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Dewey Know What’s Going To Happen Next? Lawyers and Staff Face Uncertain Future

“Our catering service requires a credit card; client matter numbers no longer accepted. Seamless food ordering requires a credit card or a corporate card.”

Here’s an email (click to enlarge). Note that it’s a cellphone pic of an email. If you have a memo or other document you want to share with us confidentially, you can take a photo of it with your personal cellphone, then send it to us by email (subject line: “Dewey and LeBoeuf”).

“It’s not clear that we still have health insurance.”

Again, here’s an email, in image form:

And Nicholas Jelf’s email doesn’t even tell the whole story. Multiple Dewey sources advise us that, if you call Empire and ask about Dewey’s policy, you’ll be told, “The coverage was terminated on April 1st.”

I’m sorry, but this is unacceptable. It’s one thing for Dewey lawyers to lose out on FedEx delivery and black cars, or Seamless food delivery; those are luxuries. It’s another thing entirely for Dewey employees to be in limbo about their health insurance, which is a necessity. This should not be happening.

The latest rumor we’re hearing is a big one: the New York office could close its doors very soon. A Dewey staffer texted us: “Just heard the NY office may shut down this Friday.”

That sounds like crazy talk, right? And, of course, it’s not backed up by anything concrete.

But if you had told me in January that Dewey might dissolve this year, I would have dismissed that as crazy talk too. We didn’t start getting serious rumblings about Dewey’s troubles until February, and we didn’t do our first story on them until February 27 (partly because we found them hard to believe and waited until we had multiple sources). And we started covering this well before most other news outlets.

Now, a little over two months later, Dewey is at death’s door. And thousands of lawyers and staffers, along with their families, are wondering what will happen next.

As always, if you have information to share, you can email us or text us (646-820-8477 / 646-820-TIPS). Because firm management has been less than transparent during this whole painful process, it’s important for D&L folks to keep each other informed of what they’re hearing. We are happy to serve as a clearinghouse for information — but we need your help in order to do so. Thanks.

UPDATE (7:05 PM): We’re already receiving valuable feedback from Dewey sources about this story (and we will update this post as we receive more info). One staffer at the firm said that this post is generally consistent with his knowledge of what’s going on at the firm, except for the dire prediction of a Friday closing: “Most partners are saying we have at least a couple of weeks.”

UPDATE (5/2/2012, 10:40 AM): Some additional information on various issues:

1. Health insurance. A Dewey source tells us that, according to Empire, the policy “was suspended for non-payment.” It will be reinstated once Dewey electronically submits payment, which Dewey claims it will do (see WSJ and NYT). A different tipster asks: “Is Dewey going to reimburse attorneys and staff for the deductions from paychecks that Dewey took for medical insurance for the time that Dewey failed to pay medical insurance? Will Dewey’s fix for medical insurance be retroactive so people were covered at all times?”

2. Copy and mailroom services. From a source at the 1301 Avenue of the Americas building in New York: “Just got into work this morning. They kicked out our whole document services team and no more mailroom. Also they kicked out our printer service guy. Mail room, copy services, and our resident printer tech are gone from D&L.”

We understand that these services were provided by contractors from William Lea (which provides these services to several Biglaw firms). It’s not clear whether the Williams Lea people were “kicked out,” to use our tipster’s language, or whether they left, perhaps because of payment issues.

3. Treatment of associates. Multiple sources tell us that associates are being told to focus on their client work, even though the partners are directing their energies elsewhere (e.g., toward job searches). Some view this as unfair.

“You may want to point out the mixed messages the ‘Office of the Chairman’ sends out,” a tipster still at Dewey told us. “Partners — abandon ship. Associates — keep billing hours and keep your noses to the grindstone despite the fact that we have stopped paying bills on all your legal resources…and health insurance.”

Said a second source, who left Dewey earlier this year: “Many partners are still making the associates work Biglaw hours. When the hell are they supposed to look for jobs? It’s so insulting the way they are treating associates. Let them have some time to find other employment, like they — the partners — are doing. Your coverage is much appreciated and needed.”

UPDATE (5/2/2012, 11:20 AM): More reports on the health insurance issue, plus concern about pensions:

1. Health insurance. “Medical coverage issue resolved,” said a source. “Restored later today. No gap in coverage.”

A second tipster told us: “[Nicholas] Jelf just emailed us and said insurance will be paid for April/May and will be resolved by end of day. All claims incurred during lapse in coverage will be honored according to Empire once policy is reinstated.”

