The clock is ticking on Dewey & LeBoeuf’s attempts to reach a clawback settlement with former partners. And with a week to go before the Aug. 7 deadline, response to the firm’s latest proposed deal is reportedly mixed.
While Dewey’s new plan addresses some partners’ concerns by raising the maximum contributions for higher-paid partners and levying further fees on firm management, some former lawyers are still unhappy with the proposed terms. The revised settlement would offer lawyers immunity from future lawsuits in exchange for payments of between $5,000 and $3.5 million. Executive committee members would pay an additional 20 percent, prorated based on time worked between October 2007 and December 2011.
But the deal hasn’t resolved all partner complaints, according to the Wall Street Journal. Some employees pointed out that the plan does not affect contributions from partners making mid-level compensation. Another disgruntled contingent: the lawyers who deferred some of their 2010 compensation until 2011 to help the firm’s financial situation, and now find themselves on the hook for more money.
Meanwhile, documents filed Thursday in bankruptcy court reveal that Dewey paid more than $7 million to bankruptcy lawyers and consulting firms in the two months before it went belly-up. That total included a $1.6 million bill from law firm Kramer Levin Naftalis & Frankel and a $1.4 million payout to lead bankruptcy counsel Togut, Segal & Segal.
The filings also show that, prior to its demise, Dewey disclosed its financial statements to Baker & McKenzie, Greenberg Traurig, Patton Boggs, Reed Smith and SNR Denton, leading some to speculate that the firms may have discussed mergers or other transactions in an attempt to stave off Dewey’s Chapter 11 bankruptcy. (Merger talks with Baker & McKenzie and Reed Smith had not previously become public).
These legal fees are a drop in the bucket of Dewey’s $315 million debt. Since declaring Chapter 11 in May, the firm has reportedly collected $19 million from clients; it could recover an additional $90.4 million if the new clawback settlement succeeds.
Get a breakdown of Dewey’s new clawback deal at the Wall Street Journal.
Read more about the firm’s bankruptcy court filings at Reuters.
And for more InsideCounsel coverage of Dewey & LeBoeuf, see:
Dewey & LeBoeuf offers new settlement to ex-partners
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”
