Some of the last remaining lawyers at Dewey & LeBoeuf packed up their belongings and turned in their BlackBerries and security passes yesterday.
With few partners remaining to handle firm affairs, what’s left of the partnership is expected to soon scatter.
“At this point, if you went down a list of partners who were still here, I wouldn’t be surprised if they were leaving in the next day or so,” said one Dewey partner in New York who declined to be identified.
Schulte Roth & Zabel announced yesterday it was picking up a group of private equity and real estate attorneys from Dewey.
Joseph Smith, chair of Dewey’s private equity practice, and Marshall Brozost join Schulte as partners. Sanford Morhouse joins as of counsel, while Russel Perkins, Shawn McCune and David Miller join as special counsel. The firm also is picking up a group of five associates.
Alan Waldenberg, a member of Schulte’s executive committee, said the addition is the largest group of lawyers the firm ever has brought on in one stroke.
“We don’t do a lot of laterals, but these guys were too good to be true,” he said. “They give us more depth in the private equity space.”
He added: “There was obviously a feeding frenzy in Dewey lawyers in the last six weeks.”
A flood of defections to other firms has already cost Dewey nearly two-thirds of its roughly 300 partners counted at the beginning of the year.
The firm laid off many support staff on May 11. Yesterday, it was the associates’ turn.
The total number of employees laid off in the New York region by what the firm called a “conditional plant closing” was 433, according to a Worker Adjustment and Retraining Notification (WARN) posted on the New York State Department of Labor’s website.
In an e-mail to associates last week, the firm provided a formal termination letter and protocol for their final day.
“Dewey & LeBoeuf is unexpectedly experiencing extraordinary difficulties. Unfortunately, the situation is deteriorating at a more rapid pace than was initially anticipated. Due to these adverse developments and the firm’s inability to find alternative solutions, this decision was not previously anticipated and notice of your termination was given as soon as practicable,” the letter said (see also Dewey’s Summary of Benefits Upon Termination).
With no exit interviews, human resources representatives were scheduled to collect associates’ security identifications, BlackBerries, American Express cards and other firm property.
The mood in the New York office was still better than last week because there’s at least some closure, said the Dewey partner who spoke on condition of anonymity.
With three of the four partners in the office of the chairman gone, general counsel Janis Meyer and newly appointed executive partner Stephen Horvath will take over, Martin Bienenstock said over the weekend in an interview with The Wall Street Journal.
Bienenstock, a former partner who has joined Proskauer Rose, told the newspaper that Dewey’s plan now is to “optimize the outcome for all constituencies.” It has no plans to file for bankruptcy, he added.
But lawsuits against Dewey are starting to pile up. Last week, the firm was sued by an employee over the lack of termination notice. In another suit, the firm is accused of not paying its janitorial service.
And a federal agency filed a lawsuit in the Southern District on May 14 following an announcement last week that it was taking over three pension plans sponsored by Dewey.
The Pension Benefit Guaranty Corp. is seeking to terminate the pension plans, appoint the agency as the statutory trustee of them and require that Dewey turn over documents, records and assets of the plans, according to the agency’s lawsuit (See Complaint).
“Dewey is liquidating and winding up its affairs outside bankruptcy,” the agency claims in Pension Benefit Guaranty v. Dewey & LeBoeuf, 12-cv-3833. “The continuing loss of revenue-generating partners and Dewey’s debt load has culminated in the imminent demise of Dewey.” The case is before Judge Jesse Furman.
The plans, covering 1,776 participants, are collectively underfunded by more than $80 million, the suit says. The agency says it’s necessary to terminate the plans to protect the interests of the plans’ participants.
Meyer did not return a message seeking comment on the lawsuit and the firm’s final days.
In the e-mail to terminated associates, the firm said health benefits provided by the firm would extend through the end of May, while contributions to attorneys’ 401(k) plans would cease with their May 15 paycheck.
Attorneys’ personal liability insurance is effective through the end of the year, the letter said.
The firm urged associates to complete all billing hour entries before leaving yesterday.
“Please be sure to clear up all missing and suspended diaries and allocate all hours in pending new matter accounts,” it said.
The termination letter concludes: “The Firm appreciates your loyalty and dedication, and we thank you for your contributions to our past successes.”
@|Christine Simmons can be contacted at email@example.com.