A bankruptcy ruling barring former Dewey & LeBoeuf partners from using a “value” defense in a clawback suit could have far reaching consequences by encouraging partners “to run for the exits” at the first sign of a law firm’s financial instability, defense attorneys said.
In a 39-page interim ruling Wednesday (NYLJ, Oct. 30), Southern District Bankruptcy Judge Martin Glenn (See Profile) said ex-partners fighting clawback suits brought by Dewey’s trustee are subject to New York Debtor & Creditor Law 277(a), meaning the trustee can recover money they earned during Dewey’s insolvency, precluding the partners’ use of the “value” defense.
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