100-Yr-Old Dewey
Files For Bankruptcy As Partners Flee, Debt Surges
(Source: The Times of India (Mumbai), May 30, 2012
Dewey & LeBoeuf, the law firm crippled by financial miscues and partner defections, filed for bankruptcy on Monday night, punctuating the largest law firm collapse in United States history.
The filing, made in federal bankruptcy court in Manhattan, is the final chapter in a turbulent period for Dewey, which came apart after disappointing profits and prodigious debt forced it to slash partners’ salaries. The partners, already owed millions from previous years, grew concerned over the firm’s finances and their ability to get paid. A partner exodus destroyed the firm.
Dewey announced Monday that the firm planned to liquidate. It said it would ask about 90 employees to remain on staff to assist in the winddown of its business. The firm has $315 million in liabilities, of which $225 million is owed to its banks, according to the court filings. Other creditors include the firm’s landlords and former partners owed money.
“This is a very sad day for the legal profession,” said Richard J. Holwell, a former federal judge in Manhattan now in private practice.
“Dewey is a fabled firm with a lot of great lawyers and a demise of this magnitude is unprecedented"
With historical roots stretching back a century, Dewey — the product of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae — employed at its peak more than 2,500 people, including roughly 1,400 lawyers in 26 offices across the globe.
Dewey’s dissolution has generated a debate across the legal profession: Was its failure an isolated event or emblematic of bigger problems in the corporate-law industry?
Many observers say the root causes of Dewey’s fall are not unique. Several of the largest firms have adopted business strategies that Dewey embraced: unfettered growth, often through mergers; the aggressive poaching of lawyers from rivals by offering outsize pay packages; and a widening spread between the salaries of the firm’s top partners and its most junior ones.
These trends, they say, have destroyed the fabric of a law firm partnership, where a shared sense of purpose once created willingness to weather difficult times. Many large firms have discarded the traditional notions of partnership — loyalty, collegiality, a sense of equality — and instead transformed themselves into bottom-line, profit-maximizing businesses.
(Source: The Times of India (Mumbai), May 30, 2012
Dewey & LeBoeuf, the law firm crippled by financial miscues and partner defections, filed for bankruptcy on Monday night, punctuating the largest law firm collapse in United States history.
The filing, made in federal bankruptcy court in Manhattan, is the final chapter in a turbulent period for Dewey, which came apart after disappointing profits and prodigious debt forced it to slash partners’ salaries. The partners, already owed millions from previous years, grew concerned over the firm’s finances and their ability to get paid. A partner exodus destroyed the firm.
Dewey announced Monday that the firm planned to liquidate. It said it would ask about 90 employees to remain on staff to assist in the winddown of its business. The firm has $315 million in liabilities, of which $225 million is owed to its banks, according to the court filings. Other creditors include the firm’s landlords and former partners owed money.
“This is a very sad day for the legal profession,” said Richard J. Holwell, a former federal judge in Manhattan now in private practice.
“Dewey is a fabled firm with a lot of great lawyers and a demise of this magnitude is unprecedented"
With historical roots stretching back a century, Dewey — the product of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae — employed at its peak more than 2,500 people, including roughly 1,400 lawyers in 26 offices across the globe.
Dewey’s dissolution has generated a debate across the legal profession: Was its failure an isolated event or emblematic of bigger problems in the corporate-law industry?
Many observers say the root causes of Dewey’s fall are not unique. Several of the largest firms have adopted business strategies that Dewey embraced: unfettered growth, often through mergers; the aggressive poaching of lawyers from rivals by offering outsize pay packages; and a widening spread between the salaries of the firm’s top partners and its most junior ones.
These trends, they say, have destroyed the fabric of a law firm partnership, where a shared sense of purpose once created willingness to weather difficult times. Many large firms have discarded the traditional notions of partnership — loyalty, collegiality, a sense of equality — and instead transformed themselves into bottom-line, profit-maximizing businesses.
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