A NNALS OF LAW THE COLLAPSE How a top legalfirm destroyed itse(f BY JAMES B. STEWART n an April morning in Manhattan A group of Dewey & LeBoeuf LLP part­ in his briefcase, and walked to the eleva­ last year, Steven Davis, the former ners has asked the New York district attor­ tor. He never returned. O ney to bring c(iminal charges against the chairman ofthe law firm ofD ewey & Le­ chairman of the totrering firm, which could A month later, on May 28, 2012, Boeuf, reached for his ringing cell phone. dose its doors as early as next week, a source Dewey & LeBoeuf.filed for bankruptcy. He was sitting in the back seat of a taxi, familiar with the matter said Thursday. The Times called it the largest law-firm The source told Law360 that an un­ on the way downtown to renew his pass­ disclosed number of partners from Dewey collapse in United States history. The port. Dewey & LeBoeuf, which was often asked the New York County district attorney firm embodied a business strategy that referred to in the press as a global "super to charge the chairman, Steven H. Davis, has begun to supplant the traditional part­ with embezzlement, wire fraud, mail fraud finn," was largely his creation. In 2007, he and other criminal activity. nership values of loyalty and collegiality had engineered the merger ofa profitable with an insistence upon expansion: by but staid midsized specialty firm- Le­ Davis immediately returned to his merging with another firm (and a Boeuf, Lamb, Greene &MacRae-with office, on the forty-third floor of a sky­ different culture) or by offering unwieldy a less profitable but much better- known scraper on Sixth Avenue near Fifty-sec­ financial packages to lure partners from firm, Dewey Ballantine. (Thomas E. Dewey, ond Street. He sat at his desk, wondering rival institutions. the former Republican Presidential nom­ what to do, and soon got a call from Ste­ It was just as well that DiCarmine had inee, was for many years the guiding part­ phen DiCarmine, the firm's executive di­ come up with a list of criminal-defense ner.) "Dewey married money, LeBoeuf rector, who asked him if he had seen the lawyers. ltwasn'tlong before he read news married up" was how some characterized Law360 article. T he source mentioned reports stating that he, too, was under the union. It was the largest merger of in the piece-preswnably a fellow-part­ criminal investigation. New York law .firms in history, and the ner- had referred to Davis as a "sinister new firm had more than thirteen hw1dred character," who was "running the firm THE TWO STEVES lawyers. Dewey & LeBoeuf handled like a mafia." A few weeks earlier, an­ high-profile transactions for an enviable other partner had walked by D avis's sec­ avis, who is sixty, wears wire­ roster of corporate clients: Lloyd's and retary and muttered, "Your boss is going Drimmed glasses and has the mild A.I.G. in insurance; Duke and BP in en­ to jail." marmer of a diplomat or a professor. H e ergy; JPMorgan Chase and Bardays in Davis and DiCarmine were known graduated from Stuyvesant High School, banking; Disney in media and entertain­ at the firm as "the two Steves." After the in Manhattan, near the top of his class ment; Dell and eBay in technology; and 2008 financial crisis, DiCarmine had car­ and went on toYale andYale Law School. Alcoa in manufacturing. Under Davis's ried out, at Davis's behest, the unpleasant He was offered a job at LeBoeuf on the leadership, a nwnber ofthe finn's partners tasks that Davis considered necessary for same day he interviewed. When he joined, had joined the ranks of the highest-paid the firm's survival. By D iCarmine's reck­ as an associate, in 1977, LeBoeuf was a corporate lawyers in the country. oning, he'd fired a hundred and thirty niche firm, focussing on utilities, energy, Now, five years later, Davis's vision partners, four hundred associates, and and insurance clients. was in ruins. He had been stripped of his three hw1dred and fifty support people­ L eBoeuf's compensation system tide ofchairman, and was being exiled to a bloodletting virtually unprecedented differed from that ofthe other white-shoe the London branch. The partnership was among big firms. Even so, he couldn't un­ law firms in New York Those firms still riven by intrigue, animosities, and defec­ derstand why anyone would despise D avis largely adhered to what is known as dle tions. I twas W1Certain d1atthe finn would enough to go to the district attorney. Cravath system, developed by Paul D. survive. DiCarmine offered to help find a Cravath, the presiding partner at Cravath, Davis saw that the call was from a col­ criminal-defense lawyer. Davis seemed Swaine & Moore from 1906 until his league in Dewey & LeBoeuf's Riyadh paralyzed. He had given up his life for the death, in 1940. Collective well-being took office. 