As promised, Dewey & LeBoeuf presented a revised clawback settlement to its ex-partners Thursday, after an initial proposal met with sharp criticism from some former employees.
Specifically, many retirees complained that the original plan favored highly paid employees and executives by putting a $3 million cap on the amount that attorneys could pay to be released from future lawsuits. In response, Dewey lowered the minimum contribution from $25,000 to $5,000 and raised the payment limit from $3 million to $3.5 million. The new proposal would also require the firm’s former executives to pay an additional 20 percent premium, though a settlement document noted that the premium did not reflect any wrongdoing by management.
In total, the firm stands to recover $90.4 million in the revised settlement, down from the $103.6 million it previously sought. But Joff Mitchell, Dewey’s chief restructuring officer, says the firm may have a better chance of recovering money from partners. "I don't think they were ever going to really write that [$25,000] check, whereas at $5,000, maybe they will," Mitchell told Reuters. Dewey hopes to collect at least $50 million—out of its reported $315 million debt load—by Aug. 7.
Meanwhile, the bankrupt firm hopes to stem the loss of its remaining employees by offering them up to $750,000 in performance-based and discretionary bonuses. A U.S. bankruptcy trustee rejected the proposal last week, but a bankruptcy judge seemed more amenable to the proposal in a hearing Wednesday.
Read more analysis of the revised settlement at Reuters.
For more InsideCounsel coverage of Dewey & LeBoeuf, read:
Dissecting Dewey’s money management
Dewey paid executive partner $190,000 after bankruptcy filing
Dewey to revise proposed clawback settlement with ex-partners
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 encourages partners to jump ship
N.Y. prosecutors probe Dewey & LeBoeuf, firm cuts ties with executive
Dewey & LeBoeuf overhauls management team amid more defections
