Bankrupt Dewey & LeBoeuf LLP is “rushing” to implement a plan that would largely free select partners from liability for mismanagement while imposing burdens on others at the firm, including retired partners, a group of retirees said.
They made the statement in a federal court filing in Manhattan, asked for a trustee or an examiner to look into the “gross mismanagement” that continues after the bankruptcy, eroding assets, they said. Assigning an examiner to probe and pursue or settle clawback or other claims related to the conduct of Dewey and its executives also would be beneficial, they said.
Dewey before bankruptcy was run to provide “disproportionate” benefits to select partners, who received more than $250 million just in the year before the firm failed, they said, citing a July disclosure of Dewey’s finances. The pattern persists even after the largest law firm collapse in history, they said.
Since its failure, Dewey has been proposing a settlement seeking $90.4 million from more than 700 partners and former partners, including almost 400 persons who left the firm before the January 2011, they said. Partners in exchange wouldn’t be sued, said the so-called ad hoc committee of retired partners.
Faulting the proposed deal for its handling of Dewey’s former executive committee members, they said it failed to address “numerous potential tort claims against partners who formally or informally managed or controlled the firm.”
“An independent review is necessary because the current management of the estate is rushing to implement the PCP that would impose significant burdens on retirees and other innocent parties and shield the partners who took out huge compensation, including in the months preceding the firm’s collapse,” they said, referring to the so-called Partner Contribution Plan.
Albert Togut, Dewey’s chief bankruptcy lawyer, and spokesman Michael Sitrick didn’t immediately respond to an e-mail seeking comment on the filing.
The product of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae, the firm at one point had more than 1,300 attorneys spanning 12 countries. Dewey, based in New York, fell apart in a matter of weeks this year after ousting its chairman and watching partners decamp to competing firms.
Former chairman Steven Davis was removed from office in April after Manhattan District Attorney Cyrus Vance Jr. told the firm he was investigating allegations of wrongdoing, Dewey has said. Davis has denied wrongdoing.
In bankruptcy, Dewey has been criticized by the U.S. trustee who supervises bankruptcies. The estate’s $700,000 bonus plan and its retention plans may not be cost effective or economically feasible for a liquidating law firm, the trustee, Tracy Hope Davis, said. She also faulted nine of Dewey’s proposals to hire advisers, including the law firm Togut Segal & Segal LLP. A judge approved several of the hirings anyway.
The case is In re Dewey & LeBoeuf LLP, 12-12321, U.S. Bankruptcy Court, Southern District of New York (Manhattan).