Several months ago I blogged on an aspect of the fall-out of the collapse of law firm Dewey & Le Boeuf. Now it seems the position has become even bleaker for a number of former senior executives within that practice.
Dewey & Le Boeuf was formed in a 2007 merger of two New York law firms, Dewey Ballantine and Le Boeuf, Lamb, Greene & MacRae. Its collapse and bankruptcy was one of the largest and most spectacular ever involving a law firm.
In early March 2014 its former chairman, executive director, chief financial officer and client relations manager were all charged in the criminal Court of Manhattan New York with theft, securities fraud and falsifying business records. All four men have pleaded not guilty. Mr. Davis, the former Dewey Le Boeuf chairman lives in London and has had to agree to travel restrictions as a condition of his bail which is set at US$2m.
Separately, the U.S. Securities and Exchange Commission has filed a civil fraud claim against five former Dewey Le Boeuf officials including Mr. Davis. That claim relates to the same subject matter as the proceedings which originally caught my eye in which a number of insurers, led by Royal Sun Alliance, claim that these same individuals deliberately misrepresented the finances of Dewey Le Boeuf in connection with a US$150m bond offering that took place in 2010.
I have no idea whether any of these individuals have access to D&O insurance with which to defend themselves in these various civil and criminal proceedings but of one thing we can, I think, be fairly certain: Given the sheer size, complexity and number of proceedings in which these individuals are embroiled, if they do have D&O insurance which is responding, the burn rate on any remaining limits will be ferocious.