Fallout from Dewey collapse hits clients (REUTERS) By Nate Raymond and Jessica Dye NEW YORK 05/28/12 2:40pm EDT)
Reuters News Service
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(Reuters) - For eight years, hundreds of victims of militant attacks
in Israel have pursued litigation against a Jordanian bank they claim
provided financial services to Hamas and other militant groups. Now
the plaintiffs have a new legal hurdle to overcome: the collapse of
law firm Dewey & LeBoeuf.
A group of lawyers from the New York-based law firm represent Arab
Bank Group, the defendant in the suit. Now, with Dewey on the verge
of shuttering and those lawyers scattering, U.S. District Judge Nina
Gershon of Brooklyn, New York, granted the bank a 60-day reprieve
from several court deadlines.
Gershon cited the "extraordinary" events at Dewey, which Arab Bank
said have "decimated" its defense team. Janis Meyer, Dewey´s general
counsel, who is helping to oversee the wind-down of the firm, did not
respond to requests for comment.
Dewey & LeBoeuf, until recently one of the largest law firms in the
United States with at one time up to 1,300 lawyers around the world,
has been saddled by debt and unable to make good on compensation
promises to key partners. Just a handful of lawyers remain, and it is
considering filing for bankruptcy.
When a law firm fails - and Dewey is the largest-ever U.S. firm to
confront that fate - it obviously can be traumatic for the partners,
associates, and support staff who called that firm home. But clients
can be buffeted, too, whether they decide to move their legal work to
their lawyer´s new firm, hunt for different counsel, or spread the
Litigation and deals can be delayed as lawyers relocate and legal
teams are dismantled and reconstituted. Massive amounts of client and
case files - both the digital and physical varieties - must be
transferred and merged into different systems.
It is not unusual for lawyers or groups of lawyers to defect to other
firms and to take their clients with them. What is unusual in the
Dewey situation is that this exodus has happened on a massive scale,
and in a very short time frame.
THOUSANDS OF CLIENTS AFFECTED
"Thousands of former Dewey clients are now seeking new counsel,
leaving hundreds of thousands of client records waiting to undergo
this process," a Dewey associate who has since left the firm, Douglas
Mateyaschuk, said in a court filing.
Dewey´s major clients included Lloyd´s of London, Allstate Corp and
eBay Inc. All of them declined to comment or else did not respond to
inquiries about the demise of Dewey.
Among other clients, Oclaro Inc, an optical components maker, moved
its proposed $177 million purchase of competitor Opnext Inc to Weil,
Gotshal & Manges, after Silicon Valley dealmaker Keith Flaum defected
to Weil, Gotshal from Dewey earlier this month. And when the NFL
Players Association last week sued the league, claiming that teams
colluded to set a secret salary cap, it relied on longtime counsel
Jeffrey Kessler, who recently defected from Dewey to Winston & Strawn.
There are no indications that any of Dewey´s now-former clients have
suffered any actual harm as a result of Dewey´s downfall. But at
least one other matter has been delayed.
NewPage Corp, a paper producer, shifted its bankruptcy case to
Proskauer Rose, sticking with its lawyer Martin Bienenstock, formerly
a member of Dewey´s leadership team. As in the Arab Bank case, a
judge has approved a delay in the NewPage proceedings, ruling that
the "period of extraordinary difficulties" justified pushing back a
Bienenstock said in an email that court delays are routine and are
granted for all sorts of reasons, "such as attorneys wanting to
attend their kids´ graduations."
The Arab Bank case started in 2004, when dozens of victims of
violence in Israel claimed that the bank bore some responsibility for
a series of suicide bombings and other attacks carried out by
Palestinian groups served by the bank. The plaintiffs are seeking an
unspecified amount in monetary damages from the bank, one of the
largest financial institutions in the Middle East. Many similar
lawsuits have since been filed, and the cases were consolidated.
The bank has denied the claims, arguing that there is no proof that
its actions could be linked to any attacks, or that senior bank
officials were aware of any links between some of its clients and
Hamas. A spokesman for Arab Bank declined comment.
Hamas leaders have offered a long-term truce with Israel in return
for a viable Palestinian state in the occupied West Bank and the Gaza
Strip. The Islamist group continues to say it will not formally
recognize Israel and its 1988 founding charter calls for the
destruction of the Jewish state.
The Arab Bank litigation now includes more than 1,000 claims, said
Michael Elsner of Motley Rice, one of the lead plaintiff´s firms in
the litigation. Elsner has generally gone along with the recent
delays, though in a court filing he emphasized his clients´ interest
in bringing the case to trial "as expeditiously as possible."
Arab Bank has had to navigate a change in counsel before - when its
lead lawyer on the case, Kevin Walsh, left Winston & Strawn in 2005
to join LeBoeuf, Lamb, Greene & MacRae, which later merged with
another firm to form Dewey & LeBoeuf.
This time around it is more complicated, as Arab Bank´s legal team
has fractured. Walsh, who left Dewey for DLA Piper, is still lead
counsel on the matter. But Arab Bank said that 17 Dewey lawyers were
working on the case, and only five of them are joining DLA Piper.
Several of those Dewey lawyers, according to an affidavit by former
Dewey associate Mateyaschuk, now with DLA Piper, have been focused
on "little more than administrative and organizational tasks" related
to moving the case to DLA Piper.
Walsh must now assemble a new team, which according to an Arab Bank
brief "will face the enormous task of mastering the sprawling factual
record generated by over eight years of intensive discovery." Walsh
MILLIONS OF PAGES
That record, Arab Bank said in a court filing, includes nearly 1
million pages of documents, expert reports, and exhibits as well as
1,000 hours of depositions - some by victims, attack eyewitnesses,
and emergency responders in the Middle East. Much of that is
contained in electronic files and in hundreds of boxes housed at the
firm´s New York headquarters.
Dewey, like all major firms, has an internal process designed for the
careful transfer of files. Nevertheless, Dewey & LeBoeuf, confronted
with this task for multiple cases at the same time, estimated it
would take up to four weeks to hand over the material, Arab Bank said
in the court filing.
It is not clear how long it will take until Arab Bank´s legal forces
are ready to jump back into the case, but no one should be surprised
by additional delays.
"Once the defendant´s legal team is in place," Judge Gershon said in
a May 15 order, "any further scheduling applications can be
considered based on the then situation, as necessary."
(Reporting by Nate Raymond and Jessica Dye; Editing by Eric Effron
and Matthew Lewis) (© Thomson Reuters 2012. 05/28/12)
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