Attorneys representing former Dewey & LeBoeuf chief financial officer Joel Sanders and executive director Stephen DiCarmine filed a limited objection to a settlement reached last week that would protect former Dewey chairman Steven Davis from most future claims stemming from his alleged mismanagement of the now-defunct firm.
The settlement’s terms call for Davis to pay the Dewey estate $511,145, and for the firm’s insurer, XL Specialty Insurance Company, to contribute $19 million to the fund bound for creditors. If approved by the court, the deal would give Davis the same protections against Dewey-related liability enjoyed by former firm partners who have agreed to participate in a $71.5 million partner contribution plan and would also preclude the estate from suing any former Dewey leaders, including Davis, DiCarmine, and Sanders.
In documents filed May 2 in Southern District Bankruptcy Court, Hughes Hubbard & Reed partner Ned Bassen, who represents DiCarmine and Sanders, asked the court to either reject or modify the deal settlement. DiCarmine and Sanders argue that the $19 million XL has agreed to pay the estate was decided "arbitrarily" and would deplete the insurance money available to cover pending claims as well as those that might yet arise. The former Dewey leaders also claim the proposed settlement includes "improper nonconsensual third-party releases" that limit DiCarmine and Sanders’s "ability to defend themselves in future litigation."
"We’re trying to protect and preserve our clients’ rights with respect to the settlement," Bassen told Law Journal affilate The Am Law Daily. "That’s why we filed the objections; plus the fact that there is, in our view, no rhyme or reason to the amount of the settlement."
The settlement is scheduled to be discussed at a hearing scheduled for May 13.