Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Dewey Gives Partners Permission to Poach Associates

Neils Busch | Digital Vision | Getty Images

I'm still at the Milken Institute Global Conference in Los Angeles, which means I'm very far from the dramatic meltdown of Dewey & LeBoeuf. There are not, as far as I've been able to discover, any Dewey partners on the program of speakers.

But I wanted to make a point about the internal memo the law firm has sent out, encouraging its partners to seek new jobs.

First, via website AboveTheLaw, here's the memo:

To: Global Partners

From: Office of the Chairman

The EC and OC have determined that, given the current situation, the priority of the firm should be to help partners to find the best opportunities for their clients, the firm’s employees, and themselves.

In this regard, we will continue to discuss potential transactions with other firms and present opportunities to partners that arise from these discussions. At the same time, all partners, including EC and OC members, are encouraged to seek out alternative opportunities for themselves or groups of partners, as appropriate, but to keep the OC advised of these opportunities if they come to fruition so that these can, if possible, be carried out in a coordinated and mutually beneficial manner. The EC has determined that it is in the best interest of the firm that OC and EC members and the Executive Partner continue to serve on these bodies while they seek out opportunities.

All partners should feel free to pursue such discussions, including with any firms that have previously been in discussions with the firm.

In connection with such discussions, we ask that you advise any firms you consider that it may be beneficial to DL’s creditors for you to continue collecting outstanding receivables and unbilled inventory from clients whose matters move with you to new firms. This could also lead to arrangements that are beneficial to all parties. To the extent a new firm may need some of our associates or nonlegal staff, you can discuss them with them so that we can coordinate and help provide new jobs for our employees.

Please note that the firm is carrying on its business, servicing its clients, and paying its bills. At the same time, it is undertaking to find new employment for its legal and nonlegal staff while administering its assets carefully. We thank everyone for their continued support during this difficult time.

While it should be unnecessary to say, this email is confidential and should not be shared with anyone else inside or outside the firm, including the press.

What really makes this letter extraordinary, however, is that Dewey isn't just encouraging partners to find new jobs. Partners are almost always free to pursue their own interests by seeking to work at other firms.

As I read the memo, Dewey partners are now authorized to do something partners are not usually free to do: arrange to recruit the Dewey associates to come with them. Typically, a partner at a law firm has a fiduciary duty to his fellow partners not to engage in poaching. So the partners arrange to leave in secret, and the associates are recruited by the hiring people at the new firm. Often, the actual offers are not made until after the partners have departed, extinguishing their fiduciary duty.

This is one of the things that can make moving a group of lawyers from one firm to another very complicated. The partners have to be careful not to violate their fiduciary duty. The new firm has to recruit associates while keeping the news of the defection confidential. Often, there's a lot of secret discussions in which the news of a potential move starts with a senior partner, goes down to a junior partner, then to the most senior associate and down the line to the legal assistants.

As I read this, Dewey has told partners and law firms that there's no need to engage in this weird recruiting dance now. Partners are free to pursue opportunities with other firms. And Dewey will help them find new jobs for the associates.

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