Dewey & Leboeuf Declares Bankruptcy, Larger Ever U.S. Law Firm Collapse

Here's a story I gather won't generate a whole lot of sympathy. Yahoo News has the details:

The crippled law firm Dewey & Leboeuf LLP filed for chapter 11 bankruptcy protection Monday night and will seek approval to liquidate its business after failing to find a merger partner, marking the biggest collapse of a law firm in U.S. history.
Once one of the largest law firms in the U.S., Dewey has been hit by the loss of the vast majority of its roughly 300 partners to other firms amid concerns about compensation and a heavy debt load.

Dewey had warned employees earlier this month of the possibility the firm may shut down, and a person familiar with the matter had told Reuters that the firm was considering a bankruptcy filing.

"Dewey's failure is rocking the industry in the sense that most firms are saying to themselves, if Dewey could go down, could we?" Kent Zimmermann, a legal consultant at the Zeughauser Group, said in an email Monday night.

Dewey said in a filing it had decided to wind down its business following unsuccessful negotiations with other law firms to strike a deal. It said it would ask about 90 employees to remain on staff to assist in the liquidation, which it expects to be completed in the next few months.

Gee, that's too bad. So what was the cause of the firm's sudden downfall?

The firm's collapse is expected to be the subject of years of court proceedings, and a number of former partners have already retained lawyers to represent them.

Monday's filing follows months of turbulence, as wave after wave of partner defections shattered the high-profile firm from within. In April, the Manhattan District Attorney's office launched a criminal probe of former firm chairman Steven Davis. He has denied any wrongdoing.

The result of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae, Dewey & LeBoeuf had about 1,450 attorneys at its peak, according to The National Law Journal.

But the firm was eventually undone by a combination of the economic downturn, excessive compensation and governance problems, according to former partners and others in the industry. In particular, Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession.

Dewey has retained Joff Mitchell of Zolfo Cooper LLC as Chief Restructuring Officer and Albert Togut of Togut Segal & Segal LLP as bankruptcy counsel.

"The full extent of the partner compensation arrangements is subject of continuing investigation," Mitchell said in the filing.

So, rapid expansion right into the teeth of the Great Recession and top management squeezing the the juice out of the firm with excessive compensation packages. Where have we seen this before? Oh that's right, all across every sector of the economy these days.


Bonus: They're probably not in love anymore

Ha-Ha! Law Firm Sues Wells Fargo After Falling For Nigerian Wire Fraud Scam

This story really made my day. Here is the Minneapolis-St.Paul Business Journal with the details:

An Edina law firm that lost nearly $400,000 in a Nigerian wire-fraud scam is claiming that Wells Fargo, which handled the fund transfers, should cover its losses.

The Star Tribune reports on the lawsuit by Milavetz, Gallop & Milavetz, which three years ago received an e-mail from someone purporting to be a Korean woman who needed the firm's help to collect a settlement. You can probably see where this is going: When the dust settled, Milavetz, Gallop & Milavetz was a lot poorer. It has parallels — down to the account numbers involved — to a investigation into a Nigerian fraud ring that targeted law firms; two people have been indicted in that investigation.

In his suit, Robert Milavetz argues that Wells Fargo & Co. should have recognized the red flags involved — a counterfeit check used in the scam had the bank's address spelled wrong, he claims. The suit also says the bank told the firm the check had cleared, only to later say it hadn't, really — but the firm had already wired the money away by that point. Wells Fargo said it will defend itself in the case.

Gee, you hardly know who to root for in this case. I guess the best outcome would be a long, drawn out court case that costs both concerns a shit pot load of money.


Bonus: What the heck, how about a song from an album that was actually recorded in Lagos

"Orange Shirt Day" Gets 14 Law Firm Employees Fired

The average American workplace is in many instances rapidly becoming a living hell, even for those still fortunate enough to have their jobs. Don't believe it? Well, then I invite you to check out this story from the Ft. Lauderdale Sun Sentinel:

Were they wearing orange shirts on Friday to protest management? Or to get psyched for happy hour?

Either way, orange-shirted workers no longer have jobs at the Deerfield Beach law firm of Elizabeth R. Wellborn P.A.

A spokeswoman said the law firm had "no comment at this time."

