So far this week, there’s been good news and bad news for failing New York law firm Dewey & LeBoeuf. First the bad news: The Pension Benefit Guaranty Corp. (PBGC), which oversees U.S. private-sector pension plans and interjects to cover plans when employers cannot pay promised benefits, sued Dewey on Monday.
PBGC spread word last week that it intended to take over three of the firm’s pension plans, which it claims are underfunded by $80 million. The agency is worried that the sale of Dewey affiliates, which are partly responsible for funding the pensions, could make it more difficult for PBGC to recoup money to make up for the shortfall.
According to the Wall Street Journal, PBGC’s play to take over Dewey’s pensions, which cover 1,776 people, was partially prompted by a phone call with the firm last week, during which regulators learned that the firm plans to sell off two or three affiliates—likely to overseas offices—for an estimated $7.2 to $9.7 million. Those affiliates are not bound to Dewey’s lenders, but are still legally responsible for funding the pensions, the lawsuit states.
PBGC’s suit set May 11 as the official termination date of Dewey’s pension plans, and appoints PBGC as the plans’ trustee. Dewey has 21 days to respond from the time it received the complaint.
Now the good news: Dewey’s Warsaw, Poland, office has transferred to Greenberg Traurig, giving a soft landing to more than 50 Dewey lawyers. The Warsaw office will be Greenberg Traurig’s 35th office and will operate as Greenberg Traurig Grzesiak in Poland, with Jaroslaw Grzesiak, the former managing partner of Dewey's Warsaw office, continuing on as managing partner, and Lejb Fogelman as the senior partner.
“This team has been successful in Poland for two decades, is integral to the Warsaw business and legal communities, and is exactly such an opportunity in one of the most important and successful European markets, where entrepreneurship in the private sector is highly valued and supported with policies that focus on growth,” Greenberg Traurig Chief Executive Officer Richard Rosenbaum said in a statement.
Dewey had desired a merger with Greenberg Traurig at the end of April before negotiations fell apart. However, Rosenbaum said at the time that he would leave the door open for Dewey attorneys to change addresses.
“Our office was approached by many of the highest quality firms in Europe and the U.S.,” Grzesiak said in the statement. “We chose Greenberg Traurig because we share many of the same values - quality, strength, spirit and clarity of vision. We feel that we have a recipe for success and are excited about what this venture will bring to our collective clients worldwide.”
While not as significant in numbers, Latham & Watkins announced yesterday that it will provide a new home for the now former head of Dewey’s white-collar defense practice.
Christopher Clark, whose practice focuses on securities law and foreign and domestic anti-corruption law, will head to Latham’s New York office. Prior to joining Dewey, Clark served as an assistant U.S. attorney in the securities fraud unit of the U.S. attorney's office for the Southern District of New York from 1999 to 2005.
For more on the PBGC’s lawsuit, read the Wall Street Journal.
And for more from InsideCounsel on Dewey’s downfall, read: