Dewey & LeBoeuf LLP, the law firm trying to stay out of bankruptcy as it collects bills to pay creditors, told employees it eventually may have to close if it can’t resolve its financial difficulties, a person familiar with the matter said.
Dewey, based in New York, told employees yesterday it was distributing the letter to comply with labor laws that require 60 days notice of large-scale layoffs, said the person, who didn’t want to be identified because the matter wasn’t public.
“Although we continue to pursue various avenues, it is possible that adverse developments could ultimately result in the closure of the firm, which would result in the termination of your employment,” the firm said in the notice, according to the person.
“Accordingly, in order to give you as much advance notice as possible, and to comply with any legal obligations that we may have, this letter will serve as conditional advance notice under the Federal Worker Adjustment Retraining and Notification Act,” known as WARN, according to the letter.
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.
By last month, the New York-based law firm had drawn about $75 million of a $100 million credit line from banks including JPMorgan Chase & Co. and Citigroup Inc., this person 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.
Angelo Kakolyris, a Dewey spokesman, didn’t immediately respond to an e-mail after regular business hours yesterday seeking comment on the letter to employees.
Dewey was the 11th-largest U.S. law firm with 1,300 lawyers after a merger during the 2007 recession. American Lawyer’s 2012 rankings puts the firm in 28th place, with revenue of $782 million for 2011 and 1,040 lawyers.
Dewey Ballantine and LeBoeuf Lamb Greene & MacRae merged in October 2007. 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 and was ousted this year after a probe into possible wrongdoing at the firm was begun, Dewey disclosed in an earlier memo.