When the law firm of Dewey & LeBoeuf LLP filed for bankruptcy earlier this week, the unfunded pensions for some of the firm’s retired partners were put in jeopardy. Well, now there is some good news on that front. Reportedly, the retired partners will be given a seat at the table as the law firm finalizes its financial affairs.
“We’re very pleased with this decision, and we think it’s a good step in the right direction,” said Eric Schnabel, a partner with Dorsey & Whitney LLP. Dorsey & Whitney LLP is the firm representing close to 50 retired partners from Dewey. Some of those partners have pension claims from LeBoeuf Lamb. “This will give voices to the appropriate parties in how this liquidation is conducted.”
The excellent news for the partners was announced on Thursday during the court filings from the Office of the U.S. Trustee, which is the branch of the Justice Department that is in charge of the bankruptcy courts. The U.S. trustee for Region 2, Tracy Hope Davis, put together a committee of unsecured creditors that have been assigned to the Dewey case. The committee will provide insight and advice for liquidation or restructuring as the case advances. There are three members of the committee and they include Hire Counsel, Fidelity National Capital, Inc. and Inta Boro Acres Inc. Davis also decided to put together a committee consisting of former partners, four of them retired, who have unfunded pensions. The unfunded pensions are being paid from current profits of the law firm.
“This has never happened before,” said Jerome Kowalski. Kowalski is a consultant working with former Dewey partners in the case.
“There has never been a law firm bankruptcy that resulted in any payment being made to the equity partners… They’ll have zero sway other than perhaps some moral imperatives, and moral imperatives don’t have much play in bankruptcy courts.”