(Reuters) - Eleven more partners have jumped ship from Dewey & LeBoeuf, as the troubled law firm scrambled on Monday to close a deal with another firm and secure a loan extension as a deadline loomed.
New-York based Dewey is now in discussions with at least two other law firms, including Patton Boggs, according to a person familiar with the matter. The firm, hobbled by high debt and a criminal investigation of its former chairman, disclosed on Sunday that it had ended talks on a potential deal with rival firm Greenberg Traurig.
Between Friday and Monday, Dewey removed at least seven partners’ names from its website. On Monday, other firms announced additional defections.
The continuing departures pose a problem for firms considering a merger with Dewey, since they cannot guarantee which lawyers will stay, said Mark Jungers, a recruiter with Lippman Jungers LLC.
The 11 partners include Gordon Warnke, the chairman of Dewey’s tax department and a member of the firm’s executive committee. Warnke, who joined Linklaters with partner Joseph Pari, could not be reached for comment on Monday. The firm has lost at least 86 of its 300 partners since the beginning of the year.
The most recent departures came as Dewey raced against the clock to avoid defaulting on roughly $75 million in loan debt due on Monday to a bank group led by JPMorgan Chase & Co (JPM.N).
As of Monday evening, Dewey and its lenders had all but completed a roughly two-week extension of the deadline, a person familiar with the matter said.
A source said on Sunday that the sides had been close to securing a 90- to 120-day extension, but that was before talks with Greenberg Traurig fell through.
That revelation, along with the Manhattan district attorney’s ongoing probe into the firm’s finances, complicated negotiations with banks, the person said.
Dewey sent a memo to firm partners on Friday saying that Manhattan District Attorney Cyrus Vance was investigating “allegations of wrongdoing” by former Dewey Chairman Steven Davis. Davis, who was ousted from management positions by the firm on Sunday, has denied any wrongdoing and has retained criminal lawyer Barry Bohrer of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer.
Dewey said on Sunday it was in “discussions with other firms about a possible transaction and will consider those and other options for the firm moving forward.”
Those firms include Patton Boggs, which is exploring opportunities short of a full merger, a person familiar with the matter said.
Edward Newberry, managing partner of Patton Boggs, said in a statement that his firm from time to time has “conversations with other firms in connection with our interest in making strategic acquisitions to strengthen our practice.
“We have only the highest regard for the lawyers at Dewey & LeBoeuf,” he added.
Dewey spokesman Angelo Kakolyris declined comment on the talks with Patton Boggs.
The New York Times reported on Sunday that Dewey was also in talks with SNR Denton. Jeff Scalzi, a spokesman for SNR Denton, said in a statement that the firm enjoys “strong relationships with many law firms around the world,” but does not comment “on rumors about specific discussions” to hire lawyers.
Other newly departed partners are Marshall Stoddard Jr., a partner in New York and Los Angeles who was the U.S. head of the firm’s bank and institutional finance practice group.
Also leaving Dewey for Morgan Lewis is Charles Moore, a Houston utilities partner and former general counsel of the U.S. Federal Energy Regulatory Commission.
“(A)s every day’s events unfolded, it seemed pretty clear if there was a better opportunity somewhere else I should take it,” Moore said on Monday.
Covington & Burling announced on Monday that it hired capital markets partners Don Murray and Eric Blanchard in New York.
Clifford Chance said it brought on board two lawyers in New York: Howard Adler, co-chair of Dewey’s tax practice, and Gary Boss, an insurance partner.
Meanwhile, Gibson, Dunn & Crutcher announced on Sunday that it hired Peter Gray, a Dubai-based Dewey partner focused on international litigation and international arbitration.
Gary Apfel, the Los Angeles co-chair of Dewey’s consumer financial services group, joined Pepper Hamilton on Monday. Apfel left Dewey on Wednesday, according to Dewey spokesman Duncan Miller.
Dewey separately removed New York corporate partner Linda Ramson from its website. Miller could not confirm she left the firm and calls and e-mails to her office at Dewey were not returned.
Miller declined to comment further on the departures.
Reporting by Nate Raymond and Nick Brown in New York; additional reporting by Karen Freifeld; editing by Noeleen Walder and Andre Grenon