Law Firms

No Plans for Dissolution Vote or Bankruptcy at Dewey; Bienenstock Doesn't Know Who Contacted DA

Dewey & LeBoeuf is apparently winding down its operations, but it still hasn’t taken a dissolution vote or filed for bankruptcy.

Bankruptcy partner Martin Bienenstock, one of four lawyers overseeing Dewey amid the turmoil, doesn’t appear to be in a hurry to take the vote. And he hopes to avoid filing for bankruptcy.

In an interview with the Wall Street Journal (sub. req.), Bienenstock sparred with a reporter who asked about a dissolution vote. “We haven’t taken any votes to dissolve, and I don’t know if that would come or not,” he said. “Let me turn this question around: Why would we do that?”

The reporter persisted, finally asking at what point a dissolution will be necessary. “I don’t know,” Bienenstock replied. “We haven’t done anything to put a dissolution into place.” Asked who will oversee the dissolution as Bienenstock and other executive committee members depart for other firms, he said that executive partner Steve Horvath and firm general counsel Janis Meyer “will take over from here.”

Nor are there plans for the firm to file for bankruptcy. “The intent is to optimize the outcome for all the constituencies,” he said. “Right now that’s done without the use of the court. Whether it continues that way, we have to say we’re not sure, but so far it’s worked. Right now, we have no plan to file a Chapter 11 bankruptcy.”

The Wall Street Journal says avoiding bankruptcy will give the firm a better chance of collecting on unpaid bills. The Recorder sees another benefit: avoiding clawback claims against partners. In the Thelen bankruptcy, for example, the trustee alleged the firm was insolvent three years before it filed for bankruptcy and sought clawbacks from partners during that time. So far more than 180 partners have left Dewey, according to the Recorder’s count.

Other nuggets from Bienstock’s Q and A with the Wall Street Journal:

• On the District Attorney’s investigation of former chairman Steven Davis: “I know nothing about the DA’s investigation. I really know nothing about it. Nor do I know who [from the firm] went to the DA’s office, and whoever went to the DA did not share with us whatever evidence or allegations they made to the DA.”

• On Steven Davis’ culpability: “My own personal view is that Steve Davis might be guilty of optimism, but I doubt, simply knowing the man, I doubt he intentionally misled anyone.”

• On partner guarantees: “I think the world changed after the merger in October of 2007, and maybe some of the contracts given to people were not as prudent in the new world. And no one saw the new world coming.”

• On his own compensation: “I made less than half of what I was supposed to be paid last year. I also have a lot of capital in the firm that I don’t think I’ll be able to get back. I’ve received virtually nothing in 2012.”

Bienenstock also spoke with the New York Times Dealbook blog on late Friday. “If you hear noise in the background that’s the sound of boxes being packed up and moved around me,” he told the blog.

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