How to handle Dewey (or similar firms)

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

Postby sunynp » Mon May 28, 2012 11:23 pm

PolySuyGuy wrote:
sunynp wrote:Now this sad story has ended up in bankruptcy court: they filed tonight in Federal court in Manhattan.

http://online.wsj.com/article/SB1000142 ... 51978.html

the wsj requires subscription so here is the NYTimes deal blog:

http://dealbook.nytimes.com/2012/05/28/ ... ankruptcy/

edit to add: the first post in this thread was March 1st - so it was about 12 weeks from the first post about ATL defections to the chapter 11 filing on May 28th.



Does this shake things up? If so, how so?


I'm not sure what you mean by shake things up. They are liquidating and it is going to be even uglier than it has been already. They have no way of collecting more than a fraction of what they are owed in receivables. They list debt of $245 million, which may be low, and assets of $193 million, which may be high. This means that the partners may have to return some of the payments they received. There is already a suit under the WARN notice that was given and the retired partners have organized and will be creditors.

I have read that the banks and insurance companies are equal creditors, which surprises me. I don't know the status of the banks security filing.

The only fight now is about who is going to get what money and where that money will come from. But it will be more technical than that sounds, for example, when was the firm insolvent - and what the management did. The guarantees are an issue as well.

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

Postby IAFG » Mon May 28, 2012 11:41 pm

sunynp wrote:Now this sad story has ended up in bankruptcy court: they filed tonight in Federal court in Manhattan.

http://online.wsj.com/article/SB1000142 ... 51978.html

the wsj requires subscription so here is the NYTimes deal blog:

http://dealbook.nytimes.com/2012/05/28/ ... ankruptcy/

edit to add: the first post in this thread was March 1st - so it was about 12 weeks from the first post about ATL defections to the chapter 11 filing on May 28th.

I only read the NYT post but wasn't it a Ch 7?

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

Postby sunynp » Mon May 28, 2012 11:53 pm

IAFG wrote:
sunynp wrote:Now this sad story has ended up in bankruptcy court: they filed tonight in Federal court in Manhattan.

http://online.wsj.com/article/SB1000142 ... 51978.html

the wsj requires subscription so here is the NYTimes deal blog:

http://dealbook.nytimes.com/2012/05/28/ ... ankruptcy/

edit to add: the first post in this thread was March 1st - so it was about 12 weeks from the first post about ATL defections to the chapter 11 filing on May 28th.

I only read the NYT post but wasn't it a Ch 7?


The WSJ has unlocked the article as a free pass when I just looked again. Here is the headline:
Storied Law Firm Dewey Files Chapter 11


and first paragraphs:
The embattled New York law firm Dewey & LeBoeuf LLP has filed for bankruptcy protection, a move that effectively ends what had been at its height a 1,300-lawyer global enterprise and marks one of the largest law-firm failures in U.S. history.

The Chapter 11 filing, submitted Monday evening in federal bankruptcy court in Manhattan, followed a rocky six months for the debt-laden firm, which had seen an exodus of partners amid disputes over compensation and concerns about the firm's financial stability.

Legal experts predict lawsuits will follow. Bankruptcy administrators for failed firms often sue former partners to recover money paid out before the firm went under. They also target law firms where ex-partners from a dissolved firm go, taking unfinished legal work with them, under the theory that profits from that business rightly belong to the old firm.

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

Postby dailygrind » Tue May 29, 2012 11:33 pm

What are they restructuring? Almost all of the lawyers are/will be gone.

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

Postby sunynp » Wed May 30, 2012 11:57 pm

This Reuters article explains that they want to be in charge of the winddown - not with a trustee liquidating their assets. It doesn't have to be a re-org to continue in chapter 11.

http://www.reuters.com/article/2012/05/ ... KO20120531


Until fairly recently, liquidations like Dewey's usually were pursued under Chapter 7 of the bankruptcy code. Chapter 7 puts a debtor's estate under the control of a trustee tasked with selling assets quickly and using the proceeds to pay off creditors.

Dewey, though, has chosen to file under Chapter 11, which provides for a more cooperative, deliberative process. Debtors typically prefer Chapter 11 because it lets them remain in control of their estate, usually without interference from a trustee.

Creditors often prefer Chapter 11 as well, because it allows them to form official committees paid for by the estate, gives them access to operating reports, and lets them exercise more control over how the debtor liquidates and how their bankruptcy claims are treated.

Given the sheer volume of competing interests and unresolved issues in the Dewey case, the unwinding could be slow going. According to Dewey's bankruptcy attorney Togut, about 90 firm employees are working to conclude the process.

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

Postby sunynp » Mon Jun 18, 2012 1:07 pm

And it is going to cost Dewey a fortune just to be bankrupt:

Bankrupt Dewey & LeBoeuf LLP asked a judge to approve payments at customary rates of as much as $935 an hour for partners of its lead law firm, Togut Segal & Segal LLP.

