On Friday, we broke the news of Dewey & LeBoeuf issuing a WARN Act notice to its U.S. employees. As explained by the U.S. Department of Labor, the WARN law generally requires an employer “to provide notice 60 days in advance of covered plant closings and covered mass layoffs.”
We noted, however, that employees shouldn’t be lulled into complacency by the 60-day requirement. As Elie wrote, “Dewey employees shouldn’t expect to just show up to work every day until Independence Day. Remember, we’ve learned from the Heller dissolution and other firms’ dissolutions that things tend to happen very quickly.”
Very quickly indeed. We are now hearing reports that this Friday, May 11, will be the last day for an unknown number of D&L employees….
As usual with the fast-moving Dewey story, we have multiple UPDATES, including some from Tuesday morning, after the jump.
“I’m a D&L secretary,” said a source. “We were notified at 4:15 p.m. that Friday is our last day. We will be paid through the 15th and will have health insurance until the end of the month. Unused vacation time will also be paid out.”
We don’t have much more than that at the current time. We don’t know how many or what type of employees received this notification. If you can provide us with additional information, please email us or text us (646-820-8477; not a voice line, text messages only). We will update this post with information that we receive.
UPDATE (9:30 PM): One source informed us that at least 90 percent of Dewey’s secretaries in New York were told that Friday would be their last day. They were notified in two meetings, at 4:15 p.m. and at 5:00 p.m. Some employees in financial departments such as accounts payable were also laid off. Additional layoffs are anticipated tomorrow or later in the week. (The staff layoffs are mentioned in this DealBook story on the latest Dewey developments.)
Could employees terminated as of Friday have claims under the WARN Act? Quite possibly. As reported on Friday by Am Law Daily:
[T]he so-called WARN notice sent to employees Friday may not be enough to protect the company from liability, according to attorney Jack Raisner, who specializes in WARN Act work. Raisner, a partner at Outten & Golden, said via e-mail Friday that in his opinion, it would provide “weak insulation” for the firm if it terminates employees before the required 60- or 90-day window closes. “It arguably does not constitute conditional notice, nor preserve the exemptions that excuse shortened notice,” Raisner said.
Current employees of Dewey aren’t the only ones who are suffering. The Dewey debacle continues to affect people from many walks of life, including people not currently at the firm.
We recently wrote about incoming first-year and summer associates who saw their jobs go up in smoke. Another one of them contacted us today:
I was slated to be joining Dewey this fall before the recent turmoil. They assured us all expenses associated with preparation for the bar exam (BarBri, travel, etc.) would be covered by the firm. The deadline for BarBri came and went with no payment from Dewey. They instructed us to pay it ourselves ($3,xxx) and we would be reimbursed by the firm. Needless to say, there has been no reimbursement. Ditto on bar exam fees, transportation & hotel stays for the exam.
In the grand scheme of things, the amounts they owe us are small, but they are significant for students living off loans.
These are lawyers just starting their legal careers. Also affected by the Dewey implosion are attorneys on the other end of the spectrum, namely, retired partners. One of them wrote to us over the weekend:
As of today, while the partners did get their draw, the retirees got neither the funded piece nor the unfunded piece of their pension. Expenses approved for payment, done normally at the end of each month, were not credited to the person’s account.
The shocking part of this is that contrary to the ill informed press accounts, Law360 in particular, the retirees’ pension obligations are not a significant drain. Before the merger, only LLGM [legacy LeBoeuf Lamb] had a real pension plan with survivors’ rights; Dewey Ballantine partners had an arrangement limited in time. To put matters in perspective, the total yearly pension benefits to all LLGM retired partners is roughly equal to the combined total yearly remuneration of Joel Sanders, CFO, and Steve DiCarmine, ex-executive director.
If retired partners want their benefits, they’ll have to take a number. As Dewey falls apart, various parties are lining up for their piece of the pie. For example, JPMorgan Chase, leader of the bank syndicate behind Dewey’s $100 million revolving line of credit, recently filed a Uniform Commercial Code lien against the firm to protect its interests as a secured creditor. I don’t remember much from Bankruptcy class in law school, but I do remember that it’s good to be a secured creditor (or relatively good — I don’t think anyone would want to be a Dewey creditor these days, with or without a security interest).
UPDATE (9:30 PM): According to DealBook, ex-Dewey partner Morton Pierce, the M&A superstar who left the firm last week for White & Case, claims that D&L owes him the staggering sum of $61 million. Wow. Even if you stick Mort Pierce with his late brother’s unpaid legal bill of $9.6 million, you’re still talking about an amount north of $50 million. Whether Pierce will see much or any of that money remains to be seen.
Meanwhile, current Dewey partners continue to depart. For example, litigator Geoffrey Coll recently left for Schiff Hardin, as reported by The BLT. And corporate partner Paul Chen moved over to DLA Piper, as reported by Thomson Reuters. (As we’ve mentioned before, Dewey partner defections are being tracked comprehensively over at Am Law Daily and Thomson Reuters News & Insight.)
We will continue to serve as a clearinghouse for D&L information. If you have something to pass along, please feel free to email us or text us (646-820-8477; not a voice line). Thanks.
UPDATE (5/8/2012): From the Wall Street Journal (sub. req.):
Ailing law firm Dewey & LeBoeuf LLP suffered a global round of defections as 25 partners and their teams jumped ship in cities ranging from Palo Alto, Calif., to Moscow.
One of Dewey’s most-prized assets — the mergers-and-acquisitions group led by Silicon Valley attorneys Richard Climan and Keith Flaum — is heading to Weil, Gotshal & Manges LLP, according to people familiar with the matter. The team, which includes three other partners and four associates, became the focus of a bidding war between rival firms, these people said….
The Palo Alto departures came as Dewey’s entire 31-lawyer office in Moscow, considered one of its most attractive foreign assets, defected to Morgan, Lewis & Bockius LLP, a Philadelphia-based firm perhaps best known for its labor and employment practice. The Moscow office, led by partner Brian Zimbler, has a strong, well-connected corporate group….
From New York, Dewey’s Berge Setrakian, a prominent corporate lawyer who advises international companies on strategy and litigation, is bound for the global firm DLA Piper with nine other partners, including Joseph Tato, former chairman of Dewey’s global project finance and infrastructure group.
These are big moves. We’ll have more about them later.
Dewey Suffers Global Defections [Wall Street Journal (sub. req.)]
Ex-Vice Chairman at Dewey Is Said to Claim That He Is Owed $61 Million [DealBook / New York Times]
Dewey Puts Employees on Notice for Termination; Banks Take Step to Secure Interest
[Am Law Daily (reg. req.)]
As Dewey Sinks, Davis Backers Take Aim at Pierce Over Brother’s Unpaid $9.6 Million Legal Tab
[Am Law Daily (reg. req.)]
Dewey & LeBoeuf Loses Latest Partner to Schiff Hardin in D.C. [The BLT: The Blog of Legal Times]
CAREER TRACKER: Lawyers on the move – May 7, 2012 [Thomson Reuters News & Insight]