Posted Apr 20, 2012 11:34 am CDT
Dewey & LeBoeuf has hired a Chapter 11 expert as it considers a prepackaged bankruptcy plan that could pave the way for a merger with another law firm, according to published reports.
The expert is Albert Togut, who has represented several major companies in Chapter 11 bankruptcy, Reuters reports. Dewey spokesperson Angelo Kakolyris refused to comment on the report, telling the wire service, “The firm does not comment on speculation.”
According to the Wall Street Journal (sub. req.), Dewey partners are considering a prepackaged bankruptcy that would allow a merger partner to avoid Dewey debts and unfunded pension obligations. The newspaper’s story is based on “people familiar with the situation”; Reuters also says a prepackaged bankruptcy may be an option, citing information from an unnamed partner who recently left the firm. A firm spokesman refused to confirm this information as well, citing once again the firm’s no-comment-on-speculation policy.
One feature of the plan would be to grant clawback waivers to lawyers who stay with the firm a certain number of years that ensures the law firm won’t seek payments if they eventually leave and take clients with them.
Possible merger partners contacted by Dewey include Shearman & Sterling, Greenberg Traurig and Reed Smith, sources told the Wall Street Journal. A Greenberg spokeswoman refused to comment, while a Shearman spokesperson said there are no merger discussions. The newspaper was unable to reach a Reed Smith spokesperson by deadline.
Dewey has lost nearly 70 partners this year. The firm has struggled to pay lucrative guarantees to lateral partners, resulting in pay cuts to other partners, ex-partners tell the Wall Street Journal.
ABAJournal.com: “Reports: As Dewey & LeBoeuf Refocuses on US, Multiple International Offices Mull Options”
ABAJournal.com: “Dewey Restructures in Middle East But Says Recent 12-Lawyer Exit There Won’t Hurt Bottom Line”
ABAJournal.com: “Three More Partners Depart Dewey; Firm Hires Crisis Expert and Denies Lender Problems”