News of DA probe ended Dewey merger and bank talks, says ex-leader of failed law firm
Prosecutors in a financial fraud case against three former leaders of Dewey & LeBoeuf say the trio knew long before their 1,400-attorney law firm imploded that it could not repay its debts and meet its financial obligations, and that they lied to lenders and engaged in accounting fraud to delay the inevitable.
However, testimony Monday by a former member of the management team that took over in March 2012 from the defendants—then-chairman Steven Davis, executive director Stephen DiCarmine and chief financial officer Joel Sanders—suggested that a partner exodus and news of a criminal investigation by the New York County district attorney’s office is what pushed Dewey & LeBoeuf over the brink, the Am Law Daily (sub. req.) reports.
Witness Richard Shutran, who served on Dewey’s executive committee in the final months of the law firm’s existence, said negotiations with banks and potential BigLaw merger partners came to an end when the DA’s probe became widely known.
The firm filed for bankuptcy about a month later.
Related coverage:
ABAJournal.com: “Tempers flared when Dewey rainmakers learned of 50% pay cut, ex-partner testifies”
ABA Journal: “How Dewey management’s rosy picture masked an ugly truth”
