The fable of the ant and the grasshopper may have lessons for the world of large law firms.
As regular readers of Above the Law well know, most major law firms — with a fewnotableexceptions — did not pay spring or mid-year bonuses in 2012. Our associate readers generally viewed this news with disappointment, while our partner readers had less of a problem with it.
But perhaps even associates should have been supportive of their firms’ decisions not to pay spring bonuses. Storm clouds are gathering over the law firm world. So says a recent report by Biglaw’s biggest bankers, over at Citigroup….
Law firm financials can be shrouded in mystery. Sure, the American Lawyer releases its closely watched and highly influential Am Law 100 rankings each year, which shed some light on the subject. But these numbers are not Gospel truth, and sometimes they get restated — which is what happened last month to Dewey & LeBoeuf.
Making a material misrepresentation to the American Lawyer doesn’t violate the securities laws. Making a material misrepresentation in connection with the purchase or sale of any security — well, that’s more problematic.
Let’s take a closer look at a subject we mentioned last night and again this morning, namely, the offering memorandum for Dewey’s 2010 private placement of $125 million in bonds….
The law firm of Dewey & LeBoeuf, which is currently fighting for its life, might have good news to report — and we’re happy to share it with you. It seems that LeBoeuf is not yet cooked.
As we’ve previously mentioned, tomorrow, April 30, was supposed to be the deadline for Dewey to reach a new deal with its syndicate of bank lenders. The firm owes its banks a reported $75 million pursuant to a $100 million revolving line of credit.
So what’s the latest — and relatively upbeat — news about Dewey?
UPDATE (4:30 PM): Additional, less cheerful Dewey updates — about the talks with Greenberg Traurig, and about embattled ex-chairman Steven H. Davis — have been added after the jump.
UPDATE (6:00 PM): More Dewey debt news — good news, happily — has been added below.
Today we’ll give you a double dose of Dewey. This morning we published an eloquent email from a Dewey paralegal, which looked at the story from a human-interest perspective. Now we shall return to the business aspects of the crisis.
About two weeks ago, we covered reports about Dewey & LeBoeuf possibly shedding some of its overseas offices. We noted at the time, however, that the reports were vague, and we added that some D&L sources denied the existence of plans for closing any specific foreign office.
Well, the reports are getting increasingly detailed. Word on the street is that D&L might shutter three of its offices in the Middle East. And the firm’s Moscow office is reportedly being courted by other major U.S. law firms.
Which offices are being considered for closure? And who are Dewey’s suitors in Moscow?
It is commonplace for settlements to include no binding admission of liability. A settlement is by definition a compromise. We know of no precedent that supports the proposition that a settlement will not be found to be fair, adequate, reasonable, or in the public interest unless liability has been conceded or proved and is embodied in the judgment. We doubt whether it lies within a court’s proper discretion to reject a settlement on the basis that liability has not been conclusively determined.
Having considered the various explanations given by the district court for its refusal to permit the settlement, we conclude that the S.E.C. and Citigroup have a strong likelihood of success in their joint effort to overturn the district court’s ruling.
Bonus, bonus, bonus time. Time to sit back and unwind.
The first bit of bonus news has leaked out of Biglaw. We’re not talking about spring bonuses, and we’re not talking about random mid-year bonuses. We’re talking about regular, end-of-the-year, take-it-to-the-champagne-room bonuses.
And sure, the early news is bad, but that’s to be expected. This first report is just what Biglaw wants you to hear.
But if the past year in bonus news proves anything, it’s that Cravath sets the bonus market, even when they do it late….
