Ex-Dewey & LeBoeuf partner ordered to repay $540k capital loan to Barclays

The judgment, handed down by Mr Justice Popplewell on Tuesday (9 June), ruled in favour of the bank, which claimed McMillan was one of a number of former Dewey partners that borrowed around $60m (£39m) to fund their equity contributions to the firm and which had been lost in the firm’s bankruptcy.

Popplewell J dismissed McMillan’s claim he did not intend the loan agreement to be for the provision of partner capital because he did not need a loan for such purposes. He said the argument was “untenable in light of the clear terms of the correspondence”.

The judge added: “I cannot accept that that was his state of mind in the light of the background of his pressing for release of the gross amount of his distributions and the clear terms of the correspondence which gave rise to his recognition that such release required him to sign the agreement to fund his capital contribution.

“McMillan was an experienced and senior partner in a major international law firm whom the bank could reasonably expect to understand the clear terms of the agreement which he signed, and to be able to assess the financial implications of doing so. Mr McMillan was not a naïve or vulnerable consumer.”

Barclays initially filed claims against four Dewey partners: Lester Charles Landgraf, Lewis Rosenbloom, Elias Farrah and McMillan.

The Lawyer revealed Landgraf, Rosenbloom and Farrah all settled with the bank for an undisclosed amount just days before the court case began on 5 May, meaning the case went ahead with just one defendant (1 June 2015).

McMillan’s legal team led by Candey partner Andrew Dunn came off the record just days before the case began meaning McMillan represented himself in court and during cross-examination.

Candey came back on the record for McMillan at the end of the hearing to file closing written statements.

Fountain Court Chambers’ Guy Philips QC and Adam Zelick were instructed by Addleshaw Goddard partner Richard Clayton for Barclays.

4 Stone Buildings’ John Brisby QC and Alexander Cook were instructed by Candey partner Dunn for Landgraf, McMillan and Rosenbloom. Wilberforce Chambers’ John Wardell QC also appeared for McMillan, instructed by Dunn.

4 New Square’s Dan Saoul was instructed by Signature Litigation partner Graham Huntley for Elias Farrah.

Barclays issued claims for more than $15m from 50 former partners in repayment of capital loans granted to them before the collapse in 2012 (29 May 2012). In July that year the bank turned down attempts by the partners to settle the claims (27 July 2012) and later filed claims in the High Court.

In November 2013 Barclays filed a claim for summary judgment against Landgraf, McMillan and Farrah (22 November 2013). Popplewell J rejected the application last year, paving the way for a full trial to examine whether Barclays colluded with Dewey to induce partners to take out individual loans to keep the firm afloat (4 March 2014).

The case featured in The Lawyer’s roundup of this year’s top 20 cases (19 January 2015).

Issues under scrutiny included partner loan programmes and the financing of equity contributions in LLPs and could affect whether ending will continue to be available at all to those wishing to become or remain partners in professional firms.

Meanwhile, the long-awaited trial against three former Dewey executives in the US kicked off in Manhattan last month (26 May). The trial will examine the causes behind the largest law firm collapse in legal history and probe allegations the trio committed fraud by altering accounts in a bid to prevent the firm going into administration.

Opening statements began in Manhattan state court for and against former Dewey chair Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Saunders.

Morvillo Abramowitz Grand Iason & Anello lawyer Elkan Abramowitz is acting for Davis, Bryan Cave partner Austin Campriello for DiCarmine, and Hughes Hubbard and Reed securities litigation co- chair Edward Little for Joel Sanders.