How to handle Dewey (or similar firms)

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Old Gregg
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Re: How to handle Dewey (or similar firms)

Postby Old Gregg » Sat Mar 17, 2012 2:24 pm

Man your life boats. The vultures are circling. The ship be sinking.

Anonymous User
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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sat Mar 17, 2012 2:32 pm

Heard a rumor that a large group of people in the corporate practice group bailed at the end of last week. Is this the same defection mentioned in the recent WSJ article? Anyone on the inside (or who knows anyone on the inside) able to comment on what's going on behind the scenes right now?

imchuckbass58
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Re: How to handle Dewey (or similar firms)

Postby imchuckbass58 » Sat Mar 17, 2012 3:54 pm

2LLLL wrote:http://online.wsj.com/article/SB10001424052702304459804577287494087945680.html?mod=WSJ_hp_LEFTTopStories

"Twelve partners are leaving New York law firm Dewey & LeBoeuf LLP in the largest group defection yet from a firm troubled by internal disputes about compensation.

The partners are to join the insurance practice at Willkie Farr & Gallagher LLP, according to a spokesman for Dewey & LeBoeuf.

Among those departing: Alexander Dye, Michael Groll, John Schwolsky and Robert Rachofsky.


This is really bad

Dye = Head of M&A
Groll = Co-head of insurance
Schwolsky = Co-head of corporate finance (capital markets)

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sat Mar 17, 2012 4:29 pm

Disastrous. Those insurance partners are mega-rainmakers and were very powerful.

imchuckbass58 wrote:
2LLLL wrote:http://online.wsj.com/article/SB10001424052702304459804577287494087945680.html?mod=WSJ_hp_LEFTTopStories

"Twelve partners are leaving New York law firm Dewey & LeBoeuf LLP in the largest group defection yet from a firm troubled by internal disputes about compensation.

The partners are to join the insurance practice at Willkie Farr & Gallagher LLP, according to a spokesman for Dewey & LeBoeuf.

Among those departing: Alexander Dye, Michael Groll, John Schwolsky and Robert Rachofsky.


This is really bad

Dye = Head of M&A
Groll = Co-head of insurance
Schwolsky = Co-head of corporate finance (capital markets)

markymark
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Re: How to handle Dewey (or similar firms)

Postby markymark » Sat Mar 17, 2012 5:09 pm

imchuckbass58 wrote:
2LLLL wrote:http://online.wsj.com/article/SB10001424052702304459804577287494087945680.html?mod=WSJ_hp_LEFTTopStories

"Twelve partners are leaving New York law firm Dewey & LeBoeuf LLP in the largest group defection yet from a firm troubled by internal disputes about compensation.

The partners are to join the insurance practice at Willkie Farr & Gallagher LLP, according to a spokesman for Dewey & LeBoeuf.

Among those departing: Alexander Dye, Michael Groll, John Schwolsky and Robert Rachofsky.


This is really bad

Dye = Head of M&A
Groll = Co-head of insurance
Schwolsky = Co-head of corporate finance (capital markets)


Wow. This very might well be the next Howrey.

Those are colossal losses.

Morgan12Oak
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Re: How to handle Dewey (or similar firms)

Postby Morgan12Oak » Sat Mar 17, 2012 7:00 pm

I don't see how the firm doesn't expect more losses. That looks like game over to me to be honest. You can't lose so many co-heads and not expect collateral effects and you CERTAINLY can't expect to not suffer a material financial impact. That's just naive.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sat Mar 17, 2012 8:45 pm

What should incoming summer associates do if the worst case scenario develops and the summer program is actually canceled? What are the feasible options if you're suddenly summer jobless in April? What did Howrey SAs do?
Last edited by Anonymous User on Sat Mar 17, 2012 8:55 pm, edited 1 time in total.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sat Mar 17, 2012 8:50 pm

Anonymous User wrote:What should incoming summer associates do if the worst case scenario develops and the summer program is actually canceled? What are the feasible options if you're suddenly summer jobless in April? What Howrey SAs do?


I don't know. It would be bad news bears. So all you Dewey SAs - hope that they pull it together.

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sunynp
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Re: How to handle Dewey (or similar firms)

Postby sunynp » Sat Mar 17, 2012 10:58 pm

Look I may be wrong, and this is very definitely bad news for the firm. At this point, I don't think they will cancel the SA program. It isn't like the firm is shutting down over the summer. I think canceling is a dramatic step that shows they are basically giving up as a firm. They will probably do as much cost cutting as possible, but not completely give up on their future.