* I know we’re a little tight for money, but we should find some money in the budget to make sure faded American stars are bailed out of the housing crisis, just like the banks were. [Monsters & Critics]
* Illinois’s redrawn legislative districts draw legal fire. I have an idea: let’s use Illinois as a laboratory for direct sponsorship of Congressional seats. I recognize the distinguished gentleman from Pizza Hut. [WSJ Law Blog]
* If anybody at Citi would like to sue for stress due to the fire drill there today, there are a bunch of out-of-work lawyers who would love to help you. [Dealbreaker]
* Prosecuting your own stalker: it’s a good story. This being the most I’ve read in a Marie Claire, however, I need to go hunt something and eat its liver to rebalance my hormones. [Marie Claire]
Stephen Mark McDaniel
* Here’s a chatwrap with Amy Leigh Womack and Joe Kovac, two reporters who have been covering the Stephen McDaniel / Lauren Giddings case down in Macon. The last time I remember Macon being this relevant to my day-to-day life, John Rocker was involved. [Macon Telegraph]
* Having to purchase legal services from a Wal-Mart that looks like a Neiman Marcus is probably something that happens in Hell. But it can’t be much worse that having to buy your clothes in a place where you buy your food. [An Associate's Mind]
* Lady lawyers: looking for a way to spend that spring bonus or partnership draw? Here are ten handbags that cost five figures. [Fashionista]
Although it officially passed away back in March, when its partners voted for dissolution, the law firm of Howrey LLP continues to twitch in its grave — or maybe even step out of its grave and walk around a bit, like a zombie from a horror flick.
Howrey continues to have a presence on Twitter, for example. A D.C.-based reader pointed out to us that the April 2011 issue of Washington Lawyer magazine contained a partnership announcement for the firm, on page 44: “Stephen D. Palley and Andrew R. Sommer have been named partner at Howrey LLP.” (Both landed on their feet: Palley is now a principal at Ober|Kaler, and Sommer is now of counsel at Winston & Strawn.)
And, strangely enough, Howrey is still seeking client engagements….
Although Howrey LLP officially dissolved as a partnership as of March 15, some operations continued beyond that date. But at the close of business today, the firm is going into a more complete shutdown, due to a withdrawal of bank financing.
“Last night, we received notice via email that Howrey is closing as of today, because CitiBank refuses to pay the payroll,” one source reported. “CitiBank has also refused to pay our PTO [paid time off], and our pension contributions.”
“Citibank has closed the door on Howrey operations today, more than a month before the May 9th date listed on WARN notices,” a second tipster confirmed. “No PTO, pensions will be paid out.”
UPDATE (6 PM): Citi takes issue with Howrey’s take on events. From a Citi spokesperson: “We are deeply disappointed in Howrey’s mischaracterization of the situation. Citi is not responsible for the employment practices of a client and has acted in a professional manner throughout this process.”
Hey, have you read Above the Law for like one single minute in the past month? If so, you probably know that we’re having this big blogger conference on March 14th at the Yale Club. Yeah, the Yale Club. You’ll be able to recognize me: I’ll be the only big… blogger guy surreptitiously holding a can of crimson spray-paint.
Speaking of coming, you should come. We’ve got CLE and all that. Click here to buy tickets to get CLE credit for listening to bloggers scream about stuff on the internet.
To refresh your memory, details on the panel that I’m moderating — almost entirely sober, mind you — follow.
My panel is called Blogs as Agents of Change, and we’re going to talk about whether all of these spilled pixels are actually making a difference. You know my view… just ask Lawrence Mitchell, but here are the panelists:
So you spent a considerable amount of time courting, selling and maybe even doing some friendly stalking of that attractive lateral partner candidate with a sizable book. After he or she ignored your emails and didn’t return your calls, a few weeks go by and you read a press release in the legal media announcing the recent move to a competing firm.
Rats. Another one got away from you. You cringe when you consider how much time was spent in meetings that did not bear fruit. Your heart aches when recall how you were led to believe this was a marriage made in heaven.
You have been rejected.
The sting of rejection is painful, even for fancy law firms. But you need to find a way that you can turn this disappointment into a legitimate learning experience.
No, this isn’t a pre-party before we come back next fall for the real thing. This IS the real thing. Quinn Emanuel is pushing the envelope on recruiting. The party is now. This is when you meet the partners and associates face to face. This is when we begin the dance that could land you an offer for your second summer BEFORE school starts in the fall.
First: You come to the party. Second: If you like us, you send your resume after June 1, 2014. Third: If we like each other, you get an offer.
We’re not waiting for fall. We’re not doing the twenty minute thing. This party is the real thing!
We hope you’ll join us, and look forward to meeting you.
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