Dissecting Dewey’s money management

Facing a costly liquidation, the floundering firm seeks approval for a bonus plan to keep employees on board

There’s not much reason to keep working at a law firm that has declared bankruptcy, especially one whose downfall has been as spectacularly drawn-out as Dewey & LeBoeuf’s. But where no career incentive exists, the firm is hoping cold hard cash will convince employees to see this thing out.

The firm’s executive partner Stephen Horvath, who is overseeing the firm’s liquidation, has been paid $190,000 since it declared bankruptcy in May, and Dewey is looking to get approval to pay its other remaining employees up to $450,000 in performance-based bonuses. On Wednesday, U.S. Bankruptcy Judge Martin Glenn said he was “inclined to grant approval,” but asked for more details on the plan before he made his decision. Specifically, he wants to see a list of the employees’ salaries and what bonuses they would be entitled to, in order to put them in context.

Dewey is also planning to offer employees $230,000 in discretionary bonuses but, though U.S. Trustee Tracy Hope Davis objected to those as well as to the performance-based bonuses, the discretionary bonuses weren’t up for debate just yet. Dewey claims those bonuses are part of the “ordinary course” of business and do not need court approval, but Davis pointed out that once the firm went bankrupt, ordinary business pretty much went out the window.

Aside from, you know, being bankrupt, it’s not like Dewey has a lot of money to be throwing at these people. Turns out, liquidating is expensive. Dewey’s bill from restructuring firm Zolfo Cooper LLC for the month of June alone was $872,700.

Read more about Dewey’s money problems at Thomson Reuters and the Wall Street Journal.

 

Follow the Dewey saga from the beginning on InsideCounsel:

Dewey paid executive partner $190,000 after bankruptcy filing

Dewey to revise proposed clawback settlement with ex-partners

Dewey retirees unhappy with proposed settlement

Dewey offers former partners a deal

Dewey looks to pay remaining staff $700,000 in bonuses

Former Dewey partner sues management, claims they were “running a Ponzi scheme”

Dewey finally files for bankruptcy

Regulators sue Dewey, Warsaw office transfers to Greenberg Traurig

Dewey’s leaders discuss downfall, next steps

Exodus of Dewey attorneys in full effect

Dewey warns employees that firm could shut down

Dewey encourages partners to jump ship

N.Y. prosecutors probe Dewey & LeBoeuf, firm cuts ties with executive

Dewey & LeBoeuf overhauls management team amid more defections

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