Dewey pull your leg? No, we’re quite serious….
The bonuses aren’t targeted at Dewey lawyers, though. Rather, they’re targeted at the staffers who are involved in the complex and messy effort to wind down business at the bankrupt firm. Jennifer Smith of the WSJ Law Blog reports:
A federal bankruptcy judge gave the green light Monday morning to most of a $700,000 bonus plan for the team collecting bills and shutting down operations at failed New York law firm Dewey & LeBoeuf LLP.
The Justice Department’s watchdog in the case had objected to the bonuses, calling the Dewey estate’s proposal to reward both the employees that have stayed on after the firm closed up and outside collections consultants “premature” and unjustified.
The objections to the Dewey “incentive plan” came from the U.S. Trustee in the Dewey bankruptcy, Tracy Hope Davis. Judge Martin Glenn overruled Davis’s objections and approved the plan (except for a proposal to give Dewey access to $100,000 of discretionary funds to pay employees). From the order:
[T]he cost of the Retention Plan is reasonable in light of the possible consequences the Debtor would face if it were unable to stop more Employees from leaving. Currently, Employees are engaged in a very wide range of tasks such as the collection of receivables, disposing of boxes of former client files, sorting through the Debtor’s fixtures, furniture, and equipment located throughout the country and in various other countries throughout the world, mining financial data about the Debtor, complying with statutory reporting requirements, administering the Debtor’s claims process, and identifying causes of action and claims that the estate may have against third parties.
Bonuses at Dewey might seem counterintuitive at first, but the policy makes sense when you stop and think about it. As Dewey’s lead bankruptcy lawyer, Albert Togut, memorably put it, “There’s no future in working for Dewey & LeBoeuf.” (Alas, that statement was probably true far earlier than anyone realized.)
Chasing after clients for money — on behalf of a defunct law firm? Figuring out how to deal with thousands of boxes of client files? Dealing with the ugliness of litigation spawned by Dewey’s collapse? This is not fun stuff. Significant incentives are required.
Moral of the story: Paying people to clean up the Augean stables isn’t cheap.
Dewey Docket: Bonuses for Wind-Down Team Get Green Light [WSJ Law Blog]
Memorandum Opinion and Order on Debtor’s Motion to Implement Employee Incentive and Retention Plans
[U.S. Bankruptcy Court for the Southern District of New York]
Judge seeks more detail on Dewey bonus plan [Thomson Reuters News & Insight]
Proposed Bonus Plan for Dewey’s Remaining Employees Scrutinized [Am Law Daily]