Last year, the mega-law firm Dewey & LeBouef generated revenue totaling $782 million. It was the 20th largest firm according to the National Law Journal. Its clients included the Los Angeles Dodgers, the NFL Players Association, and eBay. But over the last five months, 206 of its partners defected. It currently owes approximately $315 million to creditors. There is a criminal investigation involving a pension plan allegedly underfunded by $80 million. Last week, the legacy firm, which dates back to 1909 (and whose “Dewey” refers to the Thomas Dewey), filed for Chapter 11 bankruptcy protection.
How can such a legal powerhouse die? Last year, I blogged about the demise of Howrey, based here in Washington. In that case, much of the business relied on construction, which took a hit after the recession. Then came the defections. Dewey & LeBouef certainly suffered from the recession, but it also spent millions to acquire star lawyers the way Dan Snyder spends to bulk up his Redskins—a not always successful gambit.
