NEW YORK, April 29 (Reuters) - Embattled law firm Dewey & LeBoeuf said on Sunday it had removed its former chairman from
various leadership positions amid a probe by the Manhattan
district attorney and said that talks with rival firm Greenberg Traurig about a potential transaction ended with no deal.
According to an internal firm memo obtained by Reuters,
Dewey's executive committee voted to oust Steven Davis from its
ranks and remove him from a five-member management team put in
place during a leadership shakeup last month. The firm's
management also disclosed that talks with Greenberg Traurig had
"We are in discussions with other firms about a possible
transaction and will consider those and other options for the
firm moving forward," the memo said.
Saddled with high debt, Dewey has been considering filing
for bankruptcy as a vehicle to merge with or be acquired by one
or more firms.
A person close to the firm told Reuters before news of
Davis's ouster, that Dewey was close to securing a 90- to
120-day extension of roughly $75 million in loan debt due on Monday, providing a temporary reprieve on a default that could
trigger a bankruptcy.
In the internal memo, Dewey's management said the decision
to remove Davis from his leadership position was unrelated to
the end of talks with Greenberg Traurig. It also said the move
should not be read as a judgment on the merits of the district
"The executive committee felt it was in the best interests
of the firm to take this action," the memo said.
Davis had previously been the firm's chairman, but became
part of a five-member "office of the chairman" in March, after
Dewey overhauled its leadership structure. Davis has now
effectively been removed from all leadership positions.
In an e-mail to partners Sunday obtained by Reuters, Davis
said he was "saddened" by the committee's decision, and said he
had done his best to "navigate the firm through challenging and
"My decisions as chairman were made in good faith and in the
firm's best interests," Davis said. "I trust as this process
continues, a dispassionate and disinterested review of the facts
will confirm that I have not engaged in any misconduct."
Two days ago the firm disclosed the office of Manhattan
District Attorney Cyrus Vance had opened an investigation into
allegations of wrongdoing by Davis. A source familiar with the
probe said a preliminary investigation was prompted by a request
from a group of Dewey partners that Vance examine "financial
irregularities" at the firm.
About 77 of Dewey's 300 partners have left the firm this
year amid Dewey's financial turmoil. The firm hired several
high-profile attorneys last year and has struggled to afford the
full compensation of other partners.
Greenberg Traurig in a statement on Sunday confirmed that
talks with Dewey had ended.
"Dewey is a firm we hold in high regard with many fine
lawyers, though we never considered a merger," Greenberg Traurig
CEO Richard Rosenbaum said in the statement.
NEARING AN EXTENSION
Dewey is close to securing a long-term extension on a Monday
deadline on $75 million owed under a credit line to lenders led
by JPMorgan Chase & Co, according to a person familiar with the
The extension, likely in the 90- to 120-day range, would
stave off a default that could trigger a bankruptcy, said the
person, who declined to be named because talks are private.
The banks have offered a term sheet for the extension, but
the sides are still trying to hash out details, including the
length of the extension and the nature of covenant terms
proposed by the banks, the person said.
The lending core also includes Bank of America Corp,
Citigroup and HSBC Holdings.
Lenders had initially offered a one-week extension, but that
idea was shelved when parties decided it would not provide
enough time for the firm to work out its underlying debt issues.
A spokesman for Dewey declined to comment on discussions
with the banks.
A spokesman for JPMorgan declined to comment. A lawyer for
the lenders did not immediately respond to a request for
(Reporting by Nate Raymond and Nick Brown)
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