(Photo by Maggie Soladay)
About a week after former Dewey & LeBoeuf chief operating officer Dennis D’Alessandro’s lawyer spoke with The Am Law Daily about his client’s innocence in the alleged fraud scheme that helped destroy the firm, the trustee overseeing Dewey’s bankruptcy case has sued D’Alessandro in a bid to recover nearly $9.3 million for creditors.
Exhibits attached to the 24-page clawback complaint filed late Friday show that D’Alessandro earned that much as the firm’s COO from 2008 until his retirement on June 30, 2011. He averaged $200,000 in annual salary—paid in monthly increments of roughly $35,000—and another $400,000 in contractual and discretionary bonuses and trust payments during those years, according to the court filings.
After D’Alessandro retired from Dewey, the complaint states that the firm agreed to keep him on its medical plan until he hit 65 and paid him another $550,000 as part of a consulting contract. In the year prior to Dewey’s bankruptcy filing on May 28, 2012, the insolvent firm paid nearly $1.2 million to D’Alessandro—$562,500 in contractual salary and $600,000 in discretionary bonuses.
Bruce Barket of Garden City, N.Y.–based Barket Marion Epstein & Kearon told The Am Law Daily earlier this month that D’Alessandro hired him more than a year ago amid the fallout of the largest law firm collapse in U.S. history. Barket, who spoke again with The Am Law Daily by phone late Monday, expressed displeasure at finding about about the clawback complaint filed against his client via a call from a reporter at The Wall Street Journal, which first had news Monday afternoon of the suit to recoup salary, bonuses and other compensation from D’Alessandro.
“It’s not exactly a secret that I represent Dennis,” says Barket, adding that he’s never heard from lawyers representing Dewey’s Chapter 11 trustee, Alan Jacobs. “When they get around to formally serving Dennis we’ll review the case on its merits, although I can assure you we intend to vigorously contest any attempted clawback.”
Partners Allan Diamond, Andrea Levin Kim and Howard Ressler from New York—and Houston-based Diamond McCarthy—which was hired in May 2013 to represent Jacobs—are handling the clawback action against D’Alessandro. The litigation against the former firm executive comes on the heels of last week’s clawback claims seeking $234,977 from former Dewey insurance partner Patrick Gennardo, who joined Dentons in February, and $708,063 from ex-partner John Quiñones, who left the firm in 2010 to become general counsel of the YMCA Retirement Fund. (The New York–based nonprofit’s 2012 tax filing shows that Quiñones received $404,870 in compensation during the 12-month period between July 1, 2012 and June 30, 2013.)
Clawback suits in the Dewey bankruptcy have put financial strains on some former partners. The Am Law Daily reported earlier this month that former Dewey litigation partner Geoffrey Coll—now of counsel with Schiff Hardin in Washington, D.C.—had filed for personal bankruptcy in February as a result of litigation filed against him by the defunct firm’s estate. In January, former Dewey corporate partner Gregory Owens, now at White & Case, also filed his own Chapter 7 case.
The Am Law Daily reported Friday on the identities of seven ex-Dewey employees who have pleaded guilty and agreed to cooperate with Manhattan prosecutors in the criminal case filed earlier this month against a trio of former firm leaders and one lower-level staffer. D’Alessandro has been mentioned as a potential witness for the prosecution, and while Barket doesn’t dispute that his client could testify, he adds that D’Alessandro has “no legal interest in the criminal case” and wishes the defendants and their families “nothing but the best.”
The clawback suit filed against D’Alessandro claims that former Dewey chairman Steven Davis—one of the trio of former firm leaders charged by prosecutors and also ensnared in a parallel civil case filed by the SEC—had a conflict of interest in negotiating the ex–COO’s employment contract. The complaint claims that Davis benefited from a “poison pill” provision in D’Alessandro’s employment agreement that obligated Dewey to make a “significant lump sum payment” to D’Alessandro if Davis was ever replaced as chairman.
As Dewey struggled in the aftermath of the 2008 economic recession, the trustee claims that D’Alessandro received an “astronomically generous” compensation package that was “objectively unreasonable when compared to the prevailing market for law firm administrators.” In a 2007 conversation with now-defunct ALM publication Law Firm Inc., D’Alessandro spoke about the rise of C-level, nonlawyer administrators like himself at Am Law 100 firms, something he attributed to the success had by Skadden, Arps, Slate, Meagher & Flom in the early 1980s.