NEW YORK, April 27 (Reuters) - New York prosecutors are
looking into allegations of wrongdoing by a key leader of the
troubled law firm Dewey & LeBoeuf, according to an email sent by
firm management to partners on Friday.
The memo, a copy of which was provided to Reuters, stated
that the firm "learned earlier today" that the Manhattan
District Attorney's Office has launched a probe into the actions
of Steven Davis, formerly the firm chairman and now part of a
five-member management team.
A source familiar with the probe said a preliminary
investigation was prompted after a group of Dewey partners asked
District Attorney Cyrus Vance to examine "financial
irregularities" at the firm. The scope of the investigation
Another source familiar with the matter said prosecutors are
investigating whether Dewey leadership made misleading
statements about payments due to partners.
Davis did not respond to multiple requests for comment.
Martin Bienenstock, another member of the management team,
declined to comment. A spokesman for the firm, Angelo Kakolyris,
also did not respond to requests for comment.
Erin Duggan, a spokeswoman for Vance, declined comment.
Dewey has lost some 70 of its 300 partners since the
beginning of the year. The defections, coupled with debt, have
left the firm struggling to stay afloat.
News of the probe comes just days before Dewey faces a
deadline to renegotiate the terms of a $100 million line of
The firm owes roughly $75 million to a bank group led by
JPMorgan Chase that also includes Citi Private Bank, Bank of
America Corp and HSBC Holdings PLC.
Jonathan Richman, Dewey's hiring partner, said Friday that
the firm was canceling its summer associate program, an
indication that the firm was curtailing hiring plans. He
declined to comment on how many law students would be affected
by the decision.
The firm has retained a bankruptcy attorney to consider
restructuring options. One possibility is a prepackaged
bankruptcy that would involve merging with another firm.
Greenberg Traurig has said it had "preliminary discussions"
related to Dewey but has not elaborated. On Friday, Greenberg
said the firm had not made any commitments or agreements and was
not involved in Dewey's "financial situation or relationships."
Last year, Dewey hired a number of high-profile, highly
compensated attorneys but has been unable to pay many of its
long-tenured partners full compensation in recent months,
according to two partners who have left.
According to the firm's memo to partners, Dewey has been in
contact with the District Attorney's office and "intends to
cooperate with that Office's investigation." The memo also said
that two Dewey lawyers, Harvey Kurzweil and Seth Farber, would
"conduct an internal investigation into these allegations."
(Reporting by Nate Raymond; additional reporting by Joseph Ax,
Karen Freifeld and Nick Brown)
Follow us on Twitter @ReutersLegal | Like us on Facebook