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A sign marking the Dewey headquarters on 6th avenue in New York. REUTERS. Shannon Stapleton

In scramble to avoid Chapter 11, Dewey paid more than $7 mln in fees

7/27/2012 COMMENTS (0)

NEW YORK, July 27 (Reuters) - In the two months before Dewey & LeBoeuf filed for Chapter 11, the firm paid out more than $7 million to bankruptcy lawyers and management consulting firms, according to documents filed in Manhattan ba n kruptcy court on Thursday.

The highest bill Dewey paid, for $1.6 million, was submitted by law firm Kramer Levin Naftalis & Frankel for work performed between February and May. Dewey also paid $1.4 million to its lead bankruptcy counsel, Togut, Segal & Segal, for work performed in April and May and $600,000 in May to Zolfo Cooper, the restructuring firm that has taken the lead in drafting Dewey's bankruptcy plans. FTI Consulting, Inc, a consulting firm specializing in restructuring and mergers and acquisitions, received more than $1 million in May.

The sums are relatively high compared to those paid by Howrey, the last big law firm to declare bankruptcy. In the five months before it declared insolvency in July 2011, Howrey spent $500,000 on bankruptcy lawyers, according to court documents. The firm was also smaller than Dewey: before it filed for Chapter 11, Howrey employed more than 500 lawyers and reported revenues of approximately $420 million, according to bankruptcy documents and published reports. In comparison, Dewey at its height had more than 1,000 lawyers and revenues of about $782 million.

Dewey's sizable legal and consulting bills could be attributed in part to the firm's last-minute scramble to save itself through either a prepackaged bankruptcy or a merger with another firm, said Ed Reeser, a consultant to law firms.

The new filings also provide fresh details about other law firms with whom Dewey may have discussed a merger or other transactions prior to its collapse. Swapping copies of financial statements under confidentiality agreements is typical in considering a merger.

Before filing for Chapter 11 in May, Dewey disclosed its financial statements to Baker & McKenzie, Greenberg Traurig, Patton Boggs, Reed Smith and SNR Denton, according to the new bankruptcy documents. While there had been previous reports that Dewey held merger discussions with Greenberg Traurig, SNR Denton and Patton Boggs, it had not been disclosed that the firm met with Baker & McKenzie and Reed Smith.

Patton Boggs managing partner Edward Newberry declined to comment on any merger talks it may have had with Dewey. Michael Pollack, Reed Smith's global head of strategy, said the firm received Dewey's financials but denied the firms had been in merger discussions. Representatives for the other firms either did not respond to requests for comment or declined comment.

For 2010, Dewey's revenues are listed in the 355-page document as $628.4 million, and in 2011, $655 million. Those figures did not include revenues from some foreign offices, making it difficult to compare them to other published reports of Dewey's gross revenues for those years.

A spokeswoman for Zolfo Cooper, the lead restructuring firm on Dewey's bankruptcy, declined to comment. Janis Meyer, Dewey's general counsel, and Stephen Horvath, Dewey's executive partner, and spokesmen for Kramer Levin and Togut Segal did not respond to requests for comment.

(Reporting By Casey Sullivan and Nate Raymond)

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