Dewey’s clawback immunity plan has been troubled from the start. The first time it was proposed to former partners, it was offered as an assurance that creditors wouldn’t sue any of them while Dewey & LeBoeuf dissolved into bankruptcy. Partners had to pay a percentage of their 2010-2011 earnings, and there needed to be enough partners to sign on to make it work. Not enough partners signed on. Their biggest gripes regarded the unfair distribution of money ex-partners were expected to pay, and the unfair extra that some partners had to pay who happened to receive a late bonus in 2010, which would make them have to pay more than others. The first issue was settled, lowering the payments for lower ranked partners and upping it for upper ranked — the distribution ranges from $5,000 to $3.3 million — and the deadline was backed from the end of July to August 7. It’s been bumped again to 5 p.m. Monday Aug. 13, according to an email reviewed by WSJ, and it has been amended to satisfy problems of liability release.
The questions partners might ask were if they would be barred from legally seeking access to their retirement funds if they signed on. “Because the 401k plan has been frozen and we can’t get our money,” said one partner, as reported in the Wall Street Journal.
As lawyers tend to do, they are carefully studying the language of the new plan, suspicious as always that they might be cheated out of their due if they sign up, but it seems that more of them are signing on. While such plans have in the past taken years to resolve, this one could come through.
Though partners have been balked by a recent Dewey statement of financial affairs that detailed the excessive “imputed out of town living” expenses by members of the executive team, such as one partner who earned $6.6 million being paid $409,541 for such expenses, the partners are also interested in putting this messy affair behind them.
“A lot of people are bothered by those numbers,” explained an ex-partner, “But many people want to put this behind them. They’re really galled … but they are willing to swallow their anger rather than continue this fight.”
If enough partners sign on and pay in a sum of $90.4 million, the plan can go into effect. But even if it is amended many more times — which seems more and more likely — it probably will never satisfy all partners.