As mentioned, I think you should remain very professional at your firm this summer. You have to act like nothing is wrong, do stellar work, make friends and still network with people at other firms. This is not as easy as it sounds. Your work environment is going to be a challenging place. Just deal with it.

But don't expect to get an offer or, if you do get an offer, don't expect to accept it. You have to start looking at where your next job will be, but you are screwed for an SA at any other firm this year.

Younger Abstention
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Re: How to handle Dewey (or similar firms)

Postby Younger Abstention » Sat Mar 17, 2012 11:09 pm

This sounds just like what happened to Howrey. I wouldn't bet that they'll last out the summer.

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sunynp
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Re: How to handle Dewey (or similar firms)

Postby sunynp » Sat Mar 17, 2012 11:15 pm

Didn't Howrey default on their loans? I'm not sure on how the timing of all that will work here. How long did it take Howrey to fall apart?

It doesn't matter, if you are an SA at Dewey, you just have to ride this out. Unless you have some backup connection that will save you if the job falls through, what are you going to do? Where are you going to find a better job at this point? You have to assume that this job is going to get you through the summer.

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Old Gregg
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Re: How to handle Dewey (or similar firms)

Postby Old Gregg » Sat Mar 17, 2012 11:19 pm

A "default" in BigLaw with a lender usually occurs when a certain critical mass of partners has departed from the firm. This critical mass varies from bank to bank. I strongly doubt Dewey is anywhere close to such a default, but that sort of default is what would call for the dissolution of a law firm.

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Re: How to handle Dewey (or similar firms)

Postby The Duck » Sat Mar 17, 2012 11:25 pm

Fresh Prince wrote:A "default" in BigLaw with a lender usually occurs when a certain critical mass of partners has departed from the firm. This critical mass varies from bank to bank. I strongly doubt Dewey is anywhere close to such a default, but that sort of default is what would call for the dissolution of a law firm.


This. This is what happened to Howery. They actually still had money in the bank. Just no credit line to keep things afloat while waiting on fees.

I'm not sure it takes that many leaving though. One of my profs whose familiar...said that most big firms actually cross this threshold from time to time but the bank usually waives default. Once they smell blood in the water though, they refuse.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sat Mar 17, 2012 11:35 pm

Am I correct in thinking that the chances of obtaining a permanent position with a non-DL firm post DL summer are slim to none?

It seems like the options are:
1) DL cancels summer (highly unlikely at this point, but May is a long way away), no offers.
2) DL goes through with summer, continues to exist, but makes no/very few offers.
3) DL goes through with summer, implodes, no offers obviously.
4) Everything works out fine.

How are other firms/employers going to view #3 and #4?

Extremely disappointed/frustrated at the thought of going through these three years and ending up with absolutely nothing...

The Duck
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Re: How to handle Dewey (or similar firms)

Postby The Duck » Sat Mar 17, 2012 11:37 pm

Id think you'd have a shot at 3L OCI.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sat Mar 17, 2012 11:53 pm

Incoming SA here. The summer is still on. Let's hope they can stabilize the boat because there are nearly 1000 attorneys still working at the firm.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sun Mar 18, 2012 1:07 am

.
Last edited by Anonymous User on Sun Mar 18, 2012 1:11 am, edited 1 time in total.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sun Mar 18, 2012 1:24 am

I don't think that this is the whole story with respect to Howrey, though. Howrey broke a covenant, but they also had very little work for a couple years leading up to the dissolution. Attorneys were averaging something like 1500 billable hours (don't remember exactly). Profits were down like 25% from what management expected one year. Also Howrey was mostly or entirely a litigation shop, wasn't it? No (or little?) corporate to balance out the lack of antitrust litigation. At least some of the practices at Dewey are busy and they've got some major deals (for example, the Dell deal a few days ago.) Also, it sounds like litigation at least somewhat helped offset the decline in corporate work last year. I would be interested to know if other firm failures followed something closer to what is happening at Dewey..although who knows what else is going on that no one knows about. The loss of those rainmakers is incredibly alarming. Who leaves next is crucial. Hopefully no one important.

The Duck wrote:
Fresh Prince wrote:A "default" in BigLaw with a lender usually occurs when a certain critical mass of partners has departed from the firm. This critical mass varies from bank to bank. I strongly doubt Dewey is anywhere close to such a default, but that sort of default is what would call for the dissolution of a law firm.


