In its current form, the firm is only four and a half years old, and since Dewey Ballantine merged with Manhattan counterpart LeBoeuf Lamb Greene & MacRae in October 2007, the practice has been on its own brutish rollercoaster. Ultimately, the combination of debt, a gaping hole in the retirement fund, reckless lateral-hires sweetened with monster guaranteed partnership draws and the worst global economic conditions for more than 75 years will bring down Dewey.
Well, not quite yet, of course. There is still a twitching body, but the partnership has haemorrhaged more than a third of its numbers since the beginning of the year and it is only a matter of time before the doors shut permanently. Indeed, conventional wisdom expects the insolvency specialists to be helicoptered in sometime next week.

Clean-up crew

But it is not just that clinical clean-up crew that will pick over the bones of Dewey. Manhattan District Attorney Cyrus Vance – the son of a former Secretary of State and himself an ex-white collar crime partner at New York firm Morvillo, Abramowitz, Grand, Isaon, Anello & Bohrer – is reported to have launched a criminal investigation into the activities of the firm’s senior management.
It is not a move he would have made lightly. As one experienced legal profession management consultant commented earlier this week: ‘The investigation will be about more than the firm simply inflating its revenue and profit figures for
The American Lawyer magazine.’
As traumatic as the story of Dewey is, what will be its wider impact? Is it a salutary tale for global law firms from Los Angeles to London – or is it simply a sad but specific story about one, once respected, but ultimately misguided, New York law firm? Opinion on the lessons is slightly divided. Some commentators are convinced that other global firms will be complacent about the Dewey saga at their peril. They maintain that some of the core ailments affecting the firm – ballooning debt and over-paid partners – are easily found elsewhere on both sides of the Atlantic.
However, others argue that Dewey is a specifically American tale, with the key component being the lack of restrictive covenants at US law firms that would prevent partners from poaching clients when they bail out to competitor practices. Law firm clients are more institutionalised in the UK, runs the argument, while the courts in the US have adamantly ruled that clients are entitled to be represented by the individual lawyer of their choice.

Spiral of decline

That US approach meant that once panic set in at Dewey and leading partners started to cut deals elsewhere, they immediately took clients (and revenue) with them. That created a spiral of decline from which ultimately there was no escape. And it is worth remembering that while Dewey is a high-profile implosion, it is by no means the only recent example of a prominent US law firm going to the wall. After all, it is still less than a year since Howery went bust.
It is not often that the travails of a law firm make the pages of the mainstream press from The Wall Street Journal to The New York Times to The Times in London, but Dewey’s demise has fascinated and enthralled imaginations beyond the legal sector. And it may yet be a sign of things to come.