Dewey files for Chapter 11 - biggest US law firm collapses

Telegraph ^

[sunmars]

The crippled law firm Dewey & Leboeuf filed for chapter 11 bankruptcy protection on Monday night and will seek approval to liquidate its business after failing to find a merger partner, marking the biggest collapse of a law firm in US history.

"During the first quarter of 2012, the firm was confronted with liquidity constraints that led to the precipitous resignation of over 160 of the firm's 300 partners by May 11," the New-York based firm said.

Dewey listed liabilities in the range of $100m to $500m, according to the filing. It had already terminated 433 of its 533 New York employees earlier this month, according to the state's labor department.

The firm's collapse is expected to be the subject of years of court proceedings, and a number of former partners have already retained lawyers to represent them.

Monday's filing follows months of turbulence, as wave after wave of partner defections shattered the high-profile firm from within. In April, the Manhattan District Attorney's office launched a criminal probe of former firm chairman Steven Davis. He has denied any wrongdoing.

The result of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae, Dewey & LeBoeuf had about 1,450 attorneys at its peak, according to The National Law Journal.

But the firm was eventually undone by a combination of the economic downturn, excessive compensation and governance problems, according to former partners and others in the industry. In particular, Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession.

[Terry Mross]

I applied for a program at Baylor Law School where your 4th year of college doubled as your first year of law school. The catch was that even though you were accepted in the program it wasn’t a guarantee that you’d be accepted to law school, plus, you didn’t get the four year degree.

I knew four lawyers who wrote letters of recommendation. All four also told me, “If you become a lawyer, there will come a day when you regret it.” I was accepted into the program but decided not to do it.