Dewey on the brink as City crisis committee turns to BDO

London partner committee thrashes out details of UK wind-down

The fate of embattled Dewey & LeBoeuf’s City arm looked sealed this week as a newly-appointed London crisis management committee began assessing options for an orderly wind-down of the business.

A BDO team, understood to include professional practices specialists, is advising members of the UK limited liability partnership (LLP) as they examine the business’ balance sheet and decide whether they can avoid formally filing for administration by winding down the business.

Legal aspects of the potential liquidation of the UK LLP (which also includes Dewey’s Paris operations) are currently being handled in-house by European restructuring head Mark Fennessy, although the firm could appoint an independent law firm in due course. Maurice Turnor Gardner is also understood to be advising in relation to the matter.

Thirteen Dewey London partners voted on Monday (30 April) to create a steering group to oversee the closure of the UK LLP, comprising Fennessy, London managing partner Peter Sharp, finance partner Bruce Johnston, UK tax head Judith Harger and restructuring partner Hazel Miller. Partners confirmed the office will not continue.

However, Sharp has since handed in his notice from the firm, and is joining Morgan Lewis & Bockius with fellow London partners David Waldron and Nick Greenwood. His last day at the firm is today (4 May).

The crisis team has set aside funds to pay staff for May but would not comment on what will happen after this point.

Monthly partner drawings for the firm globally are understood to have been paid out yesterday (3 May) but not to partners behind with issuing bills to clients. 

Two partners told Legal Week that to complete an orderly wind-down of the business, the UK LLP would have to claim all outstanding receivables from clients and pay its creditors and its employees, as well as disposing of all fixed assets. In this scenario, the firm would aim to pay its employees’ wages as well as the redundancy package detailed in their individual employment contract. 

At the end of March, the London office had 112 lawyers including 35 partners, as well as 87 support staff. Staff in the office had not been formally notified of the firm’s intention to wind-up the business as Legal Week went to press; however, the firm has engaged recruiters with a view to helping support staff find new employment.

As the UK LLP operates separately to the US arm, any decision about its future can be made regardless of whether the US arm files for bankruptcy or bankruptcy protection.

One London partner said: “If the US banks [which include Citi] go into aggressive recovery mode, the London partners will become partially liable for the debt. Despite the fact that we can orchestrate a wind-down independently of New York, our fate is linked to the outcome of the debt renegotiations with the US lenders.”

The UK LLP’s most recent accounts, which cover the period leading up to 31 December 2010, show the UK LLP had annual commitments on property leases of £2.3m, with the leases due to run for at least five years from that point.

The new London management is set to meet with its Mincing Lane landlord next week to discuss its obligations.

Smith & Williamson’s national head of assurance and business services, Giles Murphy, said: “The fact that this is being played out in the public domain means that its assets – principally, amounts due from clients – may not be as recoverable as they first thought, and creditors – such as the landlord of the firm’s London property – may seek early settlement of their liabilities.”

The London moves came as Dewey this week saw a host of high profile partner departures, including US corporate heavyweight Morton Pierce, who is joining White & Case alongside a team of seven partners including New York corporate partner Denise Cerasini. Meanwhile international offices including Germany, Moscow and Italy were all considering their future moves.

Commenting on his move Pierce said: “White & Case is a great fit for our practice. The quality global platform, with strong New York and London offices, is extremely attractive to us, and I know will be attractive to our clients.”