By Casey Sullivan
NEW YORK (Reuters) - The law firm Paul Hastings and two of
its partners are expected to pay nearly $1.6 million to the
estate of Dewey & LeBoeuf in exchange for a release from
potential litigation, according to a filing in New York federal
Under the settlement, the trustee for Dewey will not seek to
recover profits on legal business that former partners brought
with them to Paul Hastings, according to the filing that Dewey
counsel Scott Ratner filed in court on Monday.
The new deal follows the approval of Dewey's liquidation
plan on Feb. 27 by U.S. Bankruptcy Judge Martin Glenn in which
more than 450 partners agreed to pay $71.5 million in exchange
for a release from potential lawsuits seeking to claw back
compensation paid out before Dewey collapsed in May 2012.
The $71.5 million settlement did not resolve the so-called
unfinished business claims in which Dewey's estate could move to
recover profits on legal business former partners took with them
to their new law firms.
Monday's deal with Paul Hastings is the second settlement in
the Dewey liquidation that resolves an unfinished business
claim, according to Joff Mitchell, Dewey's chief restructuring
In October 2012, Dewey reached a settlement with Jones Day
and bankruptcy lawyer Bruce Bennett, who agreed to turn over 15
percent of the profits he made on work done for the Los Angeles
Dodgers to the Dewey estate, according to court records.
In the case of Paul Hastings, the law firm agreed to pay
$575,000 to avoid potential clawback litigation involving four
former Dewey partners who are now with Paul Hastings: Latin
America practice leader Michael Fitzgerald, corporate partners
Arturo Carrillo and Taisa Markus, and antitrust partner Mary
"The Debtor believes this settlement may serve as a catalyst
for the future resolution of unfinished business claims," said
Ratner in the Monday filing.
Under the settlement, Moltenbrey and Markus are not required
to pay because they had already contributed to the $71.5 million
settlement. Fitzgerald and Carrillo, who did not contribute to
that settlement, are required to pay $1 million collectively.
Fitzgerald had openly opposed the settlement earlier this
year. He said that Dewey owed him as much as $38 million based
on compensation and pension benefits Dewey had promised him upon
joining the firm.
The settlement eliminates those claims, according to the
Contacted Tuesday, a Paul Hastings spokesman said: "We are
pleased to have resolved this matter with the Dewey estate."
Al Togut, lead debtor's counsel, did not respond to a
request for comment. None of the partners involved in the
settlement responded to requests for comment.
Follow us on Twitter @ReutersLegal | Like us on Facebook