Signs are now solidly pointing toward the end for New York law firm Dewey & LeBoeuf.
Dewey issued advance notice to its employees under the Federal Worker Adjustment Retraining and Notification Act (WARN) last Friday that they may soon lose their jobs if the firm is forced to shutter.
“As you are undoubtedly aware, Dewey & LeBoeuf LLP has unexpectedly experienced a period of extraordinary difficulties in the last few days,” the firm wrote. “Although we continue to pursue various avenues, it is possible that adverse developments could ultimately result in the closure of the firm, which would result in the termination of your employment.”
The notice, which employers are required under state and federal laws to send to employees in advance of a mass layoff or shutdown, indemnifies the firm of being held liable for back pay should such events come to pass. Dewey also noted in the letter that employees will not have any “bumping” rights, which may allow some workers to use their seniority to remain employed by displacing another employee from their job.
According to the Wall Street Journal, Dewey, which still owes about $75 million on a $100 million credit line, is still not considering bankruptcy. Last week, Dewey was facing a deadline to renegotiate its credit with a group of banks that were considering whether to extend that deadline.
Things have rapidly deteriorated for Dewey. In a span of less than 10 days, merger talks with law firms Greenberg Traurig and SNR Denton fell apart.
SNR Denton reportedly had suggested a full merger in which it would have assumed the more than 1,000 remaining Dewey attorneys. However, the deal was dependent upon the merged firm’s ability to secure hundreds of millions of dollars in financing, which the new entity would have repaid over a period of five years.
Dewey reportedly also had talks with Washington, D.C.-based Patton Boggs about a potential merger.
Last Monday, Dewey sent another internal memo suggesting that its partners look for alternative employment, and that its management team also was looking to jump ship.
Making matters worse is that former Dewey chairman Steven Davis, who was until recently part of the firm’s new management group, is under investigation by New York district attorneys over allegations of wrongdoing.
A preliminary investigation was instigated by a group of Dewey partners who asked District Attorney Cyrus Vance to examine “financial irregularities” at the law firm. Prosecutors are said to be looking into whether the firm made misleading statements about payments owed to partners.
Davis was cut loose as soon as news of the inquiry broke.
For more on the WARN notice, read the Wall Street Journal.
And for more on Dewey’s downfall, read: