Merger failure leaves Dewey with $89m pensions black hole

Dewey Ballantine is facing a pensions deficit totalling $89m (£45.18m), The Lawyer can exclusively reveal.

The firm, which ended its merger talks with Orrick Herrington & Sutcliffe on 4 January, will now have to meet its unfunded pension obligations alone.

The pension deficit was among the issues that derailed the two firms’ merger talks earlier this month.

At the start of the talks Dewey’s pension debt for retired partners totalled $41m (£20.81m), rising to $89m when the pensions of current partners were included. Of the $41m, the two firms agreed that Orrick would pay around $25m (£12.69m) and Dewey around $15m (£7.61m). A source close to the talks said Orrick had accepted the cost of Dewey’s pensions liability “as the price of doing the deal”.

When Dewey lost 11 partners in three weeks, the unfunded pensions liability rose to $53m (£26.9m). The two firms are believed to have been unable to agree on a scheme to meet this additional liability and by 4 January the deal was off.

Dewey froze its partner pension scheme three years ago and has been paying off the debt at a rate of 6 per cent of net profit each year. This scheme is expected to continue.

An Orrick spokesman said: “No one reason or event caused the merger talks to break off. The decision was mutual.”