This. This is what happened to Howery. They actually still had money in the bank. Just no credit line to keep things afloat while waiting on fees.

I'm not sure it takes that many leaving though. One of my profs whose familiar...said that most big firms actually cross this threshold from time to time but the bank usually waives default. Once they smell blood in the water though, they refuse.

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Old Gregg
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Re: How to handle Dewey (or similar firms)

Postby Old Gregg » Sun Mar 18, 2012 8:44 am

Dewey isn't busy at all, despite the Dell deal. Fuck, I know associates at V5s and V10s who are sitting around and twiddling their thumbs. The M&A departments is not built for the one-off $1 billion deal. They're built and staffed for a consistent flow of that kind of work, a flow that has all but dried up. And when it comes back, it will touch the top firms first before filtering down to Dewey. Who knows if they'll be around by then.

The reason I say Dewey isn't close to defaulting is that they're a megafirm. A 30 partner departure, while bad, won't kill a mega-firm. A chain-reaction in which partners jump ship because other partners jump ship will kill the firm. Just depends on what the mindset there is.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sun Mar 18, 2012 9:30 am

The real problem here isn't that the firm is at risk of immediate implosion due to these partners leaving (10% loss of partners isn't that much especially when they appear to be taking their support partners and associates). The major risk is perception and how they are handling it (hopefully handling it better on the inside and to clients than they are to the media). Roughly 116,000 in debt per partner seems doable.

They run two major risks to the firm's ability to survive:
Clients running for the hills; no large corporate client is going to want their information and files tied up in a firm implosion and may run for the hills in advance of that even though that running is what may cause the implosion. The perception of doing business with a firm that is unable to handle their own financial matters and trusting them on yours isn't a good idea.

Partners running for the hills. This one appears to be currently occurring. It is unclear to me if the partners that are defecting are the ones with guaranteed compensation leaving due to not being paid or if these are the regular equity partners leaving due to basically be forced to subsidize the guaranteed compensation partners. Either way it is very disconcerting and shows these tiers inside of equity partnership probably significantly hurts loyalty.

I do feel really bad for the next group of SAs (some of whom are my friends) and current attorneys. I hope that Dewey is able to get control of it because the legal field doesn't need any more blemishes like this. However, they are doing a horrible job with the public relations.

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Re: How to handle Dewey (or similar firms)

Postby The Duck » Sun Mar 18, 2012 9:32 am

Fresh Prince wrote:Dewey isn't busy at all, despite the Dell deal. Fuck, I know associates at V5s and V10s who are sitting around and twiddling their thumbs. The M&A departments is not built for the one-off $1 billion deal. They're built and staffed for a consistent flow of that kind of work, a flow that has all but dried up. And when it comes back, it will touch the top firms first before filtering down to Dewey. Who knows if they'll be around by then.

The reason I say Dewey isn't close to defaulting is that they're a megafirm. A 30 partner departure, while bad, won't kill a mega-firm. A chain-reaction in which partners jump ship because other partners jump ship will kill the firm. Just depends on what the mindset there is.


They have lost 10% of their partners (according to NY Time they had 301 and theyve lost 31). The last swath included some heavy hitters who were some of the few profitable ones. They already owe a ton to partners in past compensation. They've missed paying other huge obligations. At this point, I'd think most of the partners are looking to leave and the chain-reaction is imminent.

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Re: How to handle Dewey (or similar firms)

Postby LawIdiot86 » Sun Mar 18, 2012 10:57 am

Anonymous User wrote:Incoming SA here. The summer is still on. Let's hope they can stabilize the boat because there are nearly 1000 attorneys still working at the firm.


Despite almost being a lawyer, I am still amazed by the profession's inability to recognize patterns or discern probabilities. From seeing the 10% odds of biglaw as worth it to believing professors who say that judges' opinions are guided by higher principles of neutral interpretation, lawyers will buy nearly any crock of crap concerning their own profession. In this case, the idea that the summer is "still on" is fairly laughable. Before you could say that the summer is still on or that they can stabilize the boat, you need to do some math. Dewey has now had 10% of its partners leave the firm on their own free will (they weren't fired or de-equitized).