Four workers tell the story this way: For the past few months, some employees have worn orange shirts on pay-day Fridays so they'd look like a group when they went out for happy hour.

This Friday, 14 workers wearing orange shirts were called into a conference room, where an executive said he understood there was a protest involving orange, the employees were wearing orange, and they all were fired.

The executive said anyone wearing orange for an innocent reason should speak up. One employee immediately denied involvement with a protest and explained the happy-hour color.

The executives conferred outside the room, returned and upheld the decision: all fired, said Lou Erik Ambert, 31, of Coconut Creek, a litigation para-legal who said he was terminated.

"There is no office policy against wearing orange shirts. We had no warning. We got no severance, no package, no nothing," said Ambert. "I feel so violated."

Meloney McLeod, 39, of North Lauderdale, said her choice of shirt puts her in a tough spot: "I'm a single mom with four kids, and I'm out of a job just because I wore orange today."

Janice Doble, 50, of Sunrise,said she wore orange Friday because she was looking forward to happy hour with colleagues after a busy work week.

"Orange happens to be my favorite color. My patio is orange," said Doble. "My lipstick was orange today." She said she supervised 12 people who scanned, copied and mailed documents for the firm.

Now she's worried for relatives employed at the law firm. "I have four kids who work there," said Doble. "I don't want them to retaliate and fire my kids."

Yadel Fong, 21, of Miami, wonders where he'll find work after losing his job in the mail room. He was not aware of anyone in the group involved in a protest.

"To my mind, protesting is where you put your foot down, and you're not working. There was none of that today," said Fong, who said he was working and looking forward to happy hour.

Of course, no business would ever take such an arbitrary action if we were still close to full employment and there weren't thousands of unemployed people who will line up to take the place of those fired. The sad part is that these workers are easily replaceable, and you can bet that those who end up taking their jobs as well as those who were not fired this time around will be even more docile and compliant in the future. It would be nice if clients of this asshole law firm upon reading this story would pull their business, but I wouldn't bet on that happening.

Of course, Florida is a "Right to Work" state, which in reality means a state where you have a right to get fired for any flimsy ass reason...like wearing an orange shirt to work.


Bonus: "I get up at seven, yeah...and I go to work at nine...I got no time for livin'...Yes, I'm workin' all the time"

Ha-Ha! Foreclosure Firm Whose Halloween Party Mocked the Evicted Closes

Buck up, Occupiers. It may have been a tough weekend of police abuse, but you have definitely changed the tenor of the national conversation, as evidenced by this development. Normally, I would never cheer upon hearing that people are losing their jobs, but I'm making a BIG exception for these alleged human beings:

The 89 employees of a New York law firm specializing in foreclosures who dressed as homeless people during an office Halloween party last year have been thrown out on the street.

Steven J. Baum P.C., a firm that specialized in foreclosures, is closing its doors a month after photos showing employees celebrating Halloween by dressing like the homeless surfaced in a New York Times column by Joe Nocera.

Even better is the blurb below from an e-mail Baum himself sent to Nocrea:

The firm announced the shuttering via press release and was reported by the NYT:

“Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices,” said Mr. Baum in a press release issued on Monday. A firm spokesman said it would have no further comment beyond the release…

On Saturday, Joe Nocera, The Times columnist who originally wrote about the firm’s Halloween party, published another column about the controversy. In it, he quoted an e-mail that Mr. Baum had sent him last week.

“Mr. Nocera — You have destroyed everything and everyone related to Steven J. Baum PC,” said the letter. “It took 40 years to build this firm and three weeks to tear down.”

No, Mr. Baum, sorry to break it to you since you are obviously a whiny little John Galt-wannabe, but it wasn't Mr. Nocera who did you in, it was the FREE MARKET, as in people are FREE in the modern market NOT to do business with flaming fucking assholes like you. As recently as a couple of years ago you and your slimeball, bottom feeding colleagues probably could have gotten away with this little stunt with few taking notice or caring. But times are changing. People are fed up with economic predators destroying the livelihoods of working and middle class Americans and then literally laughing all the way to the bank. And how stupid were you to take PICTURES of this abomination, anyway? Clearly, it was about time that you clueless Social Darwinists got selected out of the marketplace.

I sincerely hope that you and your colleagues will soon experience what you were making fun of at that Halloween party. But hey, take heart. At least you already own appropriate outfits.