New York prosecutors probe law firm Dewey & LeBoeuf
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A sign marking the Dewey & LeBoeuf LLP headquarters on 6th avenue is seen in New York April 20, 2012.
Credit: Reuters/Shannon Stapleton
By Karen Freifeld and Joseph Ax
NEW YORK | Fri Apr 27, 2012 4:43pm EDT
(Reuters) - New York prosecutors are looking into possible financial mismanagement at Dewey & LeBoeuf after lawyers at the law firm requested an investigation, two people familiar with the matter said on Friday.NEW YORK
Dewey & LeBoeuf, a major U.S. law firm, has lost some 70 of its 300 partners since the beginning of the year. The defections, coupled with debt, have left the firm struggling to stay afloat.
The Manhattan District Attorney's office is investigating whether Dewey leadership made misleading statements about payments due to partners, according to one person who did not want to be identified because the probe is not public.
Another person, who also did not want to be identified, said lawyers from the firm had asked Manhattan District Attorney Cyrus Vance to examine "financial irregularities" at the firm.
Both sources said the investigation is in preliminary stages.
Erin Duggan, a spokeswoman for Manhattan District Attorney Cyrus Vance, declined comment.
Martin Bienenstock, a member of the firm's five-person executive committee, declined to comment. Representatives of Dewey did not respond to repeated requests for comment.
The request for an investigation was first reported on Friday by Law360, a specialized news service for lawyers.
It comes just days before Dewey faces a deadline to renegotiate the terms of a $100 million line of credit. The deadline was revealed earlier this week by another source familiar with Dewey's troubles.
The firm owes roughly $75 million to a bank group led by JPMorgan Chase that also includes Citi Private Bank, Bank of America Corp and HSBC Holdings PLC.
Dewey has retained a bankruptcy attorney to consider restructuring options. One possibility is a prepackaged bankruptcy that would involve merging with another firm. Greenberg Traurig LLP has said it had "preliminary discussions" related to Dewey but has not elaborated.
Last year, Dewey hired a number of high-profile, highly compensated attorneys but has been unable to pay many of its long-tenured partners full compensation in recent months, according to two partners who have left.
(Additional reporting by Nick Brown and Nate Raymond; Editing by Steve Orlofsky)
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We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/Comments (3)bobber1956 wrote:Apr 27, 2012 4:46pm EDT -- Report as abuseJamVee wrote:I find it incredible that a NY law firm, in this day and age, and a big one at that, is considering bankruptcy. Were they too “LIBERAL” with pay and benefits? Did they offer “unsustainable” retirement plans? Did all of the Partners join the United Brotherhood of Ambulance Chasers? Or, was it just lousy management?
Apr 27, 2012 5:10pm EDT -- Report as abuse
4/27/2012
New York prosecutors probe law firm Dewey & LeBoeuf
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“The defections, coupled with debt, have left the firm struggling to stay AFLOAT”. Reminds me of the old joke…What do you call 500 lawyers at the bottom of the ocean?