Payback by Demoted Duo at Dewey; Partner Comp Ranged from $300K to $10M
Posted May 14, 2012 12:57 pm CDT
When he led LeBoeuf & Lamb before its 2007 merger with Dewey Ballantine, Steven Davis had to confront a threat to his leadership.
The co-chairs of LeBoeuf’s corporate department, Alexander Dye and John Schwolsky, were making a bid to replace Davis after he became convinced the firm needed to merge with another, the New York Times DealBook blog reports. Davis confronted the two lawyers with embarrassing internal emails they had written, the story says, and they were forced out of their management posts.
This year the demoted duo led a 12-person team that left Dewey, an early defection that “had a snowball effect that devastated the firm,” DealBook says. Bankruptcy partner Martin Bienenstock mentioned the departures in an interview with the Wall Street Journal (sub. req.), though Dye and Schwolsky weren’t specifically mentioned. The loss of the practice “wasn’t that big a deal,” Bienenstock said, but “it was an optical and emotional hit, and it was magnified in the press. It led to some other groups deciding to leave, and that’s really what triggered the formation of the office of the chair and everything we’ve done.”
Bienenstock was one of four leaders who led the firm this year after the the District Attorney’s office in Manhattan began a preliminary investigation of allegations against Davis, who says he has not engaged in any misconduct.
DealBook chronicles Davis’ life from his childhood and reveals that he came out as gay in 2001, after 24 years of marriage. He has been in a long-term relationship with a man for 10 years.
According to DealBook, Davis saw early success at LeBoeuf when he lured Ralph Ferrara away from Debevoise & Plimpton with a lucrative compensation offer. The blog interviewed a managing partner of another law firm who said the hire was a great success. “What can happen when you have an early success is that it can give you a false sense confidence about what you’re capable of doing,” the anonymous managing partner said.
At Dewey, partner pay ranged from $300,000 for those who worked the cases to $10 million a year for rainmakers, DealBook says. Davis “was the driving force behind a series of moves that sowed the seeds of the firm’s demise,” the story says. “He pushed the star-crossed merger in 2007 that created Dewey & LeBoeuf, a behemoth with 1,400 lawyers. He also charted a rapid expansion fueled in part by heavy borrowing, overextended the firm by handing out lavish pay guarantees and oversaw a corrosive partnership culture of haves and have-nots.”