Dewey's Morton Pierce: Accepting Responsibility

This is the first in a series profiling Dewey & LeBoeuf’s former leaders. Morton Pierce (Yale University, B.A., 1970; University of Pennsylvania, J.D., 1974) is an appropriate person to begin with because on May 3, 2012, he told The Wall Street Journal that he hadn’t been actively involved in Dewey’s management for years and had stepped down from the firm’s executive committee in 2010.

Pierce is widely acclaimed as one of the country’s top mergers and acquisitions attorneys. He was chairman of Dewey Ballantine when its attempt to merge with Orrick, Herrington & Sutcliffe failed in 2007.

A partnership within a partnership

Pierce was a principal architect of Dewey Ballantine’s merger with LeBoeuf Lamb. Based on Bruce MacEwen’s analysis of the financial data, Dewey got the better end of that deal. As for Pierce himself, the Journal reports that he had negotiated a pay package that guaranteed him $6 million a year for six years, according to a person with direct knowledge of the arrangement. The subject of my next post, Martin Bienenstock said that there were many such deals to lock up talent for at least four years after the merger.

Early in 2010—the year Pierce says he left the firm’s executive committee—Dewey mortgaged its future with a $125 million bond offering (repayment due from 2013 to 2023). In 2011 the 62-year-old Pierce negotiated a new deal for himself. The Journal continues: “He secured a new, eight-year contract that would pay him $8 million for several years and wind down to $6 million in later years, that person said.”

Dewey’s next gambit: IOUs to the oxymoronic group—guaranteed compensation partners—when the firm didn’t earn enough current income to pay them in full. Committing future profits to make up for prior periods of missed earnings is, at best, a dubious strategy. At worst, it transforms a partnership into something that looks like a Ponzi scheme. It’s difficult to envision an attorney recommending the idea to a client.

A firm leader?