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Dewey Deferring Payments to Partners
It has been rumored that Dewey & LeBoeuf has been struggling financially, which was proven true when a memo was released about lawyer and staff layoffs at the end of last week. Now, we are learning that the layoffs are part of a larger plan to fix the firm’s financial problems. In a memo sent out by firm chairman Steven H. Davis last week, the firm is planning to “reduc[e] the number of lawyers and administrative staff globally by approximately 5% and 6% respectively.”
Another rumor out there is that staff members and lawyers are not the only ones who are going to suffer in Dewey’s larger financial plan. Supposedly the firm will be asking some partners to make sacrifices. According to four sources close to the firm, some partners that rank high within the firm have been asked to have some of their compensation from 2011 deferred to a later date. Those partners would then receive their deferred compensation after the firm takes a deep look at its financial situation.
Two of those sources claim that the compensation being withheld from the high ranking partners is that of seven figures. Three other sources close to the firm allege that compensation has been deferred in the past and that the firm now owes some partners close to $100 million total. The rumored amount that has been deferred ranges from $70 million to $120 million.
Two other unnamed sources claim that Dewey will be making payments to its newer partners, especially ones who have been bringing in their fair share of the dough. The reason for paying newbies instead of those who have been with the firm for 10 years or so is the fact that the ones who have been around longer will stay loyal and remain with the firm.
“The deferred payments that you’re talking about are being handled by the firm in a long-range fashion that is going to result in almost no impact to profitability,” said Henry Bunsow, an intellectual property lawyer with Dewey. “I have confidence that [partners] will be treated fairly within the parameters of what the firm is dealing with.”
According to reports, the firm is working on renegotiating loan agreements it has with Wells Fargo, Citibank and JP Morgan. The negotiations have been described as standard by Richard Shutran, the co-chairman of the corporate department at Dewey. The following is a statement from the memo released by Davis last week:
“Some recent partner departures have been consistent with the firm’s strategic planning for 2012, and we expect some additional partners to leave.”