'What about this lawsuit?" the col­ firm. He'd cut his own pay from four mil­ precedence over the self-interest ofindi ­ league asked. lion to three hundred thousand dollars, vidual partners. The firms were true part­ 'What are you talking about?" the same as the lowest-paid partner in nerships, in which financial risks and re­ The colleague e-mailed him an article good standing. 'Why don't you just leave, wards were shared equally. Partners were from a popular law Web site called go home?" DiCarmine suggested. generally chosen from among the finn's Law360. Davis read it on his phone as He was right, Davis thought. What associates, all of whom were steeped in he stood on the curb outside the pass­ am I doing here? He cancelled lunch with its culture and traditions. Partners were port office: a partner, put a notebook and a few papers paid the same "lockstep" compensation 80 THE NEW YOI\KEI\. OCTOilEI\ 14, 2013 A t one meeting, Steven Davis said, "'fit is only money that holds afirm and its partners together, then there is really no glue at all." ILLUSTRATION BY BARRY BLITT THE NEW '101\KEI\, OClOBEI\ 14, 2013 81 and benefits, the total amount based on hw1ter for a law firm called, looking for a seventy-fifth-anniversary celebration, at seniority. "managing attorney," a job that tun1ed out Le Cirque, DiCarmine advised him not The Cravath system assumed that all to be administering the work of the firm to. But Davis did anyway, and he invited the partners worked together and contrib­ rather than practicing law. In 1998, he his ex-wife, too. No one seemed to take uted collectively to the firm's success. No made his way to LeBoeuf, whim needed it amiss. one had to be a "rainmaker," or client-get­ someone to help manage its expansion I n tl1e summer of 2003, Davis's co­ ter. The idea was distasteful. The way to and market the firm. chairman announced his resignation, attract and keep clients was not by selling, Cousin Vinny, meanwhile, worked in leaving Davis in charge. Davis wasn't marketing, or promoting oneself but by constmction, built condos, and went to a dictatorial partner, in ilie Randall Le­ doing solid work. It was all but unheard­ Hollywood and then Las Vegas. DiCar­ Boeuf mold, but he was ambitious. Run­ of for big corporations to pit one firm mine's aw1t died in 1993, and at her fu­ tung the firm became nearly a full-time against another, or to comparison-shop neral, in the Bronx, DiCarmine noticed job, which meant that he had few direct for lower fees. men who seemed to be bodyguards exam­ client relationships of his own. He oper­ LeBoeuf, founded in 1929, allocated ining the flowers. In tl1e receiving line, ated by consensus, shuttling among part­ compensation based on individual perfor­ men in dark suits bowed and kissed his ners and offices, and through the finn's mance. The dominant partner, Randall cousin's hand. During a Christmas Eve executive committee, relying on DiCar­ LeBoeuf, Jr., provided the financial un­ dinner at Vinn}ls house, a van filled with mine to carry out decisions. LeBoeufhad derpimtings. Around the firm, he was said F.B.I. agents arrived and parked outside. long prided itself on ilie fact tl1at the part­ to be the highest-paid lawyer on Wall Vinny bantered with them and invited nership had never taken a vote on any­ Street. He died in 1975. iliem in for meatbaUs. (They declined.) thing. As Davis put it, a vote meant that Davis, after becoming a partner, in DiCarmine was slow to acknowledge someone had to lose. 1986, did mergers and acquisitions and what was obvious to everyone else in the With ilie power delegated to them by gradually assumed a greater management family. His cousin had emerged as the the firm's executive committee, the two role. In 1999, he and another partner were acting head of the Bonanno crime fam­ Steves slashed costs by more than thirty named co-chairmen. ily- Vincent (Vinny Gorgeous) Basci­ million dollars annually and boosted By the competitive standards ofmajor ano. The family considered DiCarmine profits per partner from six hundred and law firms, LeBoeufwas a pleasant place to the young Micl1ael Corleone from 'The forty thousand, in 1999, to $1.2 million work, but, in terms ofprofits per partner, Godfatl1er''- ilie son who wanted noth­ five years later. But Davis began to think, it ranked among the lowest of the major ing to do with the Mafia.