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Dewey Culprit Freed From Debts Partners Forced To Pay

 

That Davis—who has been unemployed since being forced out of Dewey in the firm's waning days—must earn at least $6 million over the next six years in order to pay off the settlement in full, and can walk away debt-free even if he doesn't, is stirring outrage among some of his former colleagues. 
"The retirees and former partners with whom I have spoken feel shocked and betrayed," says David Bicks, a retired Dewey & LeBoeuf partner who, along with other disgruntled retirees, fought with the estate over how much they were being asked to contribute before settling the dispute in February. "It's very hard to reconcile the principal architect of the debacle paying nothing at this time while the retirees and innocent partner victims have had to pay back money to the firm. Davis’s note is regarded as a sham."
Lawyers at Brown Rudnick who represent Dewey's new liquidation trustee, Alan Jacobs, declined to comment on the terms of the Davis settlement, as did Jacobs. In a declaration filed with the court Monday, Jacobs stated that "the benefits of the proposed settlement decisively outweigh the benefits of proceeding with litigation" given Davis's position that he would "vigorously" defend himself against any mismanagement claims. Jacobs also said in the filing that Davis's status as a "collection risk" based on a review of his tax returns, bank statements, and other financial records was "a leading factor" in how the note was structured. 
The advisers who preceded Jacobs in the Dewey bankruptcy did not subject any other lawyers' personal finances to similar scrutiny in putting together the so-called partner contribution plan that required former partners to pay the estate between $5,000 and $3.37 million based on how much money they received from the firm in 2011 and 2012. Those who signed on to that plan had to make their payments by April 5. The settlement was the linchpin of a Chapter 11 liquidation plan approved February 27, eight months after the firm went bankrupt

This just in from the American Lawyer on the man who allegedly caused the downfall of a once great international law firm.

The settlement appears to be a virtual hologram of the misdeeds with which he is charged. Being the spouse of a Heller partner with many Heller friends who were subjected to the threats of the creditors' committee, I feel this man's partners' pain.

As of next year, former Dewey & LeBoeuf chairman Steven Davis—faulted by many both inside and outside the firm as the chief culprit in its collapse—is to begin chipping away at the $511,145 he has agreed to give the Dewey estate to help satisfy creditors under a broader settlement that protects him against potential mismanagement claims.

 Unlike more than 500 other former partners who were required to make payments to the defunct firm's estate by early April in exchange for a release from Dewey-related liability, Davis has considerably more time to meet his obligations. Starting on March 22, 2014, court filings show, he must pay the estate a sum equal to 8 percent of his annual earnings each year for the next six years. Any outstanding balance will accrue interest at a rate of 9 percent annually.

Once that March 2019 payment is made, though, whatever debt Davis still owes will be wiped away . . . That Davis—who has been unemployed since being forced out of Dewey in the firm's waning days—must earn at least $6 million over the next six years in order to pay off the settlement in full, and can walk away debt-free even if he doesn't, is stirring outrage among some of his former colleagues. 

Read on at the American Lawyer here.

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