major law firm declares bankruptcy

#1
dreVol

dreVol

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#1
yikes! a "down goes Holyfield" moment.

. . . Dewey listed liabilities in the range of $100 million to $500 million, according to the filing. It had already terminated 433 of its 533 New York employees earlier this month, according to the state's labor department. . . .

But the firm was eventually undone by a combination of the economic downturn, excessive compensation and governance problems, according to former partners and others in the industry. In particular, Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession. . . .

As of the petition date, Dewey's assets consisted of about $13 million in cash, accounts receivable of about $255 million, various pieces of artwork, and about $11 million invested in an insurance consortium, among other potential claims, according to the filing. . . .

The firm had two dozen offices worldwide, including in Washington, Los Angeles and London. Some of the firm's biggest clients included General Motors Corp, eBay, Novartis, Ambac and Berkshire Hathaway Reinsurance Division.
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Dewey files for Chapter 11 in record law firm collapse
 
#10
#10
BigPapaVol said:
how so?
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But the firm was eventually undone by a combination of the economic downturn, excessive compensation and governance problems, according to former partners and others in the industry. In particular, Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession.
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Jockeying for "excessive compensation" plans at the risk of leaving the firm insolvent is at least ostensibly greedy.
 
#12
#12
therealUT said:
Jockeying for "excessive compensation" plans at the risk of leaving the firm insolvent is at least ostensibly greedy.
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so, they were going to attract the best talent with the promise of low incomes? You need to keep reading and see that it was the economic downturn that got them and partners started bailing.
 
#13
#13
BigPapaVol said:
how so?
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A law firm with 24 offices world wide doesn't become a big player without greed.

Sounds to me like they tried to go bigger and badder at the wrong time and weren't financially prepared. That's a mix of mismanagement and greed.
Not sure if the governing issues had to do with changes in governing rules for firms, but I assumed governing meant from within the firm, or a power struggle.
 
#14
#14
They grew too fast and gave out big signing bonuses when you don't even need to hand out bonuses to the best grads at the best law schools these days.
 
#15
#15
T-TownVol said:
so, they were going to attract the best talent with the promise of low incomes? You need to keep reading and see that it was the economic downturn that got them and partners started bailing.
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If the pay packages were well in excess of competitive rates, you could call it greedy if you want to be pedantic about it
 
#16
#16
milohimself said:
If the pay packages were well in excess of competitive rates, you could call it greedy if you want to be pedantic about it
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the company went broke because its hires were greedy?

They overpaid people and destroyed their balance sheet with a lot of promises about future payouts. I suspect that this filing is one that helps wipe out a lot of the future liabilities.
 
#17
#17
Spartacavolus said:
A law firm with 24 offices world wide doesn't become a big player without greed.

Sounds to me like they tried to go bigger and badder at the wrong time and weren't financially prepared. That's a mix of mismanagement and greed.
Not sure if the governing issues had to do with changes in governing rules for firms, but I assumed governing meant from within the firm, or a power struggle.
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first statement absurdity helped me avoid the rest. Thanks.
 
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#18
#18
I wonder how much income they lost when Government Motors became an Obama enterprise?
 
#19
#19
BigPapaVol said:
first statement absurdity helped me avoid the rest. Thanks.
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No problem. You just want to cat fight anyway. Have at it with someone else. Get your e argument of the day fix.

Bpv is correct. Corporate America law firms and greed shouldn't be used in the same sentence.
 
#21
#21
Spartacavolus said:
No problem. You just want to cat fight anyway. Have at it with someone else. Get your e argument of the day fix.

Bpv is correct. Corporate America law firms and greed shouldn't be used in the same sentence.
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as long as everyone's clear that your greed comment is baseless bunk, I'm good with the rest.
 
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#22
#22
BigPapaVol said:
the company went broke because its hires were greedy?

They overpaid people and destroyed their balance sheet with a lot of promises about future payouts. I suspect that this filing is one that helps wipe out a lot of the future liabilities.
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ding, ding, ding........they HAVE to put reasons down for the filing, it is the simple way to garner a ruling in their favor
 
#23
#23
T-TownVol said:
[/B]

ding, ding, ding........they HAVE to put reasons down for the filing, it is the simple way to garner a ruling in their favor
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So who are the decision makers in the company focused on with a positive ruling? Themselves, the company, or the employees? Themselves. Just as they were seeing $$ signs when they expanded. That's why those without want more. That's why the rich expand. To get richer. It's really nothing to argue about.
 
#24
#24
what happens to the 401ks and various pension obligations during/following chapter 11?
 
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