Bankruptcy, Biglaw, Crime, Dewey & LeBoeuf, Dewey Ballantine, Dissolution, Email Scandals, LeBoeuf Lamb, Money, Partner Issues, Partner Profits, Rudeness

Dewey Have A Postmortem For You: The New Yorker Dissects Dewey’s Death

Dewey & LeBoeuf: gone but not forgotten.

We recently learned that Justice Antonin Scalia is not a fan of women cursing. What would he make of partners at a leading law firm cursing?

And not just garden-variety cursing, but rather colorful deployment of highly profane language. As Hamilton Nolan of Gawker puts it, “The biggest law firm collapse in history began with ‘f**kwad’ emails.”

Which former Dewey & LeBoeuf partner referred to various former partners as “pathetic,” “little prick,” and “f**kwad”? Let’s take a look at James Stewart’s New Yorker magazine article on what caused Dewey’s demise….

Because the New Yorker is a general-interest magazine, Stewart’s piece (sub. req.) contains a fair amount of background information, about law firms generally and Dewey specifically, that will be familiar to Above the Law readers. But there are some interesting tidbits that have not been previously reported, including some juicy emails, based on access that Stewart had to the two StevesSteven H. Davis, former chairman of Dewey & LeBoeuf, and Stephen DiCarmine, former executive director of Dewey & LeBoeuf.

Stewart focuses on the deeper causes of Dewey’s death, so much of the article talks about LeBoeuf Lamb before its ill-fated 2007 merger with Dewey Ballantine and the early days of the merged entity. The last few months of the firm are discussed in somewhat cursory fashion (which makes sense, since they were chronicled in great detail by many outlets, including Above the Law).

One of the early interesting episodes concerns how Steve Davis, then the head of LeBoeuf Lamb, lured over Ralph Ferrara from Debevoise & Plimpton:

Davis visited Ferrara in Washington, and learned that the Debevoise pension plan was unfunded. If the firm ran into trouble, it might not be able to meet its pension obligations. Ferrara was blunt about what he wanted: a funded pension. For tax reasons, he asked for a lump sum payment that would generate the equivalent of the four-hundred-thousand-dollar annual pension that he’d earned at Debevoise — an amount that turned out to be sixteen million.

Signing bonuses of that scale, however common on Wall Street and in Hollywood, were practically unknown among élite law firms. In addition, Ferrara wanted a guaranteed annual salary to match what he was making at Debevoise — $1.6 million. It would not be tied to his performance. Still, Ferrara was a big name in a coveted practice area, and attracting such a partner would bestow cachet on LeBoeuf. Davis worked out the details, and DiCarmine recalls personally delivering the sixteen-million-dollar check to Ferrara’s house.

Many lateral partner hires turn out to be busts, but “LeBoeuf’s investment in Ferrara paid off handsomely,” Stewart reports. Perhaps it would have been better for LeBoeuf Lamb if it had not. Adopting a “growth is good” mentality, Davis hired a slew of lateral partners, offering them signing bonuses and guarantees, then entered into the disastrous merger with Dewey Ballantine, which also resulted in more partners getting lucrative guarantees.

What led Steve Davis and LeBoeuf Lamb into the Dewey merger? According to Stewart, Davis feared that rainmaker Alexander Dye and his allies might defect, “creating a gaping hole that might be impossible to fill…. Davis felt that his only move was to quickly pursue a merger with a firm that had a large corporate practice.”

And what led Davis to worry about Dye’s loyalty? Apparently Dye was disgruntled after getting passed over for chairman in 2007, in favor of Davis getting another term.

This takes us to Alexander Dye’s incendiary emails, which DiCarmine was monitoring. Here’s a message that Dye sent to one of his colleagues in the corporate-insurance group, John Schwolsky:

“Davis thinks it’s just you and me throwing our weight around. Woods hates us because we are the smart guys who gave him wedgies all his life; he can’t imagine working for us….Why the fuck is Woods the one guy who’s determining the future of this firm. These are the assholes who are afraid of melee, not us. I think many of our colleagues would be surprised to learn that squat, ignorant motherfucker is the king maker here. . . . Davis is the bad guy here. I think we need to be opportunistic about how we go after him.”

Stewart alludes to other emails in which Dye called some of his fellow partners “pathetic,” “little prick,” and “f**kwad.”

Dye also included postscripts in messages that he suspected DiCarmine might be reading (query why Dye continued to use the firm email servers if he suspected his communications were being monitored):

“BTW, Steve DiCarmine, if you are reading this, I’ll have your f**king head on a stick.”

“Same threat for you DiCarmine…. Don’t test me.”

“Suck my cock DiCarmine.”

It’s shocking stuff. Take a look at Alexander Dye’s firm bio over at Willkie Farr. He looks more like a wedgie recipient than a wedgie administrator, and his pedigree and background — Brown for undergrad, Michigan for law school — don’t exactly match up to the profile of a potty-mouth. Such salty language would be more likely to come from someone like DiCarmine, whose cousin, Vincent “Vinny Gorgeous” Basciano, served as acting head of the Bonanno crime family. (Stewart’s article discusses this colorful aspect of DiCarmine’s past at some length, perhaps because it would be of interest to a general audience.)

The rest of the piece covers fairly familiar territory — the failure of LeBoeuf Lamb and Dewey Ballantine to integrate, the greed of various partners, the financial pressures the firm felt after the start of the Great Recession, and the giant implosion. The epilogue provides updates on where some of the players are now:

  • A grand jury that convened on September 17 for a six-month term is looking into possible Dewey-related charges, but nothing has happened and no indictment has issued yet.
  • “Late last year, [Steve] Davis had surgery for prostate cancer. He is living under what he describes as severe financial stress, since he is personally liable for $1.8 million that he borrowed to make his capital contribution to the firm, and which was wiped out by the firm’s bankruptcy. He made comparatively little during Dewey & LeBoeuf’s last years, and hasn’t worked since its collapse. ‘The firm failed,’ he told me. ‘But it didn’t fail for want of me trying. I worked like a dog. I did the best I could under the circumstances.'”
  • Meanwhile, the other Steve, Steve DiCarmine, is pursuing fashion-design studies at Parsons — where he’s off to a decent start. At the end of his first semester, he received nine A’s and one B, a performance that landed him on the Dean’s List.

Will the world someday see Steve DiCarmine fashions strutting down a runway? Here’s hoping that DiCarmine can take his fashion career and “make it work” — at least better than Dewey & LeBoeuf.

P.S. One correction to Stewart’s otherwise meticulous piece. He quotes the following quip — “Steve DiCarmine is being forced to take a break from his rigorous class schedule at Parsons to testify at a Dewey bankruptcy hearing next week. He’ll be happy to hear orange is in this spring.” — and erroneously attributes it to Am Law Daily. These are actually the words of our very own Staci Zaretsky, linking to an Am Law Daily piece in Morning Docket.

The Collapse: How A Top Legal Firm Destroyed Itself [The New Yorker (sub. req.)]
The Biggest Law Firm Collapse in History Began With “F**kwad” Emails [Gawker]
Corporate lawyers can be egotistical, greedy and flamboyant [Financial Times Business Blog (reg. req.)]

Earlier: Prior ATL coverage of Dewey & LeBoeuf

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