Dewey & LeBoeuf filed for bankruptcy yesterday, the New York Times reported, more than two months after reports first emerged that the huge law firm, with one of the largest real estate practices in the city, faced financial distress. Filed in federal bankruptcy court in Manhattan, the bankruptcy calls for the firm to keep 90 employees on staff to assist in the liquidation of the business. At its peak, the firm employed more than 2,500 people in 26 global offices. The firm has $315 million in liabilities, $225 million of which is owed to banks.
The filing winds down a tumultuous year for the firm, that has seen a mass exodus of its top legal talent — including Stuart Saft, the firm’s former global head of real estate — as it became clearer they wouldn’t be paid millions of dollars of compensation they were owed.
The struggles of the firm have been traced to the merger between Dewey Ballantine and LeBoeuf, Lamb, Greene & MaCrae in 2007 and the subsequent financial crisis.
“Because the partnership lacks any shared cultural values or history, money becomes the core value holding the firm together,” said William Henderson, a law professor at Indiana University who studies law firms. “Money is weak glue.”
Legal experts quoted by the Times said the downfall of such an influential firm is “unprecedented.” [NYT]