Dewey & LeBoeuf LLP, which has lost more than a third of its partners in recent weeks, saw its merger and acquisition chief and a team of London litigators depart as the price of its bonds slumped in private trades.
M&A chief Morton Pierce is leaving today with seven other partners to join White & Case LLP in New York, he said in a telephone interview. London managing partner Peter Sharp, Nick Greenwood and David Waldron are joining Morgan Lewis & Bockius LLP in London, Morgan Lewis said in a statement.
Dewey’s privately placed bonds, sold in 2010 to insurance companies to refinance older bank loans, have fallen as low as 45 cents to 55 cents on the dollar, from a trade in the 60s on April 27, said Kevin Starke, an analyst at CRT Capital Group LLC, in a report today.
Dewey, based in New York, is in “an apparent death spiral,” Starke wrote.
Dewey, whose bank loans are partly secured with money due from clients, told partners they can’t have their monthly pay until they send all the bills for their services, a person familiar with the matter said.
Dewey is under orders from bankers to collect as much money owed to the firm as possible after the departure of about 90 partners and the ouster of chairman Steven Davis, according to another person familiar with Dewey’s finances. The banks are reluctant to put the firm into bankruptcy as that might make it harder to collect the bills, that person said. Both people didn’t want to be identified because the matter wasn’t public.
White & Case
Pierce is joining White & Case along with seven other partners, he said. He’s leaving because of the turmoil at Dewey, he said.
“Everyone knows what’s going on at Dewey,” he said.
Pierce and Denise Cerasani will be joining with six partners who can’t be named for legal reasons, White & Case chairman Hugh Verrier said in an internal memo sent to all staff and seen by Bloomberg.
“Two of our strategic priorities have been to strengthen our global M&A practice and expand our New York office,” Verrier wrote in the memo. “These new partners will help us achieve both of these priorities.”
Dewey & LeBoeuf ranks ninth among legal advisers to merger deals over the last twelve months, with 93 deals worth about $119 billion, according to data compiled by Bloomberg. Its biggest deal was Express Scripts Holding Co.’s acquisition of Medco Health Solutions Inc., announced in July with a value of about $34 billion.
Dewey’s London departures follow those of London project finance lawyer Nabil Khodadad to Vinson & Elkins LLP, tax lawyer Julio Castro to KPMG and Stephen Walters, who resigned, a spokesman for Dewey said.
The law firm is preparing to liquidate its U.K. office, two people familiar with the situation said. The London office appointed a committee including restructuring lawyer Mark Fennessy and banking lawyer Bruce Johnston to review its options to wind down or close the business, said the people, who declined to be named because the matter is private.
By last month, Dewey had drawn about $75 million of a $100 million credit line from banks including JPMorgan Chase & Co. and Citigroup Inc., a person familiar with their finances said.
Lenders were considering a 120-day extension of the credit line until a possible combination of the firm with Greenberg Traurig LLP fell through, the person said.
“The banks know that Chapter 11 will add another whole layer of huge expense and involve years of litigation with little gained,” said Anthony Sabino, a lawyer and professor at the Peter J. Tobin College of Business at St. John’s University in New York.
Clients of CRT, which trades distressed debt, are bidding on the bonds, Starke said in an e-mail. Hedge fund investors who buy distressed debt are among those who are looking at the bonds, he said.
Dewey was the 11th-largest U.S. law firm with 1,300 lawyers after a merger during the 2007 recession.
Talks with SRN Denton and other law firms about a possible transaction are continuing, Michael Sitrick, a spokesman for Dewey, said today in a statement. He declined to say in an e-mail if the talks were about a merger or transfer of lawyers from Dewey.
A merger with SNR Denton would depend on the combined law firm’s ability to raise hundreds of millions of dollars in financing, the Wall Street Journal said yesterday, citing people familiar with the matter to report that prospects for a deal had fallen apart.
Jeff Scalzi, a SNR Denton spokesman, didn’t immediately respond to an e-mail seeking comment on talks with Dewey.
In the firm’s Manhattan offices, employees for outsourced services have gone and Dewey’s own support staff may be gradually dismissed as more lawyers leave for other firms, said the first person familiar with Dewey’s situation. Contrary to some online reports, the photocopiers are still there and the computers are working, the person said.
Dewey is trying to help employees find other jobs, the person said. The person plans to take assistants and paralegals with him when he leaves the firm.
The law firm’s mailroom and photocopiers are handled by a contractor, according to a third person familiar with the firm’s situation. At a meeting yesterday, Dewey’s four employees who handle desktop support were told that their jobs would end May 4, and they would be paid salary and accrued time, the person said. A manager told them that the banks were in control of the firm, said the person, who didn’t want to be identified because the matter wasn’t public.
The group was also told that there may be a skeleton staff of support people who would be asked to stay on to complete the remaining business of Dewey, the person said.
Dewey was created by the merger of Dewey Ballantine and LeBoeuf Lamb Greene & MacRae in October 2007, during the credit crisis. The marriage produced an international firm with offices in 25 cities and revenue of more than $900 million. LeBoeuf Lamb Chairman Davis took the helm.