The Dewey Mistrial

The Takeaway from a BigLaw Implosion and Exoneration, Sort Of

takeaway from a BigLaw implosion
: Juanmonino/E+/Getty Images.

Any number of books could be written about the saga of the law firm that was Dewey & LeBoeuf, its very high rise, and its very hard fall. This aftermath included the closing of the firm, its bankruptcy filing, and the inauguration of criminal charges against its former chair, executive director, and chief financial officer. After a five-month trial, seeming miles of type chronicling the mess on all sorts of platforms, the three accused of, essentially, destroying the firm, were acquitted of some charges (58 counts of falsifying business records), and a mistrial was declared after the jury was unable to reach a verdict on the others (93 counts including conspiracy, grand larceny, and scheme to defraud).

The whole grand muddle yielded all sorts of responses from the legal world and other spheres.

Some of us couldn’t help but think, “those lucky dogs,” while others were quick to chastise the way the Manhattan District Attorney’s office handled the pursuit. Some of us also question the ability of juries to deal well with complicated matters, especially those involving lots of transactions, plenty of possibly culpable individuals, loads of emails, and math. While I personally would have loved to serve on this jury (and then would probably have written a book about the experience myself), those of us in the legal realm have to remember that people in the real world aren’t quite so fascinated by BigLaw finances and alleged mismanagement. All I personally could really think when I heard the outcome of the case is, which jury consultant worked with the defendants? And then, who represented the defendants?

I’m fairly confident that if I get into a heap of financial trouble of the sort that yields a big splashy criminal trial, I want that group to be advising me.

Whatever personal fascination with or cool professional curiosity we might have for the Dewey affair, we must also remember that there are, in fact, some very valuable takeaways for small law firms from this entire bit of business:

  • Know your firm’s financial status. Understanding spreadsheets isn’t easy, and, if we’re candid with ourselves, we will remember that law firm finances typically weren’t covered during many of our law school years. Even if the numbers “look about right” to you, consider having an independent reviewer take a peek (of course, within the scope of your partnership or employment agreement and within the scope of the rules of professional responsibility).
  • Institute a system of checks and balances — and contemplate worst-case scenarios. Dewey & LeBoeuf embarked on a course where it was paying a lot of money to some very valuable stars. The problem is, most stars think they’re equally as shiny as their fellow stars, and they want just as much gold dust to filter their way. A big-name partner may be worthwhile and may merit exorbitant pay to keep her happy and productive, but think for at least a minute about what happens when there’s a teensy cash flow problem. Then think about what happens when there’s a teensy cash flow problem, a credit line cut off, a heap of unpaid bills, a hemorrhage of other stars, and vicious arguments among partners. Then contemplate whether you have, at all, been rewarding anyone for true loyalty all these years.
  • Question whether the numbers match what’s really happening. Are your law firm’s spreadsheets showing that the business is profitable while vendors are shutting off services (phone, copying, legal research)? Are reports about money spent on certain activities not quite meshing with the experience of them (such as a very expensive holiday party with poor service and cheap food held in an unimpressive venue)? Does anything seem off?
  • Scrutinize reactions when you question the finances. If everyone is afraid to question the top dogs, or if they’re consistently rebuffed, or if the responses are defensive, or if there’s no real robust discussion, just a my-way-or-the-highway attitude, if people are afraid to say ‘no’ to a higher power, something is wrong. It might not just be that egocentric blowhards are calling the shots. The reason they might not like fielding specific questions is that the accounting might be something of a charade.
  • Allow candor in discussions – but keep it out of emails. We all know better, don’t we? Arguments with our fellow partners can be robust, but potentially incriminating commentary should not find its way into emails. Enough said.
  • Reassess any merger strategy. The sad, if not as sad as it might have been, end of Dewey really began with the ill-fated 2007 merger of Dewey Ballantine with LeBoeuf Lamb and the consequent emphasis on recruiting highly paid talent. If the only way you can make a marriage successful is by throwing vast amounts of money at it, maybe refrain from walking down the aisle in the first place.