When former Dewey & LeBoeuf partners blamed Citibank for not telling them about the dire state of the firm’s finances, they got short shrift. In today’s legal market, there’s no excuse for not scrutinising the balance sheet. Here’s LB’s definitive guide to all you need to know
When law firms fail, the fallout can be spectacular. Take the case of DLA Piper’s Berge Setrakian, a one-time corporate partner in the New York office of Dewey & LeBoeuf, who now finds himself on the hook for $3.5m that he has agreed to pay in return for being released from liabilities in the largest law firm failure in US history. His former colleague, white-collar defence attorney Ralph Ferrara (now at Proskauer Rose), will stump up $3.7m; M&A supremo Morton Pierce (now at White & Case) is set to pay $1.02m. The lesson: when things go wrong, partners get hit where it hurts.
To avoid any costly surprises, it pays to know your firm’s balance sheet inside out. But many don’t.