By Casey Sullivan
Feb 26 (Reuters) - A former partner at the defunct law firm
Dewey & LeBoeuf has accused Citibank of encouraging him to sign
up for a loan to fund his stake in Dewey while hiding the law
firm's precarious financial state.
The former partner, Steven Otillar, filed his claim in
federal court in New York on Tuesday in response to a lawsuit in
May in which Citibank accused him and his wife of defaulting on
the $209,000 loan.
In the 29-page counterclaim, Otillar's lawyer, Helen Davis
Chaitman, said internal Citibank documents revealed the bank
knew Dewey had misreported its 2010 financial information to the
legal magazine American Lawyer.
A Citibank spokeswoman did not immediately respond to a
request for comment on Tuesday. Neither did a lawyer for
According to the lawsuit, Citibank's internal records
indicated that Dewey's revenue in 2010 was $759 million, some
$150 million less than the $910 million Dewey reported to the
Citibank's records also revealed that Dewey's revenue per
partner was $707,000, when the firm reported a figure of
$870,000 to American Lawyer, the lawsuit said.
Had Citibank disclosed the facts it knew about Dewey's
financial condition, Otillar would not have executed the loan
when he joined Dewey from Baker & Mackenzie, it said.
The lawsuit also argued that Citibank had a fiduciary duty
to disclose the information it had about Dewey's financial
condition when it gave him the loan in September 2011.
In court papers last September, Citibank said it owed no
such duty to Otillar and that he "offers only his speculation
that because Citibank was Dewey's longtime lender, it must have
had information that was unknown and unavailable to Otillar."
Chaitman said Otillar does not owe Citibank payment on the
$209,000 loan and demanded punitive damages to be determined at
a potential jury trial.
The case is before Judge Louis Stanton in federal court in
Dewey once employed more than 1,000 lawyers in 26 offices
worldwide. It filed for bankruptcy in May 2012 in a collapse
that has largely been attributed to compensation guarantees the
firm gave to some of its partners.
Follow us on Twitter @ReutersLegal | Like us on Facebook