Debt-ridden law firm Dewey & LeBoeuf goes under

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The Independent Online

The clients and partners of Dewey & LeBoeuf were last night picking up the pieces after the biggest-ever failure of an international law firm.

The firm filed for Chapter 11 bankruptcy protection in New York late on Monday, marking the conclusion of a long death spiral that began earlier this year when it tried to cut the pay of its generously remunerated partners.

The resulting partner defections decimated the firm, and it told the bankruptcy court that it now owed $245m (£156m), compared to assets of just $193m.

Dewey & LeBoeuf had also built a substantial London office, where 140 lawyers worked on corporate mergers and acquisitions and financial deals that spanned Europe. Yesterday, on both sides of the Atlantic, the firm was reduced to a rump of a few dozen employees who will work to wind down what is left of the business.

Joff Mitchell, Dewey's chief restructuring officer, said the firm had been hobbled since its creation by the merger of Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae in 2007 – just before the financial crisis struck.

"These negative economic conditions, combined with the firm's rapid growth and partnership compensation arrangements, created a situation where the cash flow was insufficient to cover capital expenses and full compensation expectations," he said.

In the UK, the insolvency firm BDO appointed restructuring partners Mark Shaw and Shay Bannon as joint administrators over the British arm Dewey & LeBoeuf LLP and a subsidiary in Paris.