Three ex-Dewey & LeBoeuf partners taken to court by Barclays have settled out of court with the bank for an undisclosed amount, The Lawyer can reveal.
Lester Charles Landgraf, Lewis Rosenbloom and Elias Farrah all reached a financial agreement with Barclays just days before the trial, which was set to begin on 5 May.
The court proceedings went ahead with just one defendant, Londell McMillan.
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.
Judgment on the case between Barclays and McMillan has been reserved by Mr Justice Popplewell until an undetermined date.
4 Stone Buildings’ John Brisby QC and Alexander Cook were instructed by Candey partner Dunn for Landgraf, McMilland and Rosenbloom.
4 New Square’s Dan Saoul was instructed by Signature Litigation partner Graham Huntley for Elias Farrah.
Barclays launched the High Court litigation in order to recoup money from partners of the now defunct firm, which collapsed in May 2012. When Dewey folded, more than 200 partners owed Barclays Bank around $60m (£39m), which they had borrowed to fund their equity contributions to the firm and which had been lost in the firm’s bankruptcy.
Barclays is seeking over $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 three former partners, 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 include 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.
Should the court side with the defendant’s contention that the money cannot be recovered from partners, it is likely to make banks reluctant to lend money for capital contributions in the future.
Meanwhile, the long-awaited trial against three former Dewey executives in the US kicked off in Manhattan last week (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.
Representing is Morvillo Abramowitz Grand Iason & Anello lawyer Elkan Abramowitz for Davis, Bryan Cave partner Austin Campriello for DiCarmine, and Hughes Hubbard and Reed securities litigation co- chair Edward Little for Joel Sanders.
The legal line-up:
For the claimant, Barclays Bank
Fountain Court Chambers’ Guy Philipps QC and Adam Zellick instructed by Addleshaw Goddard partner Richard Clayton
For the defendants, Lester Charles Landgraf, Londell McMillan and Lewis Rosenbloom
4 Stone Buildings’ John Brisby QC and Alexander Cook, instructed by Candey partner Andrew Dunn
For the defendant, Elias Farrah
4 New Square’s Dan Saoul, instructed by Signature Litigation partner Graham Huntley