Dewey, which failed on May 28 owing more than $225 million to secured lenders, is seeking to hire at least nine firms to assist with the liquidation, according to federal court filings in Manhattan.

Billing rates for top officers at Zolfo Cooper Management LLC, its restructuring firm, are as much as $825 an hour. The press advisory firm Sitrick & Co. charges as much as $895 hourly for its top people, according to June 15 filings.


I had no idea that press advisory firms charged that much for top people. They certainly haven't done much to help Dewey in the press. Dewey has looked terrible in the press. Dewey didn't comment on almost every active story, and only made announcements well after information was known. I can't imagine what they are getting paid to do at this point - unless they are keeping out of the press information relating to the DAs investigation.


http://www.businessweek.com/news/2012-0 ... 35-an-hour

abc12345675
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Re: How to handle Dewey (or similar firms)

Postby abc12345675 » Mon Jun 18, 2012 1:09 pm

sunynp wrote:And it is going to cost Dewey a fortune just to be bankrupt:

Bankrupt Dewey & LeBoeuf LLP asked a judge to approve payments at customary rates of as much as $935 an hour for partners of its lead law firm, Togut Segal & Segal LLP.

Dewey, which failed on May 28 owing more than $225 million to secured lenders, is seeking to hire at least nine firms to assist with the liquidation, according to federal court filings in Manhattan.

Billing rates for top officers at Zolfo Cooper Management LLC, its restructuring firm, are as much as $825 an hour. The press advisory firm Sitrick & Co. charges as much as $895 hourly for its top people, according to June 15 filings.


I had no idea that press advisory firms charged that much for top people. They certainly haven't done much to help Dewey in the press. Dewey has looked terrible in the press. Dewey didn't comment on almost every active story, and only made announcements well after information was known. I can't imagine what they are getting paid to do at this point - unless they are keeping out of the press information relating to the DAs investigation.


http://www.businessweek.com/news/2012-0 ... 35-an-hour


Why would Dewey care about having a PR problem? They don't exist anymore

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

Postby sunynp » Mon Jun 18, 2012 1:25 pm

abc12345675 wrote:
sunynp wrote:And it is going to cost Dewey a fortune just to be bankrupt:

Bankrupt Dewey & LeBoeuf LLP asked a judge to approve payments at customary rates of as much as $935 an hour for partners of its lead law firm, Togut Segal & Segal LLP.

Dewey, which failed on May 28 owing more than $225 million to secured lenders, is seeking to hire at least nine firms to assist with the liquidation, according to federal court filings in Manhattan.

Billing rates for top officers at Zolfo Cooper Management LLC, its restructuring firm, are as much as $825 an hour. The press advisory firm Sitrick & Co. charges as much as $895 hourly for its top people, according to June 15 filings.


I had no idea that press advisory firms charged that much for top people. They certainly haven't done much to help Dewey in the press. Dewey has looked terrible in the press. Dewey didn't comment on almost every active story, and only made announcements well after information was known. I can't imagine what they are getting paid to do at this point - unless they are keeping out of the press information relating to the DAs investigation.


http://www.businessweek.com/news/2012-0 ... 35-an-hour


Why would Dewey care about having a PR problem? They don't exist anymore


I know right? Maybe the former partners care because it could affect their business in the future at their new firms.

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

Postby IAFG » Mon Jun 18, 2012 1:45 pm

Wouldn't there be a conflict of interest if whoever now constitutes "Dewey" defended the old management, since they now have to represent the best interests of the creditors? Not sure how it works with law firms.

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

Postby sunynp » Mon Jul 02, 2012 6:12 pm

There is going to be a four part series on the dewey collapse in the American lawyer

http://www.americanlawyer.com/PubArticl ... e_of_Cards


This is good reading.

run26.2
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Re: How to handle Dewey (or similar firms)

Postby run26.2 » Mon Jul 02, 2012 6:33 pm

sunynp wrote:There is going to be a four part series on the dewey collapse in the American lawyer

http://www.americanlawyer.com/PubArticl ... e_of_Cards


This is good reading.

Premium access is required to view the article.

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

Postby sunynp » Tue Jul 03, 2012 9:29 pm

I think premium access is just signing up with an email address. I know i don't pay them any cash. Here is the first few paragraphs. I don't want to quote too much.

House of Cards
It only took a few months for Dewey & LeBoeuf to collapse, but the reasons behind its fall were years in the making.

By Julie Triedman, Sara Randazzo, and Brian BaxterAll Articles
The American LawyerJune 27, 2012

Print Email Reprints & Permissions Post a Comment

Illustration by Philippe de Kemmeter

Editor's note: This is the first part of a four-part feature that appears in the July/August issue of The American Lawyer.

