NEW YORK, July 12 (Reuters) - Former Dewey & LeBoeuf
partners on Thursday began reacting, unhappily in some cases, to
emails telling them how much money the fallen firm's bankruptcy
estate wants them to contribute to a settlement of as much as
$103.6 million to benefit creditors.
"From what I've seen, the numbers are not generating
enthusiasm," said Mark Zauderer, a lawyer for 57 former Dewey
The terms of the clawback plan were laid out during a
meeting in New York on Wednesday. They called for 709 former
partners to give back a portion of the $455 million the firm
distributed to partners since 2011.
Emails from Dewey's general counsel listing amounts ranging
from $25,000 to $3 million began arriving in former partners'
in-boxes starting Wednesday night.
At least five of the former partners said that the
compensation figures listed in the emails conflicted with what
they believed they were actually paid in those years. Two former
partners said the changes could materially affect their
decisions to pay up and settle.
"I have all the records, and I can prove what I got," said
one former partner, who claimed the change in numbers could cost
him $500,000 more than he thought he owed. "It's not so much the
money. It's the ridiculous nature that they can't get it right."
Another former partner said he was being asked to pay
$50,000 more than he thought he owed and expects to delay his
retirement by at least four years because of Dewey's collapse.
He said he would pay the additional money because he wants to
"My view is there's nothing less desirable than having this
drag out for years," he said. "I'm willing to pay a lot of money
to have this go away."
At Wednesday's meeting, Joff Mitchell, the chief
restructuring officer for Dewey, said the plan was fair and
ensured that those who earned the least paid the least. He
declined to comment further through a spokeswoman at Zolfo
Cooper, where he is a managing director.
But not everyone agreed with Mitchell's assessment.
Zauderer, for example, said the estate should go after about $18
million in payments made to certain partners as a special
distribution in 2012 before applying a formula to everyone.
Once one of the largest law firms in the United States,
Dewey & LeBoeuf collapsed in May amid a raft of partner
defections and a high debt load. A firm that began the year with
1,040 lawyers in 26 offices ended with hundreds of employees
Dewey owes creditors more than $315 million, and the firm's
bankruptcy advisors want to amass at least $50 million in the
clawback fund by July 24 in order to go forward with the
If that deadline isn't met, Mitchell warned partners at the
Wednesday meeting that the bankruptcy could be converted to
Chapter 7 instead of Chapter 11. Such a move would involve the
appointment of a trustee who would be empowered to aggressively
seek clawbacks from the former partners as part of a
What's more, former partners who don't settle by July 24
could pay a 25 percent penalty. Not settling at all could mean
years of litigation.
Personal financial pressures could also factor into whether
former partners agree to the deal. Several partners owe
significant sums to Citigroup Inc and Barclays plc for money
borrowed to finance capital they invested in Dewey, according to
two people familiar with the loans.
Eamon O'Kelly, a former Dewey partner, said he thought it
was too early to tell if partners will agree to Dewey's terms.
"I think everyone has to digest the information they got and
make a rational decision on how they are going to respond to
it," he said.
(Reporting By Nate Raymond and Casey Sullivan)
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