Ex-Dewey finance chief urges London partners to team up for US defence

Dewey & LeBoeuf’s former finance chief Bruce Johnston has called on former members of the defunct firm’s UK partnership to group together and instruct US bankruptcy counsel to assess their personal liability in the firmwide bankruptcy.

Johnston, who was part of the City crisis committee charged with winding down the UK limited liability partnership (LLP) in early May, has urged 22 former Dewey London partners to jointly instruct US bankruptcy counsel to establish whether they should take part in the firmwide bankruptcy settlement put forward last week (19 June).

The settlement, which was suggested by former executive partner Steve Horvath and the firm’s bankruptcy team, would absolve former partners – with the exception of ex-chair Steven Davis – of any future liability in relation to the firm in exchange for a lump sum of money paid into the estate by each individual partner.

Before the settlement proposals were put forward, the UK partners had assumed that they were ringfenced from any form of clawback under UK LLP laws. However, Horvath suggested during the call that the settlement would include “the global partnership as a whole”.

One UK partnership specialist commented: “The move to instruct US counsel shows a complete lack of confidence in the UK LLP structure. The situation is unprecedented so these laws will now be tested.”

However, several partners told Legal Week that they have no intention of joining the group in instructing US counsel. One commented: “Although we were all members of the UK LLP, I do not think that our interests are in any way aligned – everyone came away from the firm with different problems. There are partners among the 22 who should have known about the crisis and there is no way of being sure whether they were withholding information.”

Separately, more of the last remaining partners from Dewey’s London base have now found new homes, with tax partner and London crisis committee member Judith Harger joining US firm Willkie Farr & Gallagher alongside the 12-partner insurance team that joined earlier this year.

London private equity partner Jim McNally, meanwhile, has joined US firm Schulte Roth & Zabel alongside Dewey’s former global head of private equity Joseph Smith. They will be based in London and New York respectively.

McNally, who trained at Slaughter and May, advises on corporate transactional and private equity fund matters, including M&A, joint ventures, fund formation and financings.