Law firm Dewey & LeBoeuf files for Chapter 11

Dewey & LeBoeuf filed for Chapter 11 bankruptcy in advance of liquidation. (Scott Eells / Bloomberg / May 29, 2012)

Storied law firm Dewey & LeBoeuf – which once advised the Los Angeles Dodgers on their restructuring – is itself filing for Chapter 11 protection as it prepares to liquidate.

It’s a far fall for the New York firm, which in its heyday employed a retinue of more than a thousand attorneys, commanded massive salaries for partners and kept offices in Abu Dhabi, Moscow, Hong Kong and elsewhere.

Now, weighed down by debt, Dewey & LeBoeuf is looking to “preserve assets and wind down its business.” The company hopes to keep a skeleton crew of about 90 employees to help over the next few months (there’s already been a recent exodus of 160 of the firm’s 300 partners).

In the meantime, “the firm will be operating on a budget,” according to a bankruptcy court filing Monday evening in Manhattan. As it closes its other domestic and foreign offices, Dewey & LeBoeuf will “sharply reduce the size” of its New York office and is working with landlords to remove phones, computers and furniture.

The firm has some $225 million in debt. It, and similar big-name law firms, have seen competition from upstarts such as LegalZoom and other options that make the legal industry more accessible to the average Joe.

Dewey & LeBoeuf’s London and Paris offices, which are operated through a separate UK entity, are “following broadly the same approach.” The firm was formed in 2007 when the Dewey Ballantine firm – which first launched in 1909 – merged with the LeBoeuf, Lamb, Greene & MacRae firm.

“Unfortunately, DL was formed at the onset of one of the worst economic downturns in U.S. history,” according to one of the bankruptcy filings. “These negative economic conditions, combined with the Firm’s rapid growth and partnership compensation arrangements, created a situation where the cash flow was insufficient to cover capital expenses and full compensation expectations.”

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