Law Firms

'Voracious greed' of some Dewey partners contributed to firm collapse, former leaders say

Three former leaders of Dewey & LeBoeuf say in a joint motion that the firm’s collapse was caused partly by “voracious greed” of some of the firm’s partners, and they shouldn’t be made into scapegoats for things that they didn’t do or approve.

The leaders are seeking a review of grand jury minutes to determine whether prosecutors were fair in presenting evidence against them and dismissal of criminal charges that aren’t supported by the evidence, report the New York Times DealBook blog and the New York Law Journal. The former leaders who filed the motion (PDF) are former chairman Steven Davis, former executive director Stephen DiCarmine, and former chief financial officer Joel Sanders.

The three leaders were accused in a criminal indictment of making misrepresentations when refinancing Dewey debt with a $150 million private placement of securities and a $100 million revolving line of credit with a syndicate of banks.

The motion argues that grand larceny charges should be dismissed because there was no intent to deprive lenders of their property, a scheme to defraud charge should be dismissed because of lack of knowledge and intent, and 88 counts of falsifying business records should be dismissed because they rely on legally insufficient grand larceny counts.

The defendants did not have an understanding of “complex, arcane and nuanced accounting rules, regulations and practices” that is needed to support mental culpability, the motion argues.

The motion says Dewey’s problems can be traced to “a combination of The Great Recession, the voracious greed of some of the firm’s partners, the decisions of several key partners to defect, and the publicity engendered by the District Attorney’s investigation that torpedoed an impending merger with another law firm, as well as D&L’s ongoing negotiations with its lenders to renew its credit facility.”

Another defendant, former client relations manger Zachary Warren, is seeking to sever his case from that of the three law firm leaders.

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