(Reuters) - New York law firm Dewey & LeBoeuf, struggling with a debt crisis and criminal probe of its former chairman, has “encouraged” its partners to seek new jobs, one partner said, citing an internal memo.
The email, sent on Monday night, also said members of the firm’s executive committee and the four remaining members of the office of the chairman had decided to remain in their positions while seeking other opportunities, said the partner, who had seen the email and asked not to be named because he was not authorized to publicly discuss the matter.
But Martin Bienenstock, a member of the office of the chairman, told Reuters in an email on Tuesday that it was inaccurate to say that the memo encouraged partners to leave the firm, which is in talks with “many potential merger partners.”
”Rather, it (the memo) explained that the partners who do not want to be part of a merger could look elsewhere,“ he said in the e-mail. ”This way they would not be otherwise inhibited by duties to the partnership.
Dewey is in discussions with at least two other law firms about a possible transaction, including Patton Boggs, another person familiar with the matter said on Monday.
Bienenstock also said the firm is not contemplating a bankruptcy filing.
“If real property and equipment leases are assumed by other firms or renegotiated, and the lenders realize on their accounts receivable and inventory, there may be no need for judicial intervention,” he wrote.
Bienenstock did not respond to additional questions about the memo. Dewey spokesman Duncan Miller said he did not have a copy of Monday’s memo, and declined to comment on it.
The memo came as Dewey scrambled to negotiate with its lenders and continued discussions with firms about a potential transaction.
Patton Boggs is exploring opportunities short of a full merger, according to the source on Monday, who spoke on condition of anonymity. SNR Denton on Monday declined to confirm a report in The New York Times that it was also in talks about acquiring Dewey lawyers.
Talks with rival firm Greenberg Traurig about a possible transaction fell through, according to an internal e-mail sent Sunday and reviewed by Reuters.
News of the memo, which was first reported by The New York Times, followed discussions on Monday between Dewey and a bank group led by JPMorgan Chase & Co as the law firm sought to avoid defaulting on roughly $75 million in loans due Monday, a person familiar with the matter said on Monday.
As of Monday evening, Dewey and its lenders had all but completed a roughly two-week extension of the deadline, that source said.
It was unclear early on Tuesday if the situation had changed.
The firm disclosed on Friday that the Manhattan district attorney’s office had opened a criminal investigation into “allegations of wrongdoing” by its former chairman, Steven Davis.
Meanwhile, partner defections continued, bringing the total to at least 92 since the start of the year.
Holland & Knight said on Tuesday that it had hired Stuart Saft, a New York real estate partner at Dewey, and Goodwin Procter announced it had hired Dewey lawyers Ilan Nissan and Christian Nugent as private equity partners.
Cooley LLP also said Tuesday that it had hired Dewey partner Lyle Roberts as a partner in its securities litigation practice in Washington.
Reporting by Nate Raymond; Additional reporting by Nick Brown, Caroline Humer and Joseph Ax; Editing by Noeleen Walder and Richard Chang