Dewey & LeBouif filed for bankruptcy Monday night at the federal bankruptcy court in Manhattan. The filing is a result of huge financial difficulties and partner exodus. This is the largest law firm to collapse in US history.The firm has been in difficulty since the 2008 financial crisis earning them a current liability of $ 315 million, of which it owes $225 million to banks.
The Firm dealt with corporate law and was created as a result of the mergers of Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae in 2007, but its origins can be traced back to 1909. The firm was huge and employed over 2,500 employees of which more than half consisted of lawyers. The increasing liabilities of the firm caused it to cut back on parterns' salaries and layoff many of its employees over the past year or so. Right now the firm has kept only 90 of its employees to assist in the closing down of the firm.
According to the New York Times, multimillion dollar guarantees to top lawyers, rapid expansion and large discrepancy between junior and top lawyer salaries only sunk the company further into financial turmoil. These practices are rather common to law firms and therefore the bankruptcy of this firm has shed prominence on the business practices of the entire legal industry. The dissolution of the firm has dealt a serious blow, not just to the corporate law industry, but the entire legal enterprise. Former federal judge, Richard J. Holwell tells the NY Times that "a demise of this magnitude is unprecedented."
