This morning I attended the confirmation hearing for the Chapter 11 bankruptcy plan of Dewey & LeBoeuf. As I mentioned on Twitter a few minutes after leaving the hearing, Judge Martin Glenn confirmed the plan.
Under the plan, secured creditors will recover between 47 to 77 cents on the dollar, while unsecured creditors will wind up with 5 to 14 cents on the dollar. Secured creditors hold about $262 million in claims; total creditor claims, secured and unsecured, amount to about $550 million.
So that’s the bottom line. But what was the hearing itself like? Here are my observations, including a few photos — because bankruptcy court coverage is totally WWOP….
* “Maybe in the future you could let us know when something as definite as that comes [at the last minute.]” It would appear Chief Justice John Roberts has yet again been angered terribly by a lawyer from the Department of Justice over policy changes. [CNN]
* G’day, mate! Perhaps Peter Kalis was telling the truth about his firm, because everything really is great at K&L Gates after last night’s announcement. Partners at the Biglaw firm just approved a merger with Australian firm Middletons. [WSJ Law Blog]
* The commission overseeing the revisions to Chapter 11 of the Bankruptcy Code will focus their energies on labor and benefits. Aww, how nice of them to think of the little people. [Thomson Reuters News & Insight]
* The suit over job stats against Thomas Jefferson School of Law lives to fight another day. The school was “disappointed,” but probably not as disappointed as the students it allegedly duped. [National Law Journal]
* And speaking of disappointment, people are still pissed off about Case Western Law Dean Lawrence Mitchell’s defense of going to law school, aka “a full-throated defense of the indefensible.” [New York Times]
* If you’ve made a mistake on your law school application, fret not, because there’s a way to correct it. (Note: some would say the real mistake was applying in the first place.) [Law Admissions Lowdown / U.S. News]
* Another day, another lawsuit filed against the much-sued and oft-creepy Dov Charney. This time, an ex-store manager alleges the American Apparel CEO choked him out and tried to rub dirt in his face. [Huffington Post]
Complaining about air travel has become a cliché — but it’s still fun. The other night, while flying out to San Francisco for an event I’m doing on Monday (to which you’re invited), I was delayed by two and a half hours — due to a plane turned “biohazard.”
My experience — with United Airlines, which I generally like — pales in comparison to what the novelist Gary Shteyngart experienced recently with American Airlines. He wrote about in a New York Times piece that’s horrifying and hilarious.
But some folks have much warmer feelings for AA — namely, the lawyers and law firms that are making millions from the American Airlines bankruptcy case. Let’s find out how much they are seeking in fees….
In the words of Mark Zauderer, counsel to almost 60 former Dewey partners, “I’m not seeing overwhelming enthusiasm for the proposal.” A former D&L partner was even more blunt: “I think this is destined to fail. Let the trustee [of a Chapter 7 liquidation] go for it.”
But not everyone holds such negative views. One ex-partner — who claims that he’s being asked to pay more than he thought he owed, and that he’ll have to postpone his retirement by several years due to Dewey’s downfall — told Thomson Reuters that he will vote for the deal anyway. “My view is there’s nothing less desirable than having this drag out for years,” he said. “I’m willing to pay a lot of money to have this go away.”
Dewey have other issues besides how to deal with former partners? Most certainly. There are pressing problems regarding the disposition of client files, as well as issues regarding retirement benefits for former Dewey & LeBoeuf employees….
Debtor in possession -- of a sign? Dewey still seems to have signage outside 1301 Avenue of the Americas. (Photo taken on Tuesday by yours truly.)
Ever since the once high-flying Dewey & LeBeouf filed for bankruptcy in late May, observers have been wondering about what type of financial arrangement the firm might work out with its former partners. Last month, we discussed the outlines of a possible settlement between D&L and its ex-partners, in which former partners would pay a certain amount of money into the Dewey bankruptcy estate in exchange for being released from future claims by Dewey’s estate, the firm’s creditors, and fellow ex-partners.
Would such a plan fly? We noted that the broad outlines sounded reasonable enough, but that much would turn on the specific contours of the proposal — especially the amounts that the partners would be asked to pay, and the methodology for determining those sums.
In the wake of a meeting held yesterday afternoon here in New York at a hotel in midtown Manhattan, we now have some additional information on that front….
It has been a few days since our last detailed story about the largest law firm bankruptcy in history. So let’s check in on the Chapter 11 proceedings of Dewey & LeBoeuf, currently pending in bankruptcy court for the Southern District of New York.
There have been a few recent developments. For example, as we mentioned in Morning Docket, Dewey is being counseled in bankruptcy by some pretty pricey advisers.
