Troubled Dewey & LeBoeuf could be headed for collapse as the starkest signs yet of the firm’s woes emerged with an announcement on Friday that there could be layoffs and with the issuing of a WARN Act notification that could preceed mass layoffs.
“Although we continue to pursue various avenues, it is possible that adverse developments could ultimately result in the closure of the firm, which would result in the termination of your employment,” the firm said in a letter to employees that was obtained by Reuters.
Angelo Kakolyris, a spokesman for the firm, declined to comment.
The firm issued the notification under a federal law known as the WARN Act and similar state laws that require employers to notify workers of mass layoffs in advance. The federal WARN Act requires employers with 100-plus employees to give them 60 days’ notice, while New York’s WARN Act requires employers with 50 or more workers to give at least 90 days’ notice.
“Although we continue to pursue various avenues, it is possible that adverse developments could ultimately result in the closure of the firm,” the letter said.
Dewey & LeBoeuf, once one of the biggest law firms in the United States, has been struggling this year with growing debt, declining revenue and partner defections, which continued unabated on Friday.
Since January, the firm has lost at least 120 of its 300 partners amid a mounting debt crisis. It has tried and failed to find a merger partner.
Employees leaving Dewey’s offices in midtown New York on Friday declined to talk to a reporter. Workers from a local moving company called Moishe’s loaded about two dozen boxes labeled Dewey & LeBoeuf early on Friday evening before driving away.
A Facebook site set up to help Dewey attorneys and staff find jobs grew to 220 members on Friday afternoon.
Earlier on Friday, another source close to the situation said that Dewey & LeBoeuf had dismissed Executive Director Stephen DiCarmine within the last week. DiCarmine has retained a prominent criminal defense lawyer, the source said.
Last week, the firm informed its partners that the New York District Attorney launched an investigation into allegations of wrongdoing by former Chairman Steven Davis.
No allegations of wrongdoing have been brought against DiCarmine. The reasons for his termination couldn’t be determined. Davis has denied any wrongdoing and DiCarmine did not return phone calls seeking comment.
DiCarmine has hired Edward Little, a former federal prosecutor in Manhattan, according to the source, who declined to be named due to the sensitivity of the matter. Little, a partner at law firm Hughes Hubbard & Reed, declined to comment on whether he had been hired in connection with the DA probe.
Defections from the firm decimated its overseas offices on Friday, with a wave of departures in Britain, Germany, Kazakhstan, UAE and Russia.
Dewey’s options could include an out-of-court wind-down or a bankruptcy, whether voluntary or forced by its creditors, bankruptcy experts said.