Editorial: Lessons Learned From Dewey Debacle

In May 2012, only five years after the international, white shoe law firms of Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae had merged, the resulting mega-firm, Dewey & LeBoeuf, filed for bankruptcy. It was the largest law firm collapse in the history of the profession and well-documented in the legal and mainstream press. The events leading up to Dewey & LeBoeuf’s implosion read like a Grisham novel, except more over the top.

The Dewey debacle was, of course, exceedingly complicated and multifaceted. But it appears that the core was the managing partner’s aggressive, indeed, reckless, recruitment of lateral partners to maintain the merged firm’s competitive edge and market share. Of course, in that legal environment, laterals, especially those with books of business, do not come cheaply. One securities litigation star demanded — and received — a $16 million fully-funded pension and a guaranteed annual salary of $1.6 million. For reasons that are difficult to comprehend, Dewey & LeBoeuf, which had an office in Hartford, attracted laterals by guaranteeing them such annual incomes — without regard to the revenue they produced.