As we mentioned earlier today, retired partners of Dewey & LeBoeuf received some potentially good news. These former partners, whose unfunded pensions were supposed to be funded out of firm profits, will have a voice in the firm’s bankruptcy proceedings. As reported by the WSJ Law Blog and Am Law Daily, the U.S. trustee’s office has appointed an official committee of former partners (in addition to the standard official committee of unsecured creditors). The four ex-partners on the committee are David Bicks, Cameron MacRae, John Kinzey, and John Campo.
What prompted the move? As legal consultant Edwin Reeser, whose analysis of the Dewey situation recently appeared in these pages, told the WSJ, “The retired partners have uniquely separate interests which warrant consideration as a special class of creditors.”
It’s nice that they have a seat at the table, but will the ex-partners end up with any money at the end of the process? That’s less clear. As Jerome Kowalski, another law firm consultant, told the Journal, “There has never been a law firm bankruptcy that resulted in any payment being made to the equity partners… They’ll have zero sway other than perhaps some moral imperatives, and moral imperatives don’t have much play in bankruptcy courts.”
The unsecured creditors might have more luck than the former partners. Who’s on the unsecured creditors’ committee?
* Dewey have some novel issues for our bankruptcy lawyers, or what? As we noted last night, now that D&L has filed for Chapter 11, they’ll have to deal with bank debt, and bondholders, and possible criminal proceedings, oh my! [New York Law Journal]
* And did we mention that Dewey’s defectors and their new firms might get screwed out of millions thanks to the recent Coudert decision? You really should’ve tried to finish up your business before the firm flopped. [WSJ Law Blog]
* Our SCOTUS justices’ summer plans don’t include debating the results of their landmark health care and immigration cases. They’ll be off to fabulous destinations to teach by the first week of July. [Associated Press]
* A federal judge in Brooklyn doesn’t like what seems to be happening in the “game of grams” when it comes to mandatory minimum drug sentencing. Perhaps the DOJ will heed his call for reform. [New York Times]
* Facebook’s IPO was an epic fail, but it’s been great business for plaintiffs lawyers. Twelve securities class action firms are gathering leads and getting ready to sue, and two have already sued. [National Law Journal]
* This wasn’t exactly well planned: if you’re involved in state politics, it’s probably not a good idea to fake a legal internship with a state representative so that you can graduate from law school. [Concord Monitor]
* In happier news, a New York Law School graduate walked across the stage to receive her diploma with the help of her seeing-eye dog. The pooch hasn’t lifted a leg on her law degree… yet. [New York Daily News]
... and so do folks down under.
* “Brothels are never going to be a vote winner.” But even so, if you’re looking to get it in down under, a plan to build Australia’s largest cathouse may soon gain approval if lawyers are able to do their work quick and dirty. [Bloomberg]
* Thanks to this case, stupid teenagers in New Jersey who send texts to others that they know are driving can now revel in the fact that they can’t be held liable for injuries that may occur thanks to careless driving. [New Jersey Law Journal]
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past seven years. You can reach them by email: email@example.com.
Please note that Evan Jowers and Robert Kinney are still in Hong Kong and will stay FOR THE REMAINDER OF THIS WEEK. We still have a handful of available slots for meetings with our Asia Chronicles fans. If we have not been in touch lately, reach out and let us know when we could meet! There is no need for an agenda at all. Most of our in-person meetings on these trips are with folks who understand that improving a legal practice through lateral hiring is an information-driven process that takes time to handle correctly.
Regarding trends in lateral US associate hiring in Hong Kong, we of course keep much of what we know off of this blog. Based on placement revenue, though, Kinney is having one of our most successful years ever in Asia. We are helping a number of our law firm clients with M&A, fund formation, cap markets, project finance, FCPA and disputes openings. These are very specific needs in many cases, so a conversation with us before jumping in may be helpful. As always, we like to be sure to get the maximum number of interviews per submission, using a well-informed, highly targeted, and selective approach, taking into account short, medium and long-term career aims.
Making a well informed decision during a job search is easier said than done – the information we provide comes from 10 years of being the market leader in US attorney placements at the top tier firms in Asia. There is no substitute for having known a hiring partner since he/she was an associate or for having helped a partner grow his or her practice from zip to zooming, and this is happily where we stand today – with years of background information on just about every relevant person in all the markets we serve, and most especially in Hong Kong/China/Greater Asia. So get in touch and get a download from us this week if we can fit it in, or soon in any case!
The legal industry is being disrupted at every level by technological advances. While legal tech entrepreneurs and innovators are racing to create a more efficient and productive future, there is widespread indifference on the part of attorneys toward these emerging technologies.
When the LexisNexis Cloud Technology Survey results were reported earlier this year, it showed that attorneys were starting to peer less skeptically into the future, and slowly but surely leaning more toward all the benefits the law cloud has to offer.
Because let’s face it, plenty of attorneys are perhaps a bit too comfortable with their “system” of practice management, which may or may not include neon highlighters, sticky notes, dog-eared file folders, and a word processing program that was last updated when the term “raise the roof” was still de rigueur.