As LB was going to press, news emerged that Dewey & LeBoeuf was set to lose its recently acquired London private equity team, which includes two partners and nine associates, to McDermott Will & Emery. So another two partners have jumped ship, bringing the total number of partner exits close to 70 since the turn of the year. It is entirely possible that by the time you read this, further departures will have occurred.
The pair of partners joining McDermott – private equity chief Mark Davis and partner Russell Van Praagh – only crossed over to Dewey last year from Taylor Wessing. So far this year, the firm’s London office has lost, or is losing, nearly ten partners, meaning 30% of the office’s 33 partners will be gone by the end of May.
Sound familiar? In the days leading up to the collapse of Howrey a year ago, most of the firm’s partnership had exited, leaving management no other option than to dissolve the firm.
Much like Dewey, the departures saw practice heads and office managing partners join rivals in all of Howrey’s major jurisdictions, with Winston & Strawn and Morgan, Lewis & Bockius doing particularly well out of the fallout.
Similarly, in the days leading up to the 2008 disintegration of Heller Ehrman, a total of 50 partners left the firm before management finally threw in the towel. The firm was hit hardest when a team of 15 IP partners went to Covington & Burling, leading to the firm’s banks calling in their debts.
Management has taken the ostrich approach to answering questions from the press.
US firms are more vulnerable to mass walkouts. Unlike in UK firms, US partners can give little notice period and have no restrictive covenant clauses written into their partnership agreements, meaning that departures can be like a run on a bank for a firm.
So, the flares should be going off in Dewey’s Manhattan headquarters. Management has taken the ostrich approach to answering questions from the press about the future of the firm, leaving us to speculate whether the firm will indeed be around this time next year.
Every fact check sent over by LB to the firm was sent back by management via a beleaguered PR manager with the line: ‘We are not verifying any of the figures.’ This was followed by a statement assuring us that the firm is on a ‘solid’ financial footing.
‘Revenue for the first two months of this year is up 28% compared to the same period last year,’ said the statement. It goes on to reassure: ‘Revenue for the 12 month period ending 2/29/2012 is up 6.1%, compared to the 12 month period ending 2/28/2011.’
Nothing to worry about then. However, it doesn’t negate the fact that the firm’s most prized assets – its partners – are leaving in droves.
While some will certainly be managed exits, to suggest a firm has planned to lose around a fifth of its global partnership in five months is ridiculous.
Management needs to offer answers rather than hiding behind vague corporate statements and hoping it will all go away. With the vultures circling the remaining talent, more departures are likely. By the time this issue of LB hits desks, Dewey could be much smaller.