On February 13 two dozen of the highest-compensated partners at Dewey & LeBoeuf gathered around a conference table at the firm's offices in New York. The meeting had been called by Dewey chairman Steven Davis, who told them again that Dewey could not cover the roughly $250 million it owed partners in guaranteed compensation. The problem, he said, could only be fixed if concessions were made.

The meeting was acrimonious, and before long, the discussion shifted to resentments dating back four years to the merger between LeBoeuf, Lamb, Greene & MacRae and Dewey Ballantine that had created the firm. Davis—who had come from LeBoeuf—demanded to know why Dewey Ballantine's leaders had not told him that, within three months of the merger, the new firm would have to come up with millions of dollars to cover obligations made by Dewey Ballantine. "You guys did not tell us the truth about the merger," Davis yelled, according to a participant at the meeting.

After a while, the argument died down, but tensions remained. Eventually, the group of rainmakers agreed to reset compensation—starting with trimming their own pay. But too much damage had been done. Three months later, on May 28, the firm, once 1,300 lawyers strong, filed for Chapter 11 bankruptcy, the largest U.S. law firm failure ever.

The collapse of Dewey was not just a tragedy for its lawyers and staff. "It's a terrible black eye on the legal profession," says consultant Bradford Hildebrandt, who has had a hand in many firm mergers and restructurings in recent years (though not Dewey's). "It feeds clients' fears about what's going on inside law firms and why costs are so high."

The American Lawyer spoke to nearly three dozen former Dewey partners and staffers for this story. Most, fearful of being drawn into future litigation, spoke only on the condition that they not be named. Except where noted, every assertion in this piece has at least two sources from the firm. We also reviewed past interviews with Dewey's leaders, memos and speeches written by them, copies of the firm's audited financial reports, its bond offering circular, and the merger agreement. In our reporting, we discovered several previously undisclosed episodes, such as the confrontation on February 13. We found, for instance, that millions of dollars had been promised in merger-related bonuses, and that the firm made a fateful decision to dramatically hike compensation literally on the eve of the 2008 financial crisis.

Our conclusion is that Dewey's death was the product of years of bad decisions, and of greed on the part of senior partners. "The ultimate purpose of law firms is to pass on to the next generation a stronger firm," says Hildebrandt. "Here, the most successful and senior partners gave themselves guarantees at the expense of younger partners."

We sent detailed descriptions of assertions in this story to Davis and his second in command, executive director Stephen DiCarmine, and each declined to respond to them. A spokeswoman for Davis directed us to an earlier statement issued in response to news that he was under investigation by prosecutors in Manhattan. "Every action of Mr. Davis as chair of the firm was taken in good faith and in the best interests of the firm," that statement says. "He is confident that fair-minded professionals will conclude that he engaged in no misconduct." DiCarmine, through his attorney, Hughes Hubbard & Reed's Ned Bassen, declined to comment.

When we asked Dewey lawyers about the investigation, they expressed doubt that Davis was criminally culpable, describing him instead as a man who had made a series of poor decisions. Davis and DiCarmine "understood that the firm was all about the money," says one former partner. "What they could never understand is, if that's all that holds a firm together, you have nothing left when the money runs out."


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

Postby Cavalier » Wed Jul 04, 2012 8:10 am

run26.2 wrote:
sunynp wrote:There is going to be a four part series on the dewey collapse in the American lawyer

http://www.americanlawyer.com/PubArticl ... e_of_Cards


This is good reading.

Premium access is required to view the article.

You don't need to pay; I just signed up for the free limited access and I can view the whole article.

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

Postby mness » Wed Jul 04, 2012 9:05 am

To summaraize the article: more proof that baby boomers have destroyed America for future generations.

Itws also funny to hear Davis basically admit that his own firm did shitty diligence before the merger. Wow.

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Big Shrimpin
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Re: How to handle Dewey (or similar firms)

Postby Big Shrimpin » Wed Jul 04, 2012 9:10 am

mness wrote:To summaraize the article: more proof that baby boomers have destroyed America for future generations.

Itws also funny to hear Davis basically admit that his own firm did shitty diligence before the merger. Wow.


Jumping in here to reiterate how IR8AF I am about boomers.

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

Postby sunynp » Wed Jul 04, 2012 3:23 pm

They paid out 60 million to retired partners who weren't even contributing any more. The also raised the partner salaries to the extent the combined firm would have to do 25% more in business than the best year of each firm combined.

They announced the raises, no joke, the day before bear, stearns collapsed.

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

Postby Morgan12Oak » Wed Jul 04, 2012 4:25 pm

Dewey is another example of how shitboomers ruined it for all of us. Microcosm of the economy as a whole.




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