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Impact of Dewey Collapse on Its Thousands of Clients

May 29, 2012
[ by Melanie Gretchen ] Dewey & LeBoeuf has finally filed for bankruptcy.  It's been coming.  No surprise there.  However, the aftershocks may be a different story, as the collapse hits home for the law firm's clients – all around the world, affecting thousands in a mass sweep. No Small Loss. The case of Dewey is an exceptional one.  At its peak, it had 1,300 lawyers, making it the largest law firm to fail, and the mass exodus over the past few months is nothing short of haemorrhaging. Before, during, or after a fall, clients can follow their lawyer to his/her new firm, search for new counsel, or use several lawyers.  Clients of Dewey have a new challenge ahead: waiting for massive amounts of client and case files - both the digital and physical varieties - to be transferred and merged into different systems, as lawyers relocate and legal teams are dismantled and reconstituted and litigation and deals become vulnerable to delay. "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. No Small Potatoes. Lloyd's of London, Allstate Corp and eBay Inc. were 3 of Dewey's major clients, so one can imagine who else is at risk.  Hundreds of victims of militant attacks in Israel have pursued litigation against Arab Bank Group that they claim provided financial services to Hamas and other militant groups probably didn't imagine their newest obstacle would be a delay as a result of the firm's collapse. Similarly, NewPage Corp, a paper producer, was delayed after shifting its bankruptcy case to Proskauer Rose, sticking with its lawyer Martin Bienenstock, formerly a member of Dewey's leadership team.  A judge justified pushing back a key filing based on the "period of extraordinary difficulties." For further details, go to [Reuters, 5/28/12].