Nothing keeps people happy like a fat wallet. And no one can ever accuse bankrupt New York law firm Dewey & LeBoeuf of being shy when it came to promises of doling out ducats.
Now, the firm announced that it wants to dangle a carrot in front of its remaining 52 employees. Dewey hopes to pay its remaining workers up to $700,000 in bonuses in an effort to keep them happy and stick out however long it will take to finish dismantling what’s left of the defunct firm.
The firm, which has seen a steady rate of employee attrition starting in January, which led to its eventual declaration of bankruptcy on May 28, has continued to lay off employees or see them leave. The firm had to pare down its staff to a “minimum core” team before seeking bankruptcy protection, but now Dewey says it can’t afford to lose any more people.
Therefore, it argues that it should be allowed to pay out incentive and retention compensation to its few remaining workers, who comprise billing, collections, IT and HR professionals, according to the Wall Street Journal.
“The employees are integral to the efficient and expeditious wind down of the debtor’s affairs,” the firm said Tuesday in court papers. “Without the continued commitment of these employees, the debtor’s ability to complete an orderly liquidation and to make a meaningful distribution to creditors would be severely compromised.”
According to the court documents, Dewey proposes to pay up to $450,000 in retention payments to all of its non-managerial workers. Employees’ bonus amounts will depend on how long they stay. Dewey expects workers to stay on at least through Aug. 31, if not through Nov. 30.
The four remaining senior managers, including executive partner Stephen Horvath and general counsel Janis Meyer, are not eligible for the bonuses or retention payments.
A handful of those employees, including Dewey’s billing and collections manager, could receive additional bonuses under a proposed incentive plan tethered to the firm’s ability to rake in its outstanding bills. The bonuses, which could reach up to $250,000, would come from fees Dewey’s collection agent earns, and would fluctuate based on the amount collected from legal bills.
The firm was owed about $217 million in outstanding legal fees when it declared bankruptcy. Two weeks ago, an affidavit revealed a list of Dewey’s 50 largest account debtors. The list of debtors popped up just days after Dewey’s former partners had a conference call with the firm’s bankruptcy advisers and the two partners left overseeing the wind down regarding the progress of a clawback settlement. The plan sought to settle all remaining claims from more than 5,000 creditors within two weeks.
Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan will consider Dewey’s request on July 25.
For more on Dewey’s new bonus plan, read the Wall Street Journal.
And for more from InsideCounsel on Dewey’s ongoing saga, read: