In an effort to rid itself of hundreds of thousands of boxes of files, Dewey & LeBoeuf is asking a bankruptcy court judge to consider a plan that would give the defunct firm’s former clients 45 days to claim the documents before Dewey disposes of them “in the manner it deems fit.”
In a motion filed Friday, which proposes that the firm’s former clients be notified about retrieving their files via mail, Dewey advisers ask that U.S. Bankruptcy Judge Martin Glenn rule on the request at a hearing scheduled for July 9.
As Dewey puts it, “most of the Client Files are not only unnecessary” for the bankruptcy proceeding, “but their maintenance imposes a significant ongoing burden to the estate’s effective administration.”
The files—which the firm’s advisers describe as “innumerable”—are currently located in New York, in various storage facilities where “monthly maintenance fees continue to accrue,” as well as in what Dewey says in the filing are locations around the world that are “simply not possible” to identify without significant effort.
Files for active matters, according to the proposed motion, have already been transferred to—or in the process of being transferred to—the firms to which Dewey’s some 300-partners moved in the weeks leading up to its demise.
The estate bases its request on ethics rules from New York, California, and the American Bar Association that dictate how operating firms are to dispose of client files. Taken together, the rules typically require 90 days’ notice before such disposal can begin and require that files be kept for five to seven years. Dewey argues that because the firm is liquidating, those rules do not apply.
Clients that reply to the firm within the 45 days and request the files will have an additional 30 days to retrieve them, according to the motion filed Friday. Dewey notes in its filing that if it has to ship files, clients will bear those costs, and that Dewey may withhold files to clients that still owe the firm attorney’s fees.
Two unrelated filings made this week in the Dewey bankruptcy shed light on the identities of some of those clients with delinquent bills. An exhibit attached to applications by Brown Rudnick, which is seeking approval as counsel to a committee of unsecured creditors, and Kasowitz, Benson, Torres & Friedman, which seeks to represent a committee of former partners, identifies the 50 clients with the largest outstanding bills (though the specific amounts owed are not listed). That list includes several international clients, including Equatorial Guinea, the government of Ghana, the Kingdom of Saudi Arabia, the Republic of Georgia, and Arab Bank; such bankrupt companies as American Airlines, the Los Angeles Dodgers, and Talbots; and household names like Dell, General Electric, and Morgan Stanley. (A Morgan Stanley spokeswoman declined to comment. Dell and General Electric did not immediately respond to requests for comment.)
Those same filings—in which Brown Rudnick partner Edward Weisfelner lists his hourly rate as $1,055 and Kasowitz Benson partner David Friedman reports an hourly rate of $1,000—list Dewey’s 50 largest unsecured creditors. They include several previously unknown names of interest to the legal community, including the law firm Cook Vetter Doerhoff & Landwehr, consulting firm McKinsey & Company, and The Legal Aid Society.
Since Dewey’s May 28 Chapter 11 filing, those advising the firm’s estate have made it clear they would prefer to accelerate the bankruptcy process. Over the past few weeks, creditors’ committees and their counsel have been chosen, and a budget to carry Dewey through the end of July has been approved. The firm has also sought the court’s approval to break its office leases around the world and Dewey leaders have presented the outline of a settlement plan with former partners to those former partners.
Lead Dewey bankruptcy lawyer Albert Togut, of Togut, Segal & Segal, has said in court that the so-called partner contribution plan could form the basis of the Dewey estate’s cash flow from August onward. So far, partners have not been told any specifics on what they will be asked to pay to the estate.