Some key players in the Dewey & LeBoeuf debacle are also among the profession’s leaders; that makes them role models. Some teach at law schools; that means they’re shaping tomorrow’s attorneys, too. But how do they look and sound without the Dewey spin machine?
Some readers might worry that spotlighting them erodes civility. But civility goes to the nature of discourse; it can never mean turning a blind eye to terrible things that a few powerful people do to innocent victims. Sadly, the personalities and trends that unraveled Dewey aren’t unique to it.
As to former chairman Steven H. Davis, David Lat’s analysis at Above the Law and Peter Lattman’s report at the NY Times are sufficient; there’s no reason to pile on. Rather, I’ll look at the “Gang of Four” plus one: the men comprising the four-man office of the chairman who replaced Davis as the firm came unglued, and Morton Pierce. Here’s a preview.
Morton Pierce was chairman of Dewey Ballantine when merger discussions with Orrick, Herrington & Sutcliffe failed and LeBoeuf, Lamb, Greene & McRae entered the picture. After spearheading the deal with Davis, Pierce locked in a multi-year $6 million annual contract that he reportedly enhanced in the fall of 2011. In his May 3 resignation later, he reportedly claimed that the firm owed him $61 million.
As he spoke with The Wall Street Journal while packing boxes for White & Case, Pierce said that he hadn’t been actively involved in firm management since 2010. But the Dewey & LeBoeuf website said otherwise: “Morton Pierce is a Vice Chair of Dewey & LeBoeuf and co-chair of the Mergers and Acquisitions Practice Group. He is also a member of the firm’s global Executive Committee.” [UPDATE: Two days after this May 15 post, Pierce’s page on the Dewey & LeBoeuf website finally disappeared. Such are the perils of losing an IT department too early in the unraveling process.] My post on Pierce will be titled “Accepting Responsibility.”
Martin Bienenstock, one of the Gang of Four, was an early big name hire for the newly formed Dewey & LeBoeuf. In November 2007, he left Weil, Gotshal & Manges after 30 years there. He got a guaranteed compensation deal and sat on the Executive Committee as his new firm careened toward disaster. As Dewey & LeBoeuf’s end neared, he maintained a consistent position throughout: “There are no plans to file bankruptcy. And anyone who says differently doesn’t know what they’re talking about.”
No one asked if he had a realistic plan for the firm’s survival. Ten days later, he and members of his bankruptcy group were on the way to Proskauer Rose. The title of my upcoming post on Pierce could work for Bienenstock, too. But because he teaches at Harvard Law School, I’m going to call it “Partnership, Professionalism, and What To Tell the Kids.”
Jeffrey Kessler, another of the Gang of Four, was also a lateral hire from Weil, Gotshal & Manges. He joined Dewey Ballantine in 2003. As a member of Dewey & LeBoeuf’s Executive Committee, he became a vocal proponent of the firm’s star system that gave top producers multi-year, multimillion-dollar contracts — one of which was his.
A sports law expert, Kessler analogized big-name attorneys to top athletes: “The value for the stars has gone up, while the value of service partners has gone down.” The title of my post on Kessler will be “Stars In Their Eyes.”
Richard Shutran, the third of the Gang of Four, was a Dewey Ballantine partner before the 2007 merger. He became co-chair of Dewey & LeBoeuf’s Corporate Department and Chairman of its Global Finance Practice Group. At the time of the firm’s $125 million bond offering in 2010, he told Bloomberg News that the bonds’ interest rates were more favorable than those from the firm’s bank. In March 2012, he said Dewey was in routine negotiations with lenders over its credit line. He also dismissed The American Lawyer’s retroactive revision of Dewey’s 2010 and 2011 financial performance numbers as much ado about nothing. My post on Shutran will be “Running the Numbers.”
L. Charles Landgraf, the last of the four, began his career at LeBoeuf Lamb 34 years ago. I don’t know him (or any of the others), but my hunch is that Charley (as people call him) is a decent guy. My post on him will be called “The Plight of the Loyal Company Man.”
In future installments, we’ll take a closer look at each of them. Sometimes it won’t be pretty, but neither is what some of them personify about the profession’s evolution.
I certainly look forward to your upcoming posts, Steve, but, fair warning: you may impair your chances at getting a star priced lateral offer from (until a couple of weeks ago), the world’s 13th largest law firms.
I don’t think any of us can bear witnessing any more carnage or scandal from the Dewey & LeBoeuf front. The worst part, in some respects, is that clients, laterals and law firm lenders are now looking past the Dewey debacle and looking at other large law firms and wondering which one is next.
The Dewey debacle isn’t going away any time soon. The slog of judicial proceedings will take years and impose enormous tolls on all concerned. You will have a decade of new material for your blog.
The added nightmare is that other large law firms will likely follow suit and similarly implode.
The profession must galvanize and provide assurance to law firm partners and law firm stakeholders – partners, clients, lenders, lateral candidates and law school students that individual firms are strong and viable and are not in danger of implosion. The way to provide assurances is through having law firms undergo stress tests by qualified independent professionals. Given the current state of play, firms will likely only do so if market demands dictate that they do so. Those market mandates will arise when law firms are required to do so by clients, lenders, clients, lateral candidates and to maintain a competitive edge.
The need for these stress tests is urgent and the time to start applying them is now. I’ve written on the subject, which you can find here: http://kowalskiandassociatesblog.com/2012/05/13/avoiding-law-firm-implosions-by-mandating-firms-to-undergo-annual-stress-tests/
I will look forward to them, Steve. There is a lot to learn from all of this, and I don’t regard your commentary as piling on in the least.
Law schools are too busy teaching law students how to make money rather than teaching ethics. The name of the game at the big law firms today is to win at all costs, including using devious means and verbal fraud to bankrupt the other side so that they can’t afford to get into court. As one lawyer told an opponent in a property case recently: “It doesn’t matter. You’ll never see the inside of a courtroom, we’re going to bankrupt you first.”
Then there are the judges, who rule only in favor of big law, such as the federal district judge in a foreclosure case who stated that the “..bank acted in bad faith and without cause, but it had the right to do so..,” and refused to hear evidence of verbal fraud.
Innocent people are destroyed every day, some many tiers from the actual event started by unethical lawyers, the victims of a legal system controlled by big money and lack of ethics at all levels.