Dewey & le beouf crisis analysis

372 views
328 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
372
On SlideShare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Dewey & le beouf crisis analysis

  1. 1. Dewey & LeBoeuf Crisis Analysis KATE CLARK JMC 4413 OCTOBER 23, 2012
  2. 2. Firm History In 2007, Dewey Ballantine merged with LeBoeuf, Lamb, Greene & MacRae One of the largest in New York City and had branches in 26 offices across the globe  Locations from Abu Dhabi, United Arab Emirates to Tbilisi, Georgia Offered legal services for corporate, insurance, legal, tax and restructuring practices Focused on providing services from the most prestigious lawyers in the industry In 2010, Chambers Global, a researcher and publisher for the legal market, recognized the organization in 37 different practices in 2010
  3. 3. Early Signals of a Crisis Trends similar to Finley Kumble’s implosion in 1987  After 2008 financial crisis, Dewey still developed over 100 multimillion dollar contracts with its top clients  Immediately started competing with the top dogs of the industry by recruiting rivals’ lawyers and offering them unbeatable salary packages Signed off on a $125 million bond offering in March 2010  Unusual for law firms; they typically borrow from partners or a revolving line of credit from a bank  Suggested that Dewey needed money it could not repay for a period of time Cancelled its summer associate program  pays law school interns $3,000 a week  Typically led to a first-year position at Dewey earning $160,00 a year
  4. 4. Crisis As of January 2012, 80 of Dewey’s 300 partners left the firm after consistent poor financial performance Owes over $300 million in liabilities  $225 million is owed to its banks  Other creditors, such as the headquarters’ landlords and former partners owed money as well
  5. 5. Organization’s Response In March 2012, Dewey demoted the Executive Chairman, Steven Davis, as a member of the office of the chairman  Terminated in April after Manhattan District Attorney began company investigation May 28, 2012, Dewey filed for chapter 11 bankruptcy  Allows institution to restructure its business under the direction of an appointed trustee 90 employees were asked to stay temporarily on staff to help with the wind-down of the business
  6. 6. Organization’s Response Continued Internal Responsibilities  Notifying employees of its termination  Liquidating its assets  Closing 26 offices  Shredding individual client files  Developing claims for the estate  Investigating potential causes of action for court cases External Responsibilities  Mark Shaw and Shay Bannon of BDO LLP are the Joint Administrators of Dewey LLP and Dewey Services Limited  Act as liaisons to creditors  Richard Slade of Richard Slade and Company is responsible for protecting the clients  Enacted a “clawback” deal that asked more than 700 of Dewey’s former partners to pay money back, which promises protection toward future litigation regarding Dewey’s downfall
  7. 7. Media Response American Law Daily reported Dewey’s released financial estimates  Many investors based decisions off of these fraudulent reports  ALD followed the series of events leading to Dewey’s bankruptcy in order to responsibly report the unraveling truth of Dewey’s finances New York Times offered continual coverage of internal and external factors of the bankruptcy  Published a feature story about Dewey’s currently active Co-ed Softball team as an avenue to spotlight former employees and their new positions Forbes Magazine released the 12 page bankruptcy files  Specified course of action for the Ch. 11 bankruptcy and the causes claimed by Dewey Insurance Journal criticized Dewey’s management team as the ring-leaders to financial dishonesty
