The international law firm Dewey & LeBoeuf LLP announced on Monday that in an effort to preserve assets and wind down its business in the most orderly and efficient way possible, it has filed for protection under Chapter 11 of the U.S. Bankruptcy Code, tells The Sacramento Bee.
Dewey & LeBoeuf LLP, once one of the largest law firms in the U.S., has been hit by the loss of the vast majority of its roughly 300 partners to other firms amid concerns about compensation and a heavy debt load.
The firm had warned employees earlier this month of the possibility the firm may shut down, and a person familiar with the matter had told Reuters that the firm was considering a bankruptcy filing.
“We are proud of the dedication and professionalism that has characterized Dewey & LeBoeuf over many years, and we intend to bring the same focus to the unfortunate task of closing out our affairs,” said Stephen J. Horvath, Executive Partner.
“During the first quarter of 2012, the firm was confronted with liquidity constraints that led to the precipitous resignation of over 160 of the firm’s 300 partners by May 11,” the firm said.
Dewey & LeBoeuf still continues to use the assistance of former partners and associates to help collect accounts receivable owed to the firm. It is in the interest of all parties to cooperate in the fullest possible recovery of such assets.
It is expected that the firm’s collapse will be the subject of years of court proceedings, and a number of former partners have already retained lawyers to represent them.
The result of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae, Dewey & LeBoeuf had about 1,450 attorneys at its peak.
Dewey & LeBoeuf has consolidated its operations and intends to sharply reduce the size of the office space it occupies at its headquarters in New York.
“Dewey’s failure is rocking the industry in the sense that most firms are saying to themselves, if Dewey could go down, could we?” Kent Zimmermann, a legal consultant at the Zeughauser Group, said.
Dewey had two dozen offices worldwide, including in Washington, Los Angeles and London, reports The Huff Post. Some of the firm’s biggest clients included General Motors Corp, eBay, Novartis, Ambac and Berskshire Hathaway Reinsurance Division.
Dewey is one of a handful of major law firms to declare bankruptcy since the recession that began in 2007. They include Coudert Brothers, Heller Ehrman and Howrey.
According to the filing, Dewey’s assets consisted of about $13 million in cash, accounts receivable of about $255 million, various pieces of artwork, and about $11 million invested in an insurance consortium, among other potential claims.
The U.S. Pension Benefit Guaranty Corporation filed suit this month to take control of three of the firm’s pension plans, which the agency said were underfunded by $80 million.
Dewey & LeBoeuf London and Paris offices are operated through a separately incorporated UK entity, which was placed into administration on Monday. Administration is a UK legal process under court supervision, similar to Chapter 11.