Elite New York Law Firm Hires Prominent Bankruptcy Lawyer
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Elite New York Law Firm Quietly Hires Prominent Bankruptcy Lawyer

May 4, 2012

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New York law firm Dewey & LeBoeuf, one of the largest firms in the United States, has hired a high-profile bankruptcy attorney as it struggles with mounting debts, according to a recent report from Reuters.

Sources indicate that the firm has retained the services of Albert Togut, who has represented scores of large companies in bankruptcy court, to consult with at least one member of the famous firm’s management team.

The firm has reportedly had to deal with severe financial pressure, which led to the departure of 23 percent of its partners since the start of this year. The loss of such a substantial number of partners has placed a serious dent in the firm, which employs roughly 950 lawyers.

In 2011, Dewey found itself unable to pay many of its long-term partners after the firm hired several high-profile attorneys. According to two partners who have left the firm, Dewey is in severe debt, including an unpaid $125 million debt, which has crippled its ability to pay all its attorneys.

Since most law firms are very conservative with their investments, such a substantial amount of debt is almost unprecedented at a major law firm. In response to the speculation, Togut has remained silent, and a spokesperson for Dewey simply told reporters that the firm “does not comment on speculation.”

Despite the speculation, sources are quick to note that the hiring of a prominent bankruptcy lawyer does not necessarily mean that the firm is preparing to file for bankruptcy. An alternative explanation for Togut’s presence could simply be that the attorney has been hired to help the firm renegotiate its debt with angry creditors.

Bankruptcy attorneys often help companies sort through their debt issues before heading to bankruptcy court. But a partner who left the firm has also suggested that the firm could be bracing itself for a pre-packaged bankruptcy, which would potentially allow Dewey to merge with another law firm.

In a pre-packaged bankruptcy, Dewey could reach an agreement with creditors before filing for bankruptcy, which would probably expedite the debt relief process. Of course, this strategy requires intense negotiations with the creditors outside of court.


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