As we mentioned in an update appended to yesterday’s post, last night Thomson Reuters reported on Dewey retaining outside bankruptcy counsel: Albert Togut of Togut Segal & Segal, a dean of the bankruptcy bar who has worked on such major cases as GM and Enron.

How is Dewey planning on using the bankruptcy process to its advantage? The Wall Street Journal reports (sub req.):

Leaders of New York law firm Dewey & LeBoeuf LLP are considering a novel rescue plan that would put the firm into bankruptcy protection but might be its best hope at preserving value at a prestigious firm that this year has been hemorrhaging talent.

Amid a wave of partner exits, Dewey’s leaders in recent days have reached out to law-firm peers with a fresh proposition, said people familiar with the situation. The partners have discussed filing a “prepackaged” bankruptcy plan that would allow a merger partner to take on the firm free of its mounting debts and substantial unfunded pension obligations, these people said.

A prepack for Dewey is quite ingenious (assuming it can get done). It might not thrill Dewey’s bank lenders, Citigroup and JPMorgan Chase, or investors who bought into Dewey’s $125 million bond issuance back in 2010 — but they might go along with it, if they think it’s better than the alternatives. Ditching Dewey’s debts, including all the unfunded ERISA obligations, could make the firm far more attractive to a white knight. And as we noted yesterday, getting rescued by another firm is one likely way this drama might play out.

(We previously cited McKee Nelson getting rescued by Bingham McCutchen, and Thacher Proffitt getting rescued by Sonnenschein (now SNR Denton). In response to these observations, though, one reader bitterly noted: “There is a big difference between McKee-Bingham and TPW-SNR, since Bingham acquired McKee and SNR just cherry-picked from TPW’s carcass, leaving the rest (a few lawyers and most staff) behind to collect zero severance and pension obligations.”)

So who are Dewey’s possible suitors? Per the WSJ:

Among potential partners for the merger-and-bankruptcy plan being floated, Dewey has made overtures to New York-based Shearman & Sterling LLP; Greenberg Traurig LLP, which has roots in Miami; and Pittsburgh-based Reed Smith LP, these people said.

A Greenberg Traurig spokeswoman said: “We have a great deal of respect for Dewey LeBoeuf and their quality lawyers. It would be inappropriate for us to comment on market rumors.” At Shearman & Sterling, a spokesman said the firm “isn’t in discussions with Dewey & LeBoeuf concerning a merger.” Reed Smith wasn’t immediately available for comment.

(Hmm… I wonder what John Quinn would say about such a merger.)

Of course, it’s quite possible that no merger will end up happening. As you may recall in the case of Howrey, during the firm’s final days there was talk of a merger between Howrey and Winston & Strawn. In the end, though, Winston just scooped up selected Howrey attorneys.

If Dewey doesn’t find a partner, it still has options:

The merger idea being discussed is just one among possible outcomes for Dewey. The firm could restructure itself with a leaner footprint, shedding less-profitable practices and lawyers. Partners could also vote to dissolve the firm, something the leadership has said isn’t on the table.

A prepackaged bankruptcy followed by a merger sounds vastly preferable to a dissolution and liquidation. Good luck to Dewey as it goes about its strategic planning.

If you have information about Dewey that you can share with us, please email us or text us (646-820-8477). Thanks.

UPDATE (6 PM): Dewey isn’t denying that bankruptcy is on the table. See this firm-wide memo (via the WSJ Law Blog).

Dewey & LeBoeuf retains bankruptcy counsel, role unclear [Thomson Reuters News and Insight]
As Partner Losses Near 70, Dewey’s Troubles Spread Overseas [Am Law Daily]
Storied Law Firm Pitches Plan for Rescue [Wall Street Journal (sub. req.)]
Dewey & LeBoeuf Said to Consider Prepackaged Bankruptcy [DealBook / New York Times]
Dewey Reportedly Considers Prepackaged Bankruptcy for Merger, Retains Chapter 11 Specialist [ABA Journal]

Earlier: Dewey Have Room For Incoming Associates? Or Overseas Offices?
Moscow and the Middle East: Dewey Have A Problem?
Dewey Have A Way To Stop The Partner Hemorrhaging? Energy Lawyers Exit


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