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Largest Law Firm Bankruptcy in History
Dewey & LeBoeuf LLP was a global law firm, headquartered in New York City is bankrupt. The giant firm is winding down its business. Dewey & LeBoeuf LLP was known for its corporate, insurance, litigation, tax and its restructuring practices. At the time of the bankruptcy filing, the company employed over 1,000 lawyers in 26 offices around the world. Was the giant too big to fail? Or is the firm outdated, leaving room for more agile firms?
According to Bloomberg News, Accused in a 106-count indictment was Davis; Stephen DiCarmine, the former executive director; and Joel Sanders, the ex-chief financial officer of the company. The executives were charged with what was reported to be a “blatant” $200 million fraud and the largest law firm bankruptcy in history. It has also been reported that ex-client relations manager Zachary Warren was also arrested.
A lawyer for Mr. DiCarmine, Austin Campriello vowed to fight the charges stating that, “It is very easy for a prosecutor to bring an indictment,” and also adding that “…cases like this crumble when an innocent person gets to mount a defense in court. And that is what we will do.”
The Wall Street Journal has reported that a lawyer for Mr. Warren called the charges against his client “a travesty.” Manhattan District Attorney Cyrus R. Vance Jr. commented while announcing the charges that “The defendants are accused of concocting and overseeing a massive effort to cook the books” that “contributed to the collapse of a prestigious international law firm.”
Ernst & Young LLP, which is not accused of any wrongdoing, audited the firm’s financial statements and prepared its tax returns during the years the alleged scheme took place, according to a November filing in bankruptcy court. According to the Wall Street Journal, Ernst & Young found that Dewey & LeBoeuf LLP had accurately presented its financial positions between 2007 and 2010.
Emails quoted in the SEC complaint show Dewey’s chiefs ridiculing their bookkeepers. After hearing that an Ernst & Young employee who had audited their finances was leaving the company, Mr. Sanders wrote to another Dewey official: “Can you find us another clueless auditor for next year?” The official allegedly responded: “That’s the plan. And it worked perfect this year.”
Richard J. Holwell, a former federal judge in Manhattan commented that “This is a very sad day for the legal profession,” according to the New York Times, he said that, “Dewey is a fabled firm with a lot of great lawyers and a demise of this magnitude is unprecedented.”
Image credit: www.bloomberg.comLargest Law Firm Bankruptcy in History by Jaan