As anyone following the story knows by now, Dewey & LeBoeuf LLP filed for bankruptcy early today. The New York Times story notes that the merger of the former Dewey Ballantine with LeBoeuf, Lamb, Greene & MacRae LLP happened just before the financial collapse of 2008. Before the merger, LeBoeuf, under Steve Davis's leadership, had been aggressive in recruiting partners laterally from other firms, and Dewey had taken on debt. According to the Times:
Even as [post-merger] Dewey’s performance flagged, the firm doled out lavish multiyear, multimillion-dollar guarantees to its top partners and star recruits. The guarantees — there were about 100, with several over $5 million a year — created compensation obligations that the firm could not meet.That what should have been evidently risky behavior continued after financial market turmoil, along with other, more gradual changes in the market for legal services, such as the tendency of corporations to take more legal work in-house to save costs, reduced the firm's revenue, points to a parallel between Dewey and J.P Morgan Chase. In both instances, there seems to have been a tendency to "double down" rather than to accept what may have been a manageable loss. I'll be writing more about the J.P. Morgan debacle soon.
This is not the promised second installment of my reminiscences about the LeBoeuf that was. That we be along soon; I hope by this coming weekend. Please stay tuned.