Update, 5/3/12, 3:35 p.m. EDT: The second paragraph of this story has been revised to include a statement from a Dewey & LeBoeuf spokesman.
The frantic efforts of Dewey & LeBoeuf’s leaders to save the struggling firm appear to have reached a dead end, with sources inside and outside the firm familiar with its operations telling the The Am Law Daily Thursday that Dewey is poised to close by May 15 and possibly sooner.
A Dewey spokesman responded to a request for comment with the following statement: “There is no plan to shut the firm down on May 15.”
News that the firm is set to shut down within two weeks comes on the heels of reports that mailroom and photocopy services at the firm’s 1301 Avenue of the Americas headquarters are no longer available and that food orders can no longer be charged to client accounts.
One New York secretary, who declined to give her name, tells The Am Law Daily that Dewey is no longer “a fully functional law firm.” Layoff notices have not been issued to staff, she says, adding that Dewey employees are getting most of their information about what is going on at the firm from the media at this point.
Over the past few weeks, Dewey leaders have attempted to find a way to save the firm in some form. Dewey has shed nearly 100 partners since January and faces mounting debt obligations, including a reported $75 million due to a syndicate of banks and another $150 million from a bond issued in 2010. While several other firms have been approached in an attempt to broker a deal to take on large numbers of Dewey lawyers, at least two firms, Greenberg Traurig and SNR Denton, have publicly announced the end of such discussions. (The Wall Street Journal was the first to report on the end of talks with SNR Denton talks Wednesday night.)
Federal and state laws require employers to provide 60 days’ notice prior to a mass layoff of more than 100 employees under The Worker Adjustment and Retraining Act of 1988. The last large law firm to shut its doors, Howrey, sent out WARN notices to several hundred of its employees on the eve of its dissolution last year. As of Thursday, Dewey had not issued a WARN notice with the New York State Department of Labor.
Reuters reported Thursday that Dewey’s lenders have given the firm a two-week extension as it seeks to renegotiate its bank debt. In the case of Howrey, after that firm’s partners voted to dissolve the firm in mid-March, Citi Private Bank, the Citibank unit that operates the financial services giant’s law firm group—and one of Dewey’s lenders—cut funding to cover the firm’s payroll. The move effectively put Howrey’s remaining staffers on the unemployment line, although some continued to receive some benefits into April.
Jack Raisner, cochair of the WARN practice at New York–based labor and employment firm Outten & Golden, confirmed that his firm had been contacted by Dewey employees with regard to the current situation at the firm. Raiser, whose firm has filed WARN suits on behalf of former Howrey employees, declined to comment on whether similar suits might be in the offing for Dewey employees.
It is unclear whether the quickly dwindling Dewey partnership will need to formally vote to dissolve. Robert Hillman, a professor at UC Davis Law School and an expert on partnership law, says partnership agreements typically specify a procedure for dissolution and winding down. While unfamiliar with Dewey’s agreement, Hillman says such procedures can come in the form of an executive decision made by senior partners or management, a full partnership vote (either a supermajority or majority), or a clause saying that a bankruptcy filing or certain number of partner departures triggers a dissolution.
Earlier Thursday, M&A heavyweight Morton Pierce, the former chairman of Dewey & LeBoeuf predecessor firm Dewey Ballantine, decamped to White & Case, taking seven partners with him. A three-partner team in London also left for Morgan, Lewis & Bockius on Thursday.
American Lawyer reporters Brian Baxter and Julie Triedman contributed reporting.