Dewey & LeBoeuf, a law firm that employed thousands, filed for bankruptcy on Monday night. We probably would too if we had a debt of $245 million. Dealbook's Peter Lattman calls the filing, "the largest law firm collapse in United States history" and Bloomberg's Linda Sandler, Sophia Peterson, and Joe Schneider point out that Dewey is about $245 million in debt which overshadows its $193 million in assets. Lattman adds that the firm has in total some $315 million in liabilities. Oof.
Before being known as the largest law firm collapse in U.S. history, you may have remembered Dewey as the firm that helped restructure the Dodgers or the firm that had around 1,300 attorneys working in 26 offices around the world and employed more than 2,500 people at its peak thanks to a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & Mcrae. And law analysts believe that it's those gargantuan numbers which eventually led to the firm's downfall. Lattman writes:
Many observers say the root causes of Dewey’s fall are not unique. Several of the largest firms have adopted business strategies that Dewey embraced: unfettered growth, often through mergers; the aggressive poaching of lawyers from rivals by offering outsize pay packages; and a widening spread between the salaries of the firm’s top partners and its most junior ones.
These trends, they say, have destroyed the fabric of a law firm partnership, where a shared sense of purpose once created willingness to weather difficult times. Many large firms have discarded the traditional notions of partnership — loyalty, collegiality, a sense of equality — and instead transformed themselves into bottom-line, profit-maximizing businesses.
And there's this sobering takeaway: At the height of Dewey's business it employed some 2,500 people--apparently, only 90 will be asked to stay on during its wind down.