Former Dewey executive to appear in NY bankruptcy court

Dewey & LeBoeuf’s former executive director Stephen DiCarmine will appear in a US bankruptcy court next week after several ex-Dewey partners objected to the firm’s bankruptcy plan.

DiCarmine’s lawyer, Hughes Hubbard & Reed partner Ned Bassen, told The Lawyer that DiCarmine had been summoned to testify and produce documents, which give evidence of communications between the now-defunct US firm and its banks as well as evidence of payments to partners and financial statements from 2010 to 2012, at a hearing due to take place at a New York Bankruptcy court on 27 February.

“The judge quashed the document portion but not the subpoena to testify,” Bassen told The Lawyer. “The judge’s reasoning was that there might be relevant questions for Mr DiCarmine to answer as to [bankruptcy] plan confirmation. We argued against this but the judge ruled otherwise.”

The subpoena was made on behalf of former Dewey partners Elizabeth Sandza and Andrew Fawbush, who were not available to comment at the time of writing. The pair are being represented by Becker & Poliakoff litigator Helen Davis Chaitman and are understood to be trying to overturn the bankruptcy plan.

One of the issues that ex-partners of Dewey & LeBoeuf have had about the US firm is what they saw as the secrecy displayed by the firm’s former management. In June last year, former IP partner Henry Bunsow, who now runs a San Francisco IP boutique, claimed that over 200 Dewey partners, including DiCarmine, committed fraud and “acted with an improper and evil motive amounting to malice” by misrepresenting the firm’s financial situation and persuading him to join the firm in 2010 from Howrey, another extinct US firm, on a $5m (£3.2m) guaranteed annual profit share (14 June 2012).

DiCarmine, along with former chairman Steve Davis and ex-CFO Joel Sanders, were also sued by UK insurance group Aviva last December in connection with a bond issued by the firm in 2010 (18 December 2012). The suit concerned Aviva’s purchase of $35m of senior secured notes issued by Dewey on 16 April 2010 that the company alleges were missold.

DiCarmine is a non-lawyer who was once among the firm’s most powerful figures. “DiCarmine put the merger together with Davis. Partners were slightly nervous around him. He’d hold your career in his hand,” commented a source for our feature on the firm’s collapse last year (16 April 2012).

“He was the Cardinal Wolsey. He was Steve Davis’s right-hand man,” said another former partner. “I always found him very helpful and very supportive. A lot of lawyers in big law firms don’t like being told what to do by a non-partner.”

According to filings released last month, advisers working on the US bankruptcy have racked up fees of more than $14m (£8.6m) (3 January 2013).

Dewey’s bankruptcy counsel Togut Segal & Segal came top, putting in a request for fees of $4.71m. Turnaround firm Zolfo Cooper billed second highest, at $3.66m, but after that it was two more law firms, Brown Rudnik as counsel to the unsecured creditors’ committee and Kasowitz Benson Torres & Friedman as counsel to the official committee of former partners, which billed the most at $2m and $1.3m respectively.