(Corrects that XL Specialty Insurance Co issued Dewey's
management liability insurance policy, not that XL is the
policyholder; in second paragraph)
By Casey Sullivan
April 23 The former chairman of Dewey & LeBoeuf
has agreed to pay more than half a million dollars in a proposed
settlement with Dewey's trustee and insurer to resolve claims
that bad management led to the law firm's demise, according to
papers filed in federal bankruptcy court.
Former Dewey Chairman Steve Davis has agreed to pay $511,145
to settle claims that he mismanaged Dewey & LeBoeuf, which last
May became the largest law firm in U.S. history to file for
Chapter 11 bankruptcy. XL Specialty Insurance Co, which issued
Dewey's management liability insurance policy, has agreed to pay
$19 million in the proposed settlement, according to court
"The Settlement Agreement is a substantially more favorable
result than litigation," said Edward Weisfelner, speaking on
behalf of the liquidation trustee Alan Jacobs, in court papers.
Without a settlement, Weisfelner said, Dewey's estate would
face large litigation expenses to go after Davis and the
insurance company in court, as well as the risk of not
collecting a full recovery from the parties.
"Litigation of the Management Claims would require extensive
discovery, including millions of pages of documents to review
and over 100 depositions," he said.
The settlement agreement still needs a judge's approval. A
hearing on the proposed deal is scheduled for May 13.
Reached Tuesday, Kevin Van Wart, a lawyer for Davis, said:
"Mr. Davis is pleased with the settlement, which is a practical
resolution for all concerned."
A spokeswoman for XL Specialty Insurance Co did not
immediately return a request for comment.
The case is: In re: Dewey & LeBoeuf LLP, Debtor, United
States Bankruptcy Court for the Southern District of New York,
Case No. 12-12321 (MG)
(Reporting by Casey Sullivan; Editing by Alden Bentley and Phil