NEW YORK, March 17 (Reuters) - Twelve partners from Dewey & LeBoeuf's insurance transactional team are leaving for Willkie Farr & Gallagher, the latest set of departures for the troubled firm.

The loss guts Dewey's transactional and regulatory insurance group, one of the firm's key practice areas. Partners Alexander Dye, Michael Groll, Robert Rachofsky and John Schwolsky lead the team of attorneys jumping ship.

Willkie Farr announced its acquisition in a press release on Saturday. "We have worked closely with this team in a number of transactions over the years," Willkie's co-chairman Thomas Cerabino said in a statement. The partners joined Willkie on Saturday, firm spokeswoman Antoinette McGovern said in an email.

The departures are the latest setback for Dewey, which has suffered thinning attorney ranks and reports of financial woes.

Dewey has lost 19 other partners since the beginning of the year, including leveraged-finance attorney John Cobb, who earlier this week left for Weil, Gotshal & Manges. Cobb, who became a partner in Weil's capital markets practice in New York, was head of the leveraged-finance group at Dewey.

Earlier this month, Dewey chairman Steven Davis announced internally that his firm was cutting its attorney ranks by 5 percent, as first reported by law blog Above the Law.

The New York Times cited anonymous sources this week who said the firm is deferring tens of millions of dollars in payments to partners and reducing compensation to others. The deferrals and cuts are the result of a financial shortfall the firm encountered after promising lucrative pay guarantees to new recruits, the report said.

Angelo Kakolyris, a spokesman for Dewey, said most of the recent departures were part of the firm's initiative to improve its performance.

"The firm is undertaking a number of measures to increase profitability," he said. "The firm is managing itself prudently."

Kakolyris said the insurance group's departure would reduce the firm's revenue by roughly $22 million in 2012. But he said the move would have a "neutral financial impact" because of the expenses of maintaining the group.

Dewey's gross revenue increased slightly in 2011, to $935 million from $909.9 million in 2010, according to The American Lawyer. Profits per equity partner rose 1 percent.

In a statement, Alexander Dye, one of the departing lawyers, said, "We see terrific synergies with the firm's world-class private equity, M&A and asset management practices, as well as its long-established and substantial insurance practice."

Another reason the group may have chosen Willkie is because Dye has a twin brother, William Dye, who is a partner in Willkie's corporate and financial services department.

Created in 2007 through the merger of Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae, Dewey has about 1,000 attorneys in 25 locations. The insurance group originally came from LeBoeuf, Lamb.

Dewey's largest offices are in New York, London, and Washington.

(Reporting by Terry Baynes and Leigh Jones)

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