  8. 8. Stakeholder Response Social Media  YouTube users took advantage of the downfall as an education opportunity to build awareness of red flags that lead to the bankruptcy of a company.  Bloomberg Law streamed 3 videos mentioning Dewey within the last 60 days Stockholders vary in agreemtn  $70 million clawback deal was accepted and followed by more than 400 partners  Henry Bunsow sues the firm for portraying itself as bigger than it was in order to maintain its hiring spree Employees earn leadership positions in other firms  Jared Kanover serves on the general at Hedge Fund  Michael Didriksen serves as a partner at Baker Botts
  9. 9. Recommendations Create a crisis management team that reviews financial information before it is distributed to partners  Distributes power and knowledge of the company’s performance and condition to more people than the company chairman  Develops a teamwork environment between Dewey’s crisis management team and the partners Publish a constitution of financial ethics and protocols  Binds crisis management team, executives, partners and employees  Clearly specifies procedures for including information in quarterly reviews  to calculating the company’s worth  the financial auditing process  Information distribution  Quarterly reviews include all the financial activity within employee compensations, investments, and acquisitions
  10. 10. Recommendations Continued Develop a crisis management plan for future financial downturns  Environmental scanning of news reports, social media and conditions of the stock-market  List proactive measures to diminish effects of a financial crisis  Hiring and investing freezes  Pay ceilings  Elastic expenses that can be cut from budget  Create a direct hotline for investors to request information on financial procedures
  11. 11. Recommendations Continued Post Crisis Measures  Inform stakeholders of Dewey’s plans to respond to the crisis through a press release  Instead of newspaper reports, Dewey should be the first to announce its crisis and course of action  Crisis management team should be appointed as trustees responsible for winding down the company  Ensures that Dewey follows consistent protocols throughout the crisis management plan
  12. 12. References Davis, Steven H., and Peter Sharp. Chambers and Partners. N.p., n.d. Web. 20 Oct. 2012. <http://www.chambersandpartners.com/USA/Firms/240-71398>. Harris, Elizabeth A. "Defunct Law Firm Keeps Its Troubles Off the Softball Field." TheNew York Times. The New York Times, 07 Sept. 2012. Web. 20 Oct. 2012.<http://www.nytimes.com/2012/09/07/nyregion/dewey-leboeuf-keeps-itstroubles-off-the- softball-field.html?_r=0>. Lattman, Peter. "Dewey & LeBoeuf Files for Bankruptcy." DealBook. NY Times, 28 May 2010. Web. 20 Oct. 2012. <http://dealbook.nytimes.com/2012/05/28/dewey-leboeuf-files-for-bankruptcy/>. Lattman, Peter. "Teetering, Dewey Ousts Ex-Head From Post." DealBook. NY Times, 4 Apr. 2012. Web. 19 Oct. 2012.<http://dealbook.nytimes.com/2012/04/29/dewey-leboeuf-ousts-ex-headstevenh-davis/>. Mason, Jamie. "Dewey & LeBoeuf Gets Interim Cash OK." The Deal Pipeline. The Deal,31 May 2012. Web. 21 Oct. 2012. <http://www.thedeal.com/content/restructuring/dewey-leboeuf-gets-interim-cashok.php>. Randazzo, Sara. "Ex-Dewey Partner Bunsow Sues Former Leaders for Misrepresenting Firms Finances." The Am Law Daily. N.p., 13 June 2012. Web. <http://www.americanlawyer.com/PubArticleALD.jsp?id=1202559262206&Ex ewey_Partner_Bunsow_Sues_Former_LeadersFor_Misrepresenting_Firms_Fina ces&slreturn=20120920224054>. Shipp, E. R. "Finley, Kumble, Major Law Firm, Facing Revamping or Dissolution." The New York Times. The New York Times, 11 Nov. 1987. Web. 21 Oct. 2012.<http://www.nytimes.com/1987/11/11/business/finley-kumble-major-law-firm facing-revamping-or-dissolution.html?pagewanted=all>. Smith, Jennifer. "Dewey Seeks Clawbacks." Wall Street Journal. N.p., 12 July 2012. Web. 21 Oct. 2012.<http://online.wsj.com/article/SB1000142405270230374070457752122034787582.html>. Social Mention. N.p., 22 Oct. 2012. Web.<http://socialmention.com/search?q=Dewey+and+LeBoeuf&t=all&btnG=Se rch>. "The Dewey Chronicles: Rise and Fall of a Legal Titan." The Dewey Chronicles: The Rise and Fall of a Legal Titan. Insurance Journal, 14 May 2012. Web. 19 Oct. 2012. <http://www.insurancejournal.com/news/east/2012/05/14/247383.htm>.

×