Former Dewey & LeBoeuf chairman Steven Davis on Tuesday moved for the second time in a week to ensure that he will be able to adequately defend himself against any claims he may face stemming from his lengthy tenure atop the now-defunct’s firm hierarchy.
In an afternoon filing, attorneys representing Davis filed a reservation of rights arguing that there should be no limit on the funds available to their client under a $25 million insurance policy Dewey took out with XL Specialty Insurance Company. The Dewey estate has previously expressed its intention in court filings to cap the amount of money available under the policy to be used to pay defense costs. The policy, one of several held by the firm and that are listed in bankruptcy filings, covers actions that occurred between October 2, 2011, and October 2, 2012.
In August, XL sought court approval to begin making defense expense payments to those covered by the plan—an extensive list that includes all of Dewey’s former leaders; anyone with any kind of oversight of the firm’s operations, both attorneys and nonattorneys; partners working on tax-related matters; and outside advisers brought in earlier this year as the firm began to collapse, among others. Dewey paid a premium of $541,500 when the policy was taken out in 2011 and an additional $1.08 million a year later to keep it afloat.
XL’s August filing suggests that actions have already been initiated against insured individuals, though no list of those actions was available via the online bankruptcy court docket Tuesday. Such a list would presumably include a fraud suit filed in June by former Dewey partner Henry Bunsow against Davis and several other former members of the firm’s executive ranks.
In the Tuesday filing, Davis’s advisers argue that “the policy was put in place to protect Mr. Davis and other senior management, in significant part by covering the cost of defending claims like those XL Specialty has acknowledged. Without access to the proceeds of the Policy under its terms, Mr. Davis will suffer undue hardship during the pendency of the bankruptcy case.
Late last week, Davis, along with former Dewey executive director Stephen DiCarmine and former chief financial officer Joel Sanders, argued in motions that, while they expect to be ensnared in future litigation, they believe they should not be held responsible for the harm that Dewey suffered and that if they are, they “should not be liable for more than [their] proportionate share.”
All three have been denied the opportunity to participate in a proposed settlement plan expected to raise $71 million from some 400 former Dewey partners in exchange for granting those partners waivers from Dewey-related liability. Davis, DiCarmine, and Sanders object to the settlement in part because, they claim, the liability release as currently written would unfairly prohibit any partners who participate in the settlement from cooperating with the trio in the event they must defend themselves in Dewey-related litigation.
Davis hired a new team of lawyers to represent him in the insurance action. Paul Basta, a New York partner with Kirkland & Ellis, is listed on the Tuesday filing along with other Kirkland lawyers. Also listed: Hughes Hubbard & Reed partners Ned Bassen and Kathryn Coleman, who have represented Davis in the bankruptcy from the start.
Basta and Bassen did not immediately respond to requests for comment Tuesday. Dewey’s chief restructuring officer, Joff Mitchell, had no comment on Davis’s motion.
A hearing to discuss the proposed partner contribution plan and other recent motions is scheduled for Thursday in U.S. bankruptcy court in lower Manhattan.