NEW YORK Dewey & LeBoeuf on Wednesday proposed a $104 million deal to recoup money from former partners who left the law firm as it teetered on collapse, a former partner said.
It's a settlement that could head off a lengthy court fight in the biggest law firm bankruptcy in U.S. history.
The proposed deal would cover clawback claims the estate has against hundreds of Dewey's former partners. The firm is seeking to clawback money paid out since the start of 2011, two people familiar with the matter said.
If partners accept the deal, it would provide the first big recovery for Dewey's creditors, who are owed $315 million stemming from the firm's bankruptcy filing in May.
Partners could reject the offer if they think Dewey's demands are too great, creating the possibility that the firm would sue them.
Mark Zauderer, a lawyer for 57 former Dewey partners, confirmed a plan had been put forward. He declined to discuss the settlement's terms, but said "it would not be a safe bet to assume that our clients will agree to it."
"But they will certainly look at it," he added.
Even if partners accept the deal, the bankruptcy would continue as the estate seeks to recover money from former clients and others to pay off its remaining debt.
Terms of the proposal were discussed at a meeting at the Sheraton in Manhattan, on the same block where Dewey once had its headquarters, a former partner said.
Al Togut of Togut, Segal & Segal, who is serving as Dewey's primary bankruptcy lawyer, did not immediately respond to a request for comment.
Before its decline, the Wall Street firm had 1,040 lawyers in 26 offices internationally. Dewey collapsed in May amid partner defections and a high debt load. (Reporting by Casey Sullivan and Nate Raymond; Additional reporting by Nick Brown; Editing by Eric Effron, Noeleen Walder and Bernard Orr)