The bankruptcy estate of defunct law firm Dewey & LeBoeuf LLP could pay former employees a total of $4.5 million in order to settle claims that the law firm did not issue proper notice of mass layoffs that came before the firm collapsed in May of 2012, according to The Wall Street Journal.
The settlement was filed on Wednesday in the U.S. Bankruptcy Court in Manhattan. If the settlement is approved, it will end a class-action lawsuit filed on behalf of 425 former employees who worked in the New York and Washington, D.C. offices of the firm. The lawsuit was filed under the Worker Adjustment and Retraining Notification Act (WARN). The lawsuit said that the firm owed the employees 60 days’ wages and benefits.
The $4.5 million will be paid to the former employees and their attorneys. The attorneys would receive one-third of the settlement. It needs to be approved by U.S Bankrupcty Judge Martin Glenn. He is scheduled to hear the case on June 25.
Jack Raisner is an attorney for the former employees. Raisner said, “we were looking for the most positive outcome possible for the employees, and we think we achieved that.”
In defending their stance in the lawsuit, Dewey pointed to two emails sent by the firm’s management to employees. One of them was sent on May 10, 2012 that told staff members and attorneys that they would lose their jobs in five days due to ‘extraordinary difficulties’ that were plaguing the firm.
The firm also argued that the collapse of merger discussions with another law firm and their efforts to find capital to stay afloat exempted the firm from the WARN Act.
Judge Glenn ruled back in April that the emails were not sufficient under the law and that Dewey failed to explain to employees why it believed it should be exempt from the WARN Act notices.
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