To be able to establish that it there is a possibility of the firm surviving, you need to look at other NLJ250 firms that have lost 10% or more of their partners and see what percentage of them have survived. I don't know which have survived a 10%+ hit, but http://lawshucks.com/biglaw-dead-pool/ indicates a large number of peers have failed after passing the 10% point (Heller Ehrman; Howrey; Thelen; Thacher Proffitt Wood; WolfBlock; Brobeck; Coudert Brothers; Jenkens & Gilchrist; Arter & Hadden; and Altheimer & Gray). If you can find more than 10 firms that in the last decade have had 10%+ of their partners leave and have survived, then you can have reasonable hope in Dewey stabilizing the boat. If you can't find more than 10, then having hope would be irrational.

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Re: How to handle Dewey (or similar firms)

Postby Anonymous User » Sun Mar 18, 2012 1:31 pm

LawIdiot86 wrote:
Anonymous User wrote:Incoming SA here. The summer is still on. Let's hope they can stabilize the boat because there are nearly 1000 attorneys still working at the firm.


Despite almost being a lawyer, I am still amazed by the profession's inability to recognize patterns or discern probabilities. From seeing the 10% odds of biglaw as worth it to believing professors who say that judges' opinions are guided by higher principles of neutral interpretation, lawyers will buy nearly any crock of crap concerning their own profession. In this case, the idea that the summer is "still on" is fairly laughable. Before you could say that the summer is still on or that they can stabilize the boat, you need to do some math. Dewey has now had 10% of its partners leave the firm on their own free will (they weren't fired or de-equitized).

To be able to establish that it there is a possibility of the firm surviving, you need to look at other NLJ250 firms that have lost 10% or more of their partners and see what percentage of them have survived. I don't know which have survived a 10%+ hit, but http://lawshucks.com/biglaw-dead-pool/ indicates a large number of peers have failed after passing the 10% point (Heller Ehrman; Howrey; Thelen; Thacher Proffitt Wood; WolfBlock; Brobeck; Coudert Brothers; Jenkens & Gilchrist; Arter & Hadden; and Altheimer & Gray). If you can find more than 10 firms that in the last decade have had 10%+ of their partners leave and have survived, then you can have reasonable hope in Dewey stabilizing the boat. If you can't find more than 10, then having hope would be irrational.


way to flame the fire

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Re: How to handle Dewey (or similar firms)

Postby LawIdiot86 » Sun Mar 18, 2012 2:06 pm

Anonymous User wrote:
LawIdiot86 wrote:
Anonymous User wrote:Incoming SA here. The summer is still on. Let's hope they can stabilize the boat because there are nearly 1000 attorneys still working at the firm.


Despite almost being a lawyer, I am still amazed by the profession's inability to recognize patterns or discern probabilities. From seeing the 10% odds of biglaw as worth it to believing professors who say that judges' opinions are guided by higher principles of neutral interpretation, lawyers will buy nearly any crock of crap concerning their own profession. In this case, the idea that the summer is "still on" is fairly laughable. Before you could say that the summer is still on or that they can stabilize the boat, you need to do some math. Dewey has now had 10% of its partners leave the firm on their own free will (they weren't fired or de-equitized).

To be able to establish that it there is a possibility of the firm surviving, you need to look at other NLJ250 firms that have lost 10% or more of their partners and see what percentage of them have survived. I don't know which have survived a 10%+ hit, but http://lawshucks.com/biglaw-dead-pool/ indicates a large number of peers have failed after passing the 10% point (Heller Ehrman; Howrey; Thelen; Thacher Proffitt Wood; WolfBlock; Brobeck; Coudert Brothers; Jenkens & Gilchrist; Arter & Hadden; and Altheimer & Gray). If you can find more than 10 firms that in the last decade have had 10%+ of their partners leave and have survived, then you can have reasonable hope in Dewey stabilizing the boat. If you can't find more than 10, then having hope would be irrational.


way to flame the fire


Sadly, the NLJ doesn't make things like --LinkRemoved-- as easily available as it used to, but I'm sure someone has a subscription or old spreadsheets and could figure out more recent partner departure rates. If you have a Dewey SA and are scared about a no-offer, it's worth the time to figure out the likelihood of dissolution and build that into your personal risk assessment.

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Guchster
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Re: How to handle Dewey (or similar firms)

Postby Guchster » Sun Mar 18, 2012 2:12 pm

If I were a Dewey SA, I would be hustling my ass this summer to interview with other firms. I'm a 1L, and I've networked with a few mids and senior level associates at my firm this summer that I really got along with that have offered to get me callbacks at other NYC firms, so I can avoid the mess that is OCI/EIP. I would try to find someone who can help you do the same as a 2L at Dewey--although it might be hard when those people themselves are also looking for a jerb.




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