The cat’s out of the bag. While many former partners of Dewey had been living in suspense, and groups of former partners hiring lawyers and firms to defend clawback claims, on Wednesday the firm came up with the first concrete figure on the amount it wants from former partners: $104 million.
Experts say the proposed settlement can lead to years of courtroom battles, but former partners who left the firm in its last days now know the score. The proposed deal has been made to cover clawback claims of the estate against hundreds of former partners of the law firm, including money paid out since the beginning of 2011.
While it would be a big recovery and relief for creditors if former partners accept the deal, the possibility of rejection is also high. It is difficult to visualize all partners agreeing to the settlement. However, even if such a settlement is reached, it would cover only about one-third of the $315 million owed by the firm to creditors. It is possible that many partners would choose to face matters in court.
Mark Zauderer, who is representing 57 former partners of Dewey confirmed to the media that the proposal has been received though he did not comment on the terms of the settlement. However Zauderer said, “It would not be a safe bet to assume that our clients will agree to it … But they will certainly look at it.”
The terms of the proposal were discussed in a meeting at the Sheraton in Manhattan. Al Togut of Togut, Segal & Segal, Dewey’s primary bankruptcy lawyer, did not respond to requests for comments on the issue. However, even if former partners accept the settlement, the bankruptcy proceedings would continue as the Dewey estate tries to recover money from former clients and tries to pay off the huge debt created by its former management.
Before it went bust, the Wall Street law firm had 26 offices across the globe and 1,040 lawyers on its payroll.
The case is Dewey & LeBoeuf LLP, U.S. Bankruptcy Court, Southern District of New York, No. 12-12321.