It was during the merger talks between Dewey Ballantine and LeBoeuf Lamb Greene & MacRae in 2007 that London partners were split up into small groups to be told about the ultimately disastrous combination. It was in a mass phone call that junior partners in 2008 were told they might have taken too much money out of the firm and would have to pay something back. And it was at a heated video conference this January that former chairman Steve Davis told global partners how bad the firm’s financial situation was - the moment they realised the business was doomed.
Now it’s the turn of Dewey’s bankruptcy team to face the audience, with former partners and their counsel dialling in at 2.30pm New York time yesterday to grill former executive partner Stephen Horvath and the rest of the key wind-down figures. The topic: plans for a settlement that would see ex-partners (except the excluded Davis) pay a contribution to the Dewey estate in return for release from liability.
The call started some 15 minutes late, but the partners were fast out of the blocks: two are said to have asked questions that suggested the plan was just about protecting the senior management by absolving them a liability to be sued by other former partners. Another partner had something to say about Horvath’s assumption that all partners were considered ’insiders’ under US bankruptcy law and could face clawbacks for payments they received going back a year rather than three months. It is understood that Horvath failed to provide any real answer to this.
One partner who dialled in said it sounded as though Horvath and the call leaders were improvising as they went along. They have six weeks to approve a settlement, but a lot of progress is needed pretty fast if this is going to happen.