Dead Dewey Files Cases to Recover Money Paid Out from Deathbed
On Friday, the estate of now defunct law firm Dewey & LeBoeuf filed lawsuits against several law firms, vendors and the Bank of America to recover money paid during the 90 days prior to Dewey filing its Chapter 11 petition. The biggest amount sought to be recovered in the preference lawsuits is $3.9 million from the Bank of America. The total sum sought is close to $5.7 million.
The latest lawsuits belong to a slew of at least 25 preference cases which could not be filed earlier, because Hahn & Hassen, the previous counsel of the Dewey liquidation trustee, had conflicts of interest.
The recent preference cases have been filed by ASK LLP, which is the current counsel of the Dewey liquidation trustee Alan Jacobs and run by Minnesota lawyer Joseph Steinfeld.
Almost all of the lawsuits are near-identical and allege the payments received by the defendants happened during a time when Dewey & LeBoeuf was already insolvent.
Lawsuits have been filed against several law firms including Shook, Hardy & Bacon, Cook Vetter Doerhoff & Landwehr, Allen & Overy, Cummings & Lockwood, Gaimes, Weil, West & Epstein, Lankler Siffert & Wohl, and Keightley & Ashner.
Even law professors were not spared and a legal ethics professor at the University of Pennsylvania Law School has been sued over $20,000 paid to him in August 2011.
Lankler counsel Joanne Harvey informed the media via email on Friday that the lawsuit against the law firm "was filed in error and is being withdrawn."
Though not a part of Friday's wave of lawsuits, other recovery actions are also being initiated by the Dewey estate.
On Friday, Texas lawyer Allan Diamond said that on behalf of the Dewey estate, his law firm has started sending demand letters to the 115 former partners of Dewey who didn't participate in the $70 million partner contribution plan approved in February.
Dewey & LeBoeuf continues to make the headlines as an ideal case study of what could go wrong in law firms with a strategy of growing too big too fast. Dewey & LeBoeuf was one of the few big law firms that went public in its initial stages in contrast to common practice in the legal industry.
Dewey also relied on a Ponzi like scheme based on rainmakers to fuel its exponential growth. The scheme depended upon continuous recruitment of rainmakers with tall promises, while promises made to previous recruits were kept up by the revenue that came into the firm with induction of new partners.
Ultimately, the business model imploded leading to one of the worst law firm catastrophes in recent times. However, Dewey continues to be a case study, in its type of law firm business model, in what went wrong, and what can still be done after things go wrong in a law firm.
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