March 27, 2012 4:04 PM
Dewey Shakes Up Management in Bid to Turn the Page
Posted by Julie Triedman
Correction, 3/28/2011, 9:30 a.m. EDT. An earlier draft incorrectly identified which firms Richard Shutran and Jeffrey Kessler were with prior to the 2007 merger. Both were at Dewey Ballantine.
Faced with a spate of high-level departures, questions about its fiscal health, and a wave of negative publicity, Dewey & LeBoeuf's leadership team told partners late Monday that, pending their approval, the firm will replace its current governance structure with a five-member "office of the chairman" and that London M&A partner Stephen Horvath will take control of day-to-day operations.
In a memo sent via e-mail to partners around the world late Monday, Dewey said the firm's executive committee, joined by more than 30 other senior partners, had reached an "overwhelming consensus" to change the firm's governance at a meeting earlier in the day.
The proposed changes require an amendment to Dewey's partnership agreement. A vote on the matter is likely to come next week.
Should partners approve the changes, Steven Davis will no longer serve as the firm's sole chairman. Instead, he will become one of five members of a new "office of the chairman" charged with "carrying out the firm's strategy to restructure its organization and concentrate on our core strengths," according to the memo, which was first reported on by Bloomberg and subsequently obtained by The Am Law Daily.
One of those poised to join Davis on the five-member chairmanship, Jeffrey Kessler—who heads Dewey's global litigation department and cochairs its sports litigation practice—says the new governance structure reflects the increasingly hands-on role he and other top partners have taken recently with regard to management matters: "In some ways, this is a formalization of what was already evolving."
At the same time, Kessler adds, there was a feeling within the firm that something significant needed to be done to counter the steady stream of unflattering Dewey stories that many media outlets have produced lately.
"The change is being made now in connection with a desire by the senior leaders of the firm to frankly put an end to the stories about the changes that have taken place at the firm," Kessler says. "This is a way for all the senior people to get together and say, 'We're going to come together to manage this firm, to focus on our core areas, and, please, let's end the stories and get back to the practice of law.'"
Many of those stories have focused on a series of lateral departures that have cut into Dewey's core practice groups. The firm has lost at least 37 partners so far this year, with the biggest hits including a 12-partner group led by insurance sector cochair Michael Groll, corporate finance cochair John Schwolsky, and U.S. M&A practice chair Alexander Dye going to Willkie, Farr & Gallagher two weeks ago and six more insurance partners heading to Sutherland Asbill & Brennan last week. (The latest defector, Sean Gorman, the former managing partner of Dewey's Houston office, jumped to a Texas litigation boutique on Monday.)
Dewey is also facing questions about its finances. As previously reported by The Am Law Daily, its gross revenue and profits per partner rose only slightly last year. Meanwhile, the firm is contending with substantial debt obligations. In addition to renegotiating a $100 million line of credit it has taken from a group of lenders, the firm must begin repaying a reported $125 million in bonds it sold in 2010 next year.
On the subject of the firm's debt, Kessler says Dewey is in fine shape. "We're not going to comment generally about the banks. I will say we don't feel we have any problem with the banks," he says. "It's a routine renewal of a line of credit."
On top of relinquishing his role as sole chairman and restarting his practice, according to Monday's memo, Davis—who was elected to a second, five-year term in the firm's top management post just six months ago—is "relocating to London and concentrating on our international offices to work with his many client contacts helping both the firm’s clients and its various departments across the firm."
In addition to Kessler, those in line to join Davis as "office of the chairman" members include: Martin Bienenstock, chairman of the firm's business solutions and governance department and chair of the firm's consumer financial services group; L. Charles Landgraf, chairman of the legislative and public policy practice group and managing partner of the Washington, D.C., office; and Richard Shutran, chairman of the corporate department, as well as the firm's global finance practice group. All currently sit on Dewey's 20-member executive committee.
Davis and Landgraf were LeBoeuf, Lamb, Greene & MacRae partners prior to the 2007 merger with Dewey Ballantine from which Dewey & LeBoeuf was born. Bienenstock was among the star laterals brought into the merged firm by Davis. Kessler and Shutran were Dewey Ballantine partners before the merger.
In another major shift, the firm is proposing the creation of a new position, executive partner, to be filled initially by Horvath, who, according to the memo "will carry out the day-to-day responsibilities of implementing the directions of the Executive Committee and the Office of the Chairman."
In the newly created position, Horvath—who joined Dewey Ballantine from Hunton & Williams in 2002—will essentially assume the duties currently performed by executive director Stephen DiCarmine, whose future role was left unclear in the memo.
"Partners wanted more partner direction in the management," says Kessler in describing the logic behind creation the executive partner post. As for DiCarmine, Kessler says he is a "member of the professional staff" who now "will report to Horvath."
Also unclear is what roles firm vice-chairs Morton Pierce—the onetime chair of Dewey Ballantine who led his firm into the merger—and Ralph Ferrara—a lateral brought into LeBoeuf Lamb by Davis in 2004—will play in the new leadership structure. They were appointed to those positions in mid-2010 in order to focus on client development.
"Nothing has been announced yet," Kessler says of Pierce and Ferrara. "We'll look at changes to the vice-chairman position going forward."
If approved by the partnership, the office of the chairman as proposed would run the firm for the balance of the year. At that point, a newly elected executive committee will determine which five partners should make up the office.
The memo also notes that firm leaders are sensitive to internal concerns that the full partnership isn't being fully informed about critical matters.
"We have also heard your requests for more direct communication with partners on internal matters, including compensation and, if approved, the Committee intends to respond to that request," the memo states.
Sara Randazzo contributed reporting.Make a comment