By Karen Freifeld and Joseph Ax
NEW YORK, April 27 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.
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
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
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.