Posted Apr 18, 2012 12:56 pm CDT
Updated: Partner losses continue at Dewey & LeBoeuf, but the firm is taking steps to defend itself.
The firm has lost nearly 70 partners this year, but it says the exodus has not led to a violation of loan covenants. Dewey is fighting media reports of departures with “a public relations offensive” and the hiring of crisis management expert Michael Sitrick, the New York Times DealBook blog says.
Meanwhile reports emerged Friday of a new plan: Partners are reportedly considering a prepackaged bankruptcy that would allow a merger partner to avoid Dewey debts and unfunded pension obligations. The Wall Street Journal (sub. req.) and Reuters have the news, citing unnamed sources; Reuters says the firm has hired Chapter 11 expert Albert Togut.
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.
The firm says the departures have not violated loan covenants, and one of its lenders agrees, DealBook says. Typically, such agreements declare a loan in default if the firm does not maintain 75 to 85 percent of its partners. Dan Di Pietro, the chairman of the law firm group at Citi Private Bank, issued a statement saying Dewey is in good standing with the lender.
The Am Law Daily reported earlier this week on the latest defections. Dewey partners Catherine Hood and J. Anthony Terrell, who handle corporate and securities work, are moving to Pillsbury Winthrop Shaw Pittman. And Dewey partner William Primps, a litigator, is moving to Dorsey & Whitney.
On Tuesday, Hunton & Williams announced that it is acquiring five Dewey energy partners and a counsel.
Dewey released this statement on the departures on Tuesday: “As we have said in the past, although the new direction that the firm is taking was approved and is supported by the overwhelming majority of the firm’s partners—as might be expected at a firm with 300 partners—some didn’t like the change.”
DealBook quotes anonymous sources who say Dewey is negotiating with both Citigroup and JPMorgan Chase to restructure its credit line. The firm also has a $125 million bond issue that begins maturing next year.
Crucial to the firm’s survival, DealBook says, is a group of key rainmakers. Those lawyers include litigation chief Jeffrey Kessler, M&A lawyer Richard Climan, corporate lawyer Berge Setrakian, and bankruptcy partner Martin Bienenstock.
ABAJournal.com: “Dewey Reportedly Considers Prepackaged Bankruptcy for Merger, Retains Chapter 11 Specialist”
ABAJournal.com: “Reports: As Dewey & LeBoeuf Refocuses on US, Multiple International Offices Mull Options”
ABAJournal.com: “As Another Dewey & LeBoeuf Partner Exits, Total 2012 Departure Tally Tops 50”
ABAJournal.com: “Dewey Restructures in Middle East But Says Recent 12-Lawyer Exit There Won’t Hurt Bottom Line”
Updated April 19 and 20 to include related and subsequent coverage, and to include news of the possible prepackaged bankruptcy.