NEW YORK, April 3 (Reuters) - A four-attorney mergers and acquisitions group has left troubled law firm Dewey & LeBoeuf for DLA Piper in New York.

The defections bring to at least 40 the number of partners known to have left 1,000-attorney Dewey since the beginning of the year.

John Altorelli, who leads the group of lawyers leaving Dewey, will join DLA Piper as co-chairman of the firm's U.S. finance practice and a member of the executive committee. The other attorneys departing are former Dewey partner Alexander Fraser, and Gerald Francese and Patrick Costello, both of whom were counsel at Dewey. The group, which will become part of DLA Piper's corporate and finance practice, handles mergers and acquisitions, private equity deals and corporate transactions.

All of the attorneys joined DLA Piper as partners on Tuesday.

A Dewey & LeBoeuf spokesman declined comment.

Roger Meltzer, global chairman of DLA Piper's corporate and finance practice, said that he had started talking to Altorelli about eight weeks ago.

"We made a combined pitch to each other," he said. Meltzer said that the additions enhanced the firm's corporate and finance practice.

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

Last week, Dewey announced a reorganization of its management structure, replacing Steve Davis as the sole chairman of the firm with a five-partner office of the chair, which includes Davis.

In mid-March, the law firm lost 12 partners from its insurance group to Willkie, Farr & Gallagher. The co-leader of the group joined DLA Piper in February. A few weeks later, six Dewey partners went to Sutherland Asbill & Brennan. A Dewey spokesman said that the impact of the departures would be minimal.

COMPOUNDING EFFECT

The loss of 40 partners represents a 13% decrease in the number of partners, which totaled 304 at the end of 2011, according to The National Law Journal.

The firm, which in 2011 brought aboard a number of high-profile attorneys, has been unable to pay many of its longer-term partners full compensation in recent months, according to two partners who have left. Dewey is saddled with large debt, including about $125 million in bond debt, a rare liability for law firms.

Three law firm consultants contacted for this story declined to discuss whether Dewey would survive the departures since the beginning of the year or would be forced to declare bankruptcy.

Peter Zeughauser, a law firm consultant with Zeughauser Group, said that the departures are having a compounding effect, particularly in light of the firm's problems in fulfilling its partner compensation obligations.

"With each group that leaves, they have a tougher hill to climb in terms of generating the revenue necessary to pay partners whose compensation they've deferred," he said.

Altorelli and Fraser joined Dewey Ballantine, Dewey & LeBoeuf's predecessor law firm, in 2007 from Reed Smith. Dewey Ballantine merged with LeBoeuf, Lamb, Greene & MacRae later that year.

Before working at Dewey Ballantine, Altorelli was a partner at Paul, Hastings, Janofsky & Walker. He serves as debtor's counsel for Capmark Financial Group, the commercial real estate lender that filed for bankruptcy in 2009 with $21 billion in debt.

Dewey's gross revenue was $910 million in 2010, and profits per partner were $1.8 million, according to The American Lawyer.

At 4,200-lawyer DLA Piper, gross revenue in 2010 was $1.96 billion, and profits per partner were $1.1 million, AmLaw reported.

(Updates with comment from law firm consultant; Corrects amount of bond debt from $150 million to $125 million)

(Reporting by Leigh Jones)

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