By Jennifer Smith
A happy weekend thought for the roughly 300 ex-partners of the defunct law firm Dewey & LeBoeuf LLP: just how much money will I be asked to cough up as the firm slogs through bankruptcy?
They may have a better idea come Tuesday afternoon, when a conference call is scheduled to brief Dewey refugees on “the status of the bankruptcy proceeding, progress on the development of a global partner contribution plan, and other issues of interest,” according to an email sent out Friday morning by the firm and reviewed by Law Blog.
As joint owners of the business, law firm partners are paid out of profits. When firms fail, partners are typically subject to compensation clawbacks as creditors and bankruptcy trustees try to recoup money doled out as the firm tipped toward a bankruptcy filing.
In Dewey’s case, the issue is likely to be more complicated because the firm had a vast pay spread–some partners made more than $ 6 million a year, while others got less than $ 500,000–and as many as 100 partners had special pay deals that guaranteed them a certain amount of money each year.
Dewey’s goal is to come up with a partner settlement as early as possible, something the firm’s bankruptcy lawyer, Albert Togut, has made clear since the first hearing after the firm filed for Chapter 11 on May 28. The firm owes more than $ 315 million to more than 5,000 creditors that include banks, bondholders, pension regulators and trade creditors from car services to staffing agencies.
A consultant is reviewing the firm’s books and mapping out the broad outlines of a settlement with partner contributions. But thus far no specific numbers have been made public or run by the partners.
“We’re still assembling data,” Mr. Togut said in an interview earlier this week. “We’ve had preliminary discussions with lenders and the unsecured creditors committee. Conceptually everybody is on board with what we’re trying to do.”
A Dewey spokesman declined to comment Friday when asked about the Tuesday conference call and what it might entail.
On Law Blog’s mind: will partners be asked to pay a flat sum, or will each get a number tailored to their particular circumstances? What about those who had contracts, and may–like ex-partner Henry Bunsow did this week–file their own lawsuits seeking money they were promised but not paid as the firm sank?
“I don’t know any more than you do,” said lawyer Tracy Klestadt, who represents about 20 former Dewey partners and plans to be in on the call.
“We have many people who want more information, not less,” said Mark Zauderer, another attorney who represents a group of 60 ex-partners. “We’ll be happy to hear what they have to say.”