(Corrects spelling of name in seventh paragraph of story published April 18.)
Dewey & LeBoeuf LLP’s struggle to survive a defection crisis that has seen it lose 20 percent of its partners is intensifying as its 42-lawyer Moscow outpost seeks to decamp to another U.S. law firm, according to a person familiar with the negotiations.
More than 60 partners have departed New York-based Dewey over the past several months during what the firm has called a restructuring process. The largest contingent to leave was a group of 12 insurance and regulatory lawyers who went to Willkie Farr & Gallagher LLP last month.
The firms in talks with Dewey’s Russia-based lawyers include Orrick Herrington & Sutcliffe LLP, Winston & Strawn LLP and King & Spalding LLP, said the person, who declined to be identified because they weren’t authorized to speak publicly on the matter.
Dewey has had a Russian presence since 1990 and currently houses 12 partners there, according to U.K.-based spokesman Duncan Miller. With one of the larger Russian offices of the international law firms in Moscow, its team focuses on corporate and finance work in the energy sector.
Garry Pegg, co-managing partner of Atlanta-based King & Spalding’s London office; David Schaefer, a spokesman for San Francisco-based Orrick; and Thomas Benz, a partner in Chicago- based Winston’s London office, didn’t immediately return calls seeking comment.
Yesterday, eight lawyers, including several members of Dewey’s key utilities, power and pipelines industry group, left for Hunton & Williams LLP and Pillsbury Winthrop Shaw Pittman LLP. The drumbeat of departures, if it continues, may trigger requirements to pay back loans, a law firm consultant said.
“I think the departures are likely of concern internally and to providers of capital to the firm,” said Kent Zimmermann, a Zeughauser Group consultant. “This just fuels the perception that is widely held in the market that the firm is in a spiral.”
At issue are Dewey’s loan agreements tied to its lines of credit, the consultant said. Typically, law firms are required to maintain a certain number or percentage of partners, said Zimmermann. Dewey is in renegotiation talks with lenders including Citigroup Inc. (C:US) on restructuring its credit lines, the firm said.
“We’re in ongoing discussions and they’re private,” Angelo Kakolyris, a spokesman for the firm, said today. He declined to comment on the Russia office.
New York-based Citigroup said yesterday the firm is still in good standing. The New York Times reported earlier, citing three unidentified sources, Dewey’s talks with its banks.
“Dewey LeBoeuf is a client in good standing with Citi Private Bank,” Dan DiPietro, chairman of Citi’s Law Firm Group, said in an e-mailed statement. “Citi has had a banking relationship with the firm dating back to the early 1970s and continues to provide banking services to a significant percentage of the partners and associates.”
Dewey has maintained that the departures are consistent with the reduced headcount contemplated by the firm’s restructuring plan. Further departures are expected, the firm said in a statement yesterday.
“Their best hope is loyalty,” Zimmermann said. “At this point what Dewey needs to do is to retain their top talent and attract strong talent and the hill keeps getting steeper.”
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