By Nate Raymond
NEW YORK May 15 Dewey & LeBoeuf, the U.S. law
firm teetering on the brink of closure, has been sued by the
Pension Benefit Guaranty Corp, which is seeking a decree to
terminate various Dewey retirement plans.
The case brought by the PBGC, a wholly owned U.S. government
corporation, was filed in federal court in Manhattan on Monday.
Last week, the agency said it would seize control of three
Dewey pension plans covering 1,776 current and future retirees
that the PBGC said were underfunded by $80 million.
"The continuing loss of revenue-generating partners and
Dewey's debt load has culminated in the imminent demise of
Dewey," the PBGC said in its lawsuit.
The lawsuit sheds more light on the final days of Dewey &
LeBoeuf, once one of the largest law firms in the United States.
More than two-thirds of its 300 partners have departed to rival
firms since January, following concerns about compensation and
the firm's large debt.
Dewey is liquidating and winding down outside of bankruptcy,
according to the lawsuit. Many of the firm's associates were
told on May 10 that Tuesday would be their last day.
The PBGC's move to take control of Dewey's pensions followed
a telephone call last week with the firm, the lawsuit said.
On the call, Dewey told the agency it planned to close "two
or three transactions" between Friday and Monday involving the
sale of its interests in affiliates, the lawsuit said. The PBGC
estimated that these transactions would generate between $7.2
million and $9.7 million.
It was not immediately clear what deals the lawsuit was
referring to and a spokesman for the agency declined to
One transaction that did take place on Monday was Greenberg
Traurig's hiring of 50-plus lawyers from Dewey's office in
Warsaw, Poland. The deal was structured in cooperation with the
Greenberg Traurig CEO Richard Rosenbaum did not respond to a
request for comment.
Meanwhile, more Dewey partners continued to defect from the
Attorneys in Dewey's Italian offices said on Tuesday they
would spin off from their U.S. parent and establish a separate
law firm, Grimaldi Studio Legale. The firm, which is hiring
high-profile Italian mergers lawyer Vittorio Grimaldi, will have
130 lawyers in Milan, Rome and Brussels.
Separately, 11 private equity and real estate lawyers in New
York said they will join Schulte Roth & Zabel. The group
includes Sanford Morhouse, the former co-chairman of Dewey
Ballantine, which merged with LeBoeuf, Lamb, Greene & MacRae in
While the firm continued to bleed partners, Dewey as
recently as Friday had not appointed a dissolution committee or
voted to dissolve the firm. According to the PBGC, Dewey is
attempting to liquidate without court intervention.
If the firm takes this route, it would avoid the steep costs
associated with a bankruptcy filing.
In other industries, companies often shoulder this cost
because it is the only way to freeze tangible assets and keep
creditors from descending on the company's estate.
But for law firms, whose primary assets are people, a
bankruptcy filing incurs costs without necessarily salvaging the
corporate structure or the value of the firm's assets.
However, it remains possible that Dewey could be forced into
While rare, involuntary bankruptcies occur when creditors
fear their collateral could lose value unless it is frozen by a
court. Law firm Howrey last year attempted to liquidate out of
court before creditors filed an involuntary bankruptcy petition.
The firm later converted its case to a voluntary filing.
Dewey representatives did not respond to requests for
comment on the firm's plans.