Top bankruptcy lawyer leaving Dewey

Fri May 11, 2012 6:30pm EDT

1 of 4. A man moves boxes out of the offices of Dewey & LeBoeuf in New York May 11, 2012. Once one of the largest law firms in the United States, Dewey & LeBoeuf has suffered a wave of partner defections in recent months amid a debt crisis and concerns over partner compensation. Dewey warned employees last week of layoffs and that it would possibly close. A lawsuit filed Thursday by an employee at Dewey said the firm planned to fire about 450 workers in its New York office on Friday.

Credit: Reuters/Eduardo Munoz

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(Reuters) - Martin Bienenstock, a prominent bankruptcy lawyer who advised on General Motors Co's restructuring in 2009, is leaving the law firm Dewey & LeBoeuf to join Proskauer Rose, which announced his move on Friday.

Bienenstock has been part of a small management team overseeing Dewey since a leadership shakeup in March. Earlier this week, two other members of that office announced plans to leave the firm.

Bienenstock's departure would leave just L. Charles Landgraf as a member of the chairman's office. Proskauer said that five other restructuring partners at Dewey will join Bienenstock at the firm.

"We aim to continue developing our multidisciplinary approach to take restructuring and governance to the next level," Bienenstock said in a statement issued by Proskauer.

Once one of the largest law firms in the United States, Dewey & LeBoeuf has suffered a wave of partner defections in recent months amid a debt crisis and concerns over partner compensation. Around 200 of the firm's roughly 300 partners have left since January, with several other departures besides Bienenstock's group announced on Friday.

Bienenstock had been a leading force in seeking to avoid the firm's dissolution since being put in the firm's office of the chairman in March.

The firm last week warned employees of mass layoffs and of the possibility the firm may close. A lawsuit filed on Thursday by an employee at Dewey said the firm planned to fire about 450 workers in its New York office on Friday.

Lawyers in Dewey's California offices were told this week that California operations would cease on May 15, said Henry Bunsow, who resigned from the partnership earlier this week. He had been co-chair of Dewey's intellectual property litigation group.

"There was a video conference a couple days ago, Tuesday, where we were told it would happen," Bunsow said.

Spokespeople for Dewey have previously denied reports the firm as a whole would close by May 15. On Friday, William Brandt, a consultant advising Dewey on its restructuring, said no such decision had been made.

"While there are some reductions in force that will take effect tonight and Tuesday," Brandt said on Friday, "they by no means represent a closure of the firm or anything similar."

Bunsow is no stranger to law firm dissolutions. He was vice chairman of Howrey, which dissolved two months after he left for Dewey in January 2011. He said he plans to open a four-partner boutique in San Francisco called Bunsow & DeMory.

"Dewey went down a little quicker than everyone expected," he said.

Other signs of distress at Dewey continued to mount in recent days. On Thursday, the U.S. Pension Benefit Guaranty Corporation said it would take responsibility for three pension plans covering 1,800 current and future retirees at Dewey. The plans were underfunded by $80 million, the agency said.

LEADERSHIP AT DEWEY

Bienenstock joined Dewey from Weil, Gotshal & Manges in February 2008. Well known in bankruptcy circles, he became one of the chief partners tasked with restructuring Dewey as troubles mounted.

Amid partner defections, Dewey created a five-person "office of the chairman" on March 27, including Bienenstock, to take over responsibility from its then-chairman, Steven Davis.

Davis was removed from all leadership roles on April 29 after the firm said in a memo that the New York District Attorney was investigating allegations of wrongdoing against Davis.

Davis has denied any improprieties. A spokeswoman for Davis declined comment on Friday.

Jeffrey Kessler and Richard Shutran, two other partners in the office of the chairman, said on Wednesday they were leaving Dewey. Shutran, former co-chair of Dewey's corporate department, is joining O'Melveny & Myers, while Kessler, the former head of litigation at Dewey, is going to Winston & Strawn.

(Additional reporting by Nick Brown and Caroline Humer; Editing by Steve Orlofsky and Carol Bishopric)

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