NEW YORK, July 26 (Reuters) - Bankrupt law firm Dewey &
LeBoeuf revised its settlement offer to former partners on
Thursday, dropping its potential recovery from $103.6 million to
The estate is seeking the money from the former partners in
exchange for releasing the lawyers from potential clawback
The offer shrinks the burden for some while increasing it
for others in the hopes of spurring greater participation by
former partners. It also attempts to address criticism by some
of those partners that the settlement placed too heavy a burden
on the firm's lower-paid members rather than top earners and
members of management.
Under the revised offer, the minimum amount was reduced from
$25,000 to $5,000, according to a document reviewed by Reuters.
The maximum contribution was increased from $3 million to $3.5
million, the document said.
At the same time, the new plan calls for onetime members of
Dewey's executive committee to pay a 20 percent premium on top
of what they otherwise might contribute, the document said.
The premium appears to be a concession to some former
partners who had complained that the initial settlement plan
protected the committee's members from lawsuits brought by its
Joff Mitchell, Dewey's chief restructuring officer, said
that though the total possible settlement is smaller, the net
amount the estate could recover could be greater, mostly because
the lower-paid partners are each off the hook for $25,000.
"I don't think they were ever going to really write that
check, whereas at $5,000, maybe they will," he said.
The estate wants to have commitments of at least $50 million
from former partners by Aug. 7, in order to present the
settlement for approval by a U.S. bankruptcy judge in Manhattan.
The proposed deal is part of the continuing efforts to wind
up the affairs of Dewey & LeBoeuf. Once one of the largest law
firms in the United States, the firm filed for Chapter 11
bankruptcy May 28 following partner defections and concerns
about hefty guaranteed compensation packages a third of its 300
partners had prior to its collapse.
If the former partners agree to the offer, they will help
make a significant dent in the approximately $315 million Dewey
has said it owes creditors. The firm's wind-down team had hoped
initially to get a settlement done by Tuesday, but last week
pushed the deadline to Aug. 7 to respond to "widely held partner
concerns," according to an email from Mitchell.
The choice between settling or being sued isn't ideal,
Mitchell acknowledged, but it is the reality. "It's not a happy
outcome," he said. "What partners are being asked to do is make
a choice between two outcomes, neither of which they
particularly like, and hopefully the settlement is better than
Partners were briefed on the details of the settlement
during an afternoon meeting in a conference room of the New York
Hilton & Towers hotel, the block adjacent to Dewey's former
headquarters. About 25 people were seen inside the room by the
time the meeting began.
Former partners had a variety of reactions to the deal, some
saying it showed they estate was listening to their concerns.
One former executive committee member said the additional
surcharge he was being asked to contribute was not significant
enough to deter him from settling. "It's not that much, so it's
not that big of a deal," he said.
The eight-page document reviewed by Reuters said the premium
levied on executive committee members does not reflect a
conclusion they breached a duty or bore responsibility for
Dewey's failure. But the document said the settlement does
acknowledge that the committees members face a "greater risk" of
being sued by other partners.
Partners who earned the most before Dewey's failure are now
being asked to pay more than in the initial plan. The 20
partners who took home more than $3 million since 2012 are each
being asked to contribute an average of $1.33 million, or $26.7
million in total.
On the flip side, the 345 partners who took home less than
$400,000 will pay $12,600 on average, or $4.3 million in total.
Another 192 partners who received $400,000 to $800,000 will pay
$71,200 on average, or $13.7 million.
(Reporting By Nate Raymond and Casey Sullivan)
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