representing utilities and insurers.

Despite the old-school name, Dewey jettisoned traditional notions of a law firm partnership. Instead, Mr. Davis promoted a star system where top-producing partners had guaranteed contracts paying them millions of dollars a year. Some partners, the so-called rainmakers who brought in the business, made more than 10 times Dewey’s lowest-ranking ones, the service partners who earned a salary of about $300,000 drafting legal briefs and proofreading merger agreements.

The timing of the merger, struck in August 2007, could not have been worse. Just as the firms were combining, the credit markets seized up. A year later, Lehman Brothers collapsed, setting off the global financial crisis and a precipitous decline in the demand for legal services. Dewey, like other large law firms, struggled through the deep recession.

Yet in 2010, anticipating a business recovery, Mr. Davis began a hiring spree, snaring partners from other firms by luring them with huge multiyear contracts. Last year alone, Dewey brought on 37 lateral partners. On just one day in January 2011, the firm brought on seven partners from three firms.

The problem was that Dewey could not afford to pay its existing partners, let alone these new ones.

Cash was already running low; partners were already owed tens of millions of dollars in back pay. The firm had fallen so behind on collecting unpaid legal bills that management sent out an e-mail offering partners free iPads and iPhones if their clients paid them on time.

Last October, as it became clear that Dewey was not going to meet its lofty projections for 2011, Mr. Davis held a partners’ meeting to discuss the firm’s finances. He dropped a bombshell: The firm had extended guarantees to nearly 100 of its lawyers, creating compensation commitments that it could not possibly meet. Partners with large contracts who were already owed millions of dollars would be asked to take additional pay cuts.

By March, Dewey’s partners were already in revolt when they crammed into a conference room for another meeting. Jeffrey L. Kessler, a top sports-industry lawyer who represents the National Football League players’ union, took the microphone and delivered, according to people present, the law firm equivalent of a locker room pep talk.

Yet the partners had already lost confidence in management’s ability to save the firm. Groups of partners continued to jump ship, and the steep decline in its partnership ranks caused Dewey to breach covenants on its loans.

A dissolution of Dewey would be expected to result in ugly legal battles over money between creditors, bondholders and the partners owed back pay. In a bankruptcy proceeding, Dewey’s partners could also be on the hook for millions of dollars in so-called clawback claims brought by creditors seeking to recover money.

and....

http://sfgate.bloomberg.com/SFChronicle/Story?docId=1376-M3B78A1A74E901-7751KMRPTVDB646DGR4QBO6FDG

May 1 (Bloomberg) -- Dewey & LeBoeuf LLP, as it prepares for a possible bankruptcy after losing more than 80 lawyers, is close to reaching 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 past weekend before Dewey’s talks with Greenberg Traurig LLP about a partial combination ended, said the person, who declined to be named because the talks were private.

An accord between Dewey and lenders, including JPMorgan Chase & Co. and Citigroup Inc., wasn’t yet signed, the person said.

Dewey has drawn about $75 million of a $100 million credit line from banks, the person said. The firm said April 29 in an internal memorandum that New York prosecutors were probing possible wrongdoing at the firm. The memo said that Steven Davis, formerly sole chairman, was ousted from a five-person chairman’s office and the executive committee.

Davis hired criminal defense attorney Barry Bohrer, a partner at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, as he faces allegations of misconduct.

“Every action of Mr. Davis as chair of the firm was taken in good faith and in the best interests of the firm,” Bohrer said in an e-mail confirming his retention. “He is confident that fair-minded professionals will conclude that he engaged in no misconduct.”

Bonds Reeling

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.

“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 that 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

Patton Boggs LLP, based in Washington, 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.”

Job Opportunities

Dewey management sent another memo to all the firm’s partners yesterday informing them they are free to explore other job opportunities, said a person familiar with the contents of the document. The firm is carrying on business as usual and at the same time trying to find employment for legal and non-legal staff, according to the person who saw the memo and who declined to be identified because the information is private.

At least 11 lawyers announced departures from Dewey yesterday including Marshall Stoddard, the U.S. head of Dewey’s bank and institutional finance practice group, and Charles Moore, an energy partner in Houston, who both left for Philadelphia-based Morgan Lewis & Bockius LLP along with two counsel lawyers and an associate.

Gibson Dunn & Crutcher LLP hired disputes partner Peter Gray for the firm’s Dubai office, and Clifford Chance LLP hired Howard Adler, co-chair of Dewey’s compensation and benefits practice and Gary Boss, a partner who specializes in mergers and acquisitions and insurance. Dewey partner Gary Apfel, co-chair of the consumer financial services group, also announced his departure yesterday to Philadelphia-based Pepper Hamilton LLP to lead that firm’s California expansion.

Vance Probe

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 investigating possible wrongdoing at the firm, the person said.

Vance seeks to ensure documents and other evidence is preserved ahead of any bankruptcy, merger or dissolution, the person said.

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. and Citigroup Inc., 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.

Internal Probe

Erin Duggan, a spokeswoman for Vance, declined to comment. Angelo Kakolyris, a spokesman for Dewey, declined to comment yesterday on the probe, a possible bank extension and Davis’s hiring of a criminal defense attorney.

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.

In March, 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.

‘Various Paths’

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 Traurig, 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 Greenberg’s CEO, Richard A. Rosenbaum, in a statement sent yesterday by Jill Perry, a spokeswoman for the firm.

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.

Junior Partners

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 top lawyers, 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.

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 last month after getting what it called “newly obtained information.”

Bankruptcy Considered

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 pre-packaged 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.

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.

Mergers Ranking

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.

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.”

Firms Hiring

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, 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 in March. 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.