Dewey Have a Deal With Former Partners of the Firm?
Dewey have a chance of settling with ex-partners? Here's the latest news on the Dewey bankruptcy front.
It’s hard to say if this deal will work. On the one hand, as one former partner told Thomson Reuters, “The prospect of litigation is worrisome to multiple groups of partners.” On the other hand, some partners may balk at how much they’re being asked to pay — or even at the prospect of having to pay anything to Dewey, considering that some partners left the firm thinking that they were owed money (or left the firm still owing money to banks that gave them loans for capital contributions that they never got back; having to pay clawback money to the Dewey estate, while still owing money to a bank for a capital contribution that was never returned to you, has got to hurt).
For now, the ex-partners seem to be keeping an open mind. As Mark Zauderer, who represents 57 former Dewey partners, told the Wall Street Journal, “I can’t give any assurances that our clients will warm up to it or even agree to it, but we will look at it.”
The appeal of the proposal may depend in large part on where a former partner falls on the D&L hierarchy. According to the views shared by one ex-partner with The Lawyer, “the deal was favourable to those low on the remuneration ladder who did not bring in much revenue and to those on the top who earned significantly more than the cap of $3m they will have to pay. However, the partner said it was unfavourable towards those in the middle who were profitable members of the firm.”
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A deal that’s tilted in favor of the top earners — Dewey find this surprising? Not really.
Still, this structure might garner enough partner votes (and dollars) to win approval. As one of our sources opined:
If highly compensated partners who received large sums during 2011/2012 are getting a “good deal,” then (a) a disproportionately large number of them should jump on the deal affirmatively, and (b) it won’t take that many to reach the minimum threshold of $50 MM of contribution to the plan. The contribution of the junior partners is so small (and that may be entirely appropriate) that (c) a large number of junior partners should jump on the deal affirmatively, [even if] (d) the sum total of junior partner contributions will not materially ‘move the needle’ on the total sum raised. So one can quickly conclude that the structure described below will generate high participation levels from both the junior partners and the senior partners, and could be enough to carry the plan to approval by themselves.
This reader added, commenting on the proposed settlement structure, “Is not the superior value of the economic contribution of the middle class partner confirmed, and the exploitation continued?” So yes, some midlevel partners might find this proposal unpalatable, feeling that they’re being asked to shoulder a disproportionate share of the burden.
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But let’s not forget: many lawyers like finality and dislike risk. If you’re a productive partner, happily ensconced at a new and stable firm, and just want to forget the D&L debacle and return to serving your clients, this deal may Dewey the trick.
Dewey Seeks ‘Clawbacks’ [Wall Street Journal (sub. req.)]
Dewey & LeBoeuf seeks $104 mln from ex-partners [Thomson Reuters News & Insight]
Ex-Dewey Partners’ Price Tag for Settling All Future Claims: $103.6 Million [American Lawyer]
Former Dewey partners to pay up to $3m each in settlement deal [The Lawyer]
Dewey & LeBoeuf Estate Seeks $103.6M Clawback From Bankrupt Firm’s Former Partners [ABA Journal]
Dewey calls meeting with ex-partners to talk settlement [Thomson Reuters News & Insight]
Dewey Docket: Fighting Over the Bones [WSJ Law Blog]
Contentious Day in Court Ends in Partial Victory for Dewey [Am Law Daily]
Earlier: Dewey Have Good Prospects for a Speedy Settlement With Former Partners?
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