Earlier this summer former Dewey & LeBoeuf IP partner Henry Bunsow brought a law suit against the defunct firm’s senior management alleging they had run a Ponzi scheme, securing capital contributions from new joiners that they knew they could not repay.
Now, another former partner – energy specialist Steven Otillar – is making allegations against one of Dewey’s biggest lenders, Citibank, claiming that it conspired with the collapsed firm to devise a capital loan programme designed to attract lateral hires (see story).
Well, to be more precise, Otillar is objecting to Citibank’s action against him. In June Otillar told former partners on a conference call that Citibank was pursuing him for his $207,000 professional practice loan.
Otillar’s countercharge, filed in New York last month, claims that Citibank devised a scheme “intended to lure unsuspecting lateral hires to join the failing firm as equity partners, who would then be responsible for making significant capital contributions to [Dewey] when its revenue was insufficient to pay its obligations […].”
Essentially, Otillar is saying that Citibank was owed a lot of money by Dewey and was looking to cover its losses by enticing new partners to join the firm and then take loans with the bank.
Dirty stuff, if true. In fact, the mud slung at Halliwells’ management following the firm’s demise pales in comparison. You can always trust the Americans to do things bigger and better.
Also on TheLawyer.com:
The traditional law firm model of paying out profits to partners in full may no longer be possible, says Smith & Williamson’s Giles Murphy.