| NEW YORK
NEW YORK Jan 25 A judge on Friday approved a
plan by bankrupt law firm Dewey & LeBoeuf to foot some of the
cost of destroying old client files, a bill that could
ultimately reach almost $1.4 million.
In a written order in U.S. Bankruptcy Court in Manhattan,
Judge Martin Glenn green-lighted Dewey's plan to chip in about
$4 per box to help destroy an estimated 345,000 boxes of old
records, some dating back to the 1930s.
The fate of Dewey's old files has become an intriguing
sub-plot in the unwinding of a once-proud firm that employed
1,000 lawyers in 26 worldwide offices at its height.
Dewey, now liquidating, filed the largest-ever bankruptcy by
a U.S. law firm in May. In October it reached a $71.5 million
settlement with former partners to help pay back about $260
million owed to secured creditors.
The question of how to destroy files that go unclaimed by
former clients has framed a difficult legal issue, pitting
Dewey's fiduciary responsibility to creditors against its
ethical duty to clients.
Bankrupt entities have an obligation to creditors to save as
much money as possible to maximize payouts. But law firms also
owe it to clients to preserve the privacy of their information.
Dewey and several storage companies that hold its files,
including Iron Mountain Inc and Citystorage LLC, had
been haggling for months over the cost of shredding. Earlier
this month, the defunct law firm announced a plan to chip in
about $4 per box, a figure that would come to $1.38 million if
all roughly 345,000 boxes are ultimately destroyed.
There is no law governing the destruction of client files
for liquidating firms, which has made the issue controversial in
many law firm bankruptcies. The deal hammered out in Dewey's
case appears consistent with others in the past, including the
$5-per-box price that law firm Dreier agreed to pay warehouses
after its 2008 bankruptcy.
The case is In re Dewey & LeBoeuf, U.S. Bankruptcy Court,
Southern District of New York, No. 12-12321.