2. Pension benefits. A former Dewey staffer asked us, “Is my pension protected?” ERISA lawyers, we welcome your insights. On the issue of partner pensions, the Wall Street Journal reports:

[A]t risk are any pension-benefit payments to retired partners that come out of the firm’s current profits, instead of from a dedicated fund. If a firm folds, there is no money to pay such benefits, though many law firms offer 401(k) and other supplemental plans. Retired partners and their survivors are concerned about their pension benefits, which for some represent a substantial portion of their income, said David Bicks, a 79-year-old retired partner and pension recipient, who joined LeBoeuf decades before the merger.

UPDATE (5/2/2012, 11:30 AM): Here is an excerpt from Nicholas Jelf’s email about health insurance:

To: US Personnel

This is to confirm that we have resolved yesterday’s issue with Empire BlueCross Blue Shield. Coverage under the firm’s medical insurance plan will be restored later today. However, if, in the meantime, you speak with BlueCross Blue Shield regarding insurance issues, you may be advised that your coverage ended on April 1. When coverage is fully restored, BlueCross Blue Shield’s records will confirm coverage through April and May. There will be no gap in coverage. I will update you further when the process is complete.

If you have any questions regarding benefits, please contact a member of the Benefits team at extension [xxxx] or by email at [xxxx].


UPDATE (5/2/2012, 12:45 PM):

1. Severance for previously laid-off employees. People have been focusing on finding jobs for current Dewey employees. See, e.g., former D&L partner John Altorelli’s commendable effort (discussed here, memo here). But what about all the people who lost their jobs in the layoffs earlier this year, which claimed 5 to 6 percent of Dewey headcount?

One of them wrote to us: “I’m a laid off D&L attorney, still looking for a job. No one talks abut the loss of our severance if the firm goes under. Supposedly the firm is helping those still employed find jobs but not those they cut loose this year. We need them to survive more than anyone.”

2. Pension benefits. A pension lawyer — one of our ERISA hotties, in fact — wrote us as follows:

You asked what would happen to the D&L pension plan. I expect if it is a regular defined benefit plan, then DL will terminate it using a “distress termination” and the PBGC will take over the plan. Once the PBGC takes over the plan, benefits are guaranteed but only up to certain limits. The participants in the plan will end up with some retirement benefit, but, depending on the underfunding, not up to the level of benefit that they were originally promised. You can read more about distress terminations on the PBGC website.

I should add that if the partners participate in a nonqualified plan, their benefits under that plan have no level of guarantee and are subject to the claims of the firm’s creditors – in other words, they are not likely to see anything.

UPDATE (5/2/2012, 2:00 PM): From the WSJ Law Blog:

On Wednesday, a memorandum was circulated instructing lawyers how to deal with their pro-bono clients should they leave the firm.

“If and when you leave the firm, the best option is to continue advising your pro bono client, provided that you have malpractice insurance from either your new firm or as a volunteer lawyer through the public interest organization that referred the matter,” reads the three-paragraph memo, circulated by Scot Fishman, the firm’s pro-bono director.

We will continue to add updates to this post (and fresh links to the collection of news stories about Dewey that appear below). Return to this page and refresh for the latest.

Things Are So Bad at Law Firm Dewey & LeBoeuf That One of Its Top Partners Left for KPMG [Going Concern]
Dewey encourages partners to seek new jobs [Thomson Reuters News & Insight]
Dewey LeBoeuf Said to Be Close to Extending Deadline [Bloomberg Law]
Once an Ambitious Law Firm, Reduced to Grim Dispatches [DealBook / New York Times]
Dewey Jobs Endangered [Wall Street Journal (sub. req.)]
At Dewey, More Partners Scatter, Leaders Scramble, and Holdouts Confront a Grim Reality [Am Law Daily (sub. req.)]
The Lunchtime Dewey Dish: Health Care to Return to the Firm, More [WSJ Law Blog]

Earlier: Dewey Have Any Shot of Surviving? Internal Memo Urges Partners To Seek ‘Alternative Opportunities’
Dewey Have More Partner Departures To Report? Sadly, Yes
Dewey Have Enough Money To Use FedEx?

(hidden for your protection)

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