Judge Balks at Dewey’s Bankruptcy Bonuses

Law firm culture seems to be coming up against bankruptcy law, as the ongoing Dewey & LeBoeuf saga took an interesting turn this week.

A sign is seen at the offices of Dewey & LeBoeuf in Palo Alto, California June 5, 2012. (Reuters)

The firm had hoped to pay employees that are helping wind down operations — people in HR, finance and IT mainly — a bonus totalling $450,000. This is chump change compared to pay packages that were offered to rainmakers that were lured to the firm (and which ultimately doomed the firm to bankruptcy).

Now, though, 450K sounds like a lot of money. U.S. Trustee Hope Davis objected to Dewey’s plan, arguing that the firm had not proven that the bonus was necessary or affordable (as required by American bankruptcy law).

Judge Martin Glenn, who’s presiding over the hearings, hasn’t put the kibosh on the bonuses just yet, but he’s asking for a list of employees and the amount to which each would be entitled under the plan.

Dewey lawyer Al Togut has argued strongly for the payments:

“There’s no future in working for Dewey & LeBoeuf — none,” he said. “There’s every reason for these people to leave. The only reason for them to stay is this application.”

Nick Brown is reporting on all of this for Reuters. Read his excellent report here.

-David Dias

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