Thursday, March 6, 2014
Do We LeBoeuf or Not?
It's a story that writes its own jokes.
Today, the Securities and Exchange Commission filed felony fraud charges against executives of a former "big law" law firm. The firm was Dewey & LeBoeuf, the fairly recent amalgamation of two storied Manhattan firms with a combined total of 1,400 attorneys and hundreds of support staffers in two dozen offices around the world.
Although the firm was only created in 2007, by 2012 it had entered bankruptcy in a high-profile fall from grace that stunned America's legal industry. This was no simple default by a bumbling group of legal eagles. Dewey & LeBoeuf's top-flight client roster included corporate name brands like Disney, Dell, JP Morgan Chase, and Alcoa. At their height, annual billings topped nearly one billion dollars. Partners worked 60-hour weeks and took most of August off. They enjoyed base pay rates of one to three million dollars per year, plus bonuses, perks, and prestige.
Two of its top directors were gay, but that didn't bother anybody. One of them even had an authentic Cousin Vinny who was in the Mob, and actually put on trial for murder and conspiring to kill a judge. Once, the FBI asked this law firm executive to try and talk his jailed cousin into coping a plea - something the mobster flatly refused to do.
That particular director of the firm, among the ones indicted today by the SEC, is now a student at New York's famous Parsons The New School for Design. One website has already remarked that at least for him, "he’ll be happy to hear orange (the color of prison jumpsuits) is in this spring."
See what I mean about the jokes?
It's no laughing matter, however, that to date, D&L's bankruptcy is the largest of its kind in American history. And as details have emerged about the various factors that led to is demise, it's hard not to paint the whole story as one big, sordid tale of plain old greed. The SEC action claims that D&L's executives deliberately misled banks from which the firm was trying to obtain a line of credit, but lawyers for the, um, lawyers at D&L assert that no laws were technically broken. Apparently, according to them, it was all simply a matter of clients not paying swiftly enough to cover the extravagant payroll promised to celebrity partners.
Not that the former chairman of D&L will likely ever see the inside of a United States courthouse anyway. No, after recovering from prostate cancer, the former chairman took a job as chief legal officer to the government of Ras al Khaimah, one of seven semi-autonomous emirates that make up the United Arab Emirates. And conveniently for him, the UAE does not have an extradition treaty with the United States.
If he thought things got too hot in New York, he ain't seen nothin' yet in the Arabian peninsula.
For all the rest of the lawyers who had to abandon ship when D&L sank, it's unlikely that many of them were without employment for long. In fact, so many of them were bailing after the first cracks in D&L's hull became apparent, the outflow of talent became one of the reasons the firm couldn't survive. Mostly it was probably the secretaries, assistants, mail room clerks, and photocopy clerks who've been scrambling to find jobs in New York City's shrinking legal industry. If they're even interested in finding more work in that field.
Perhaps the biggest irony in all of this, however, can be found in the evidence released by the SEC in their indictments against the former leaders of D&L. Among other things, a treasure trove of allegedly incriminating e-mails has been collected from the defunct firm's IT servers, including the ever-so-subtle "I don't want to cook the books anymore" line, and "I don't see how we'll get past the auditors another year."
Adding to the irony is that some of the same guys writing and receiving these e-mails were the guys who used the firm's same e-mail servers to spy on partners within the firm.
How could smart people be so stupid as to use the same communication method to "allegedly" incriminate themselves that they used to dig up incriminating evidence on their co-workers?
When some right-wingers try to insist that America's One Percenters have earned all of their wealth - and virtually all of these partners were, and likely still are, One Percenters - cases like the collapse of Dewey & LeBoeuf cast serious doubt on that assumption. No matter how much money a person makes, there's still a big difference between earning it, and simply being paid.
Ever since the 1950's, when a long-time law firm in Manhattan welcomed the former governor of New York State, Thomas E. Dewey, to be a named partner (and become a precursor to Dewey & LeBoeuf), comics have reveled in the opportunity to name fictitious law firms "Dewey, Cheatem, and Howe."
Most recently, Tom and Ray Magliozzi, the affable brothers who created the "Car Talk" program for National Public Radio, put a New England spin on the humorous name by incorporating their enterprise as "Dewey, Cheetham, and Howe." Probably because car mechanics generally have just about as good a reputation as lawyers.
Do we cheat them? And how! Unfortunately, however, nobody's come up with a good rhyme for "LeBoeuf" yet.