By Nate Raymond
Partners at law firm Dewey & LeBoeuf were encouraged in an e-mail from management on Monday night to find new jobs, according to a current partner who read the e-mail.
The e-mail also said that members of the firm's executive committee and office of the chairman had decided to remain members of those bodies while seeking other opportunities, the partner said.
Monday's e-mail came as Dewey scrambled to negotiate with its lenders and as it held discussions with other firms.
The company declined to discuss the nature of those talks, but on Sunday in an e-mail obtained by Reuters it said that talks with law firm Greenberg Traurig about a potential transaction had ended. It said in that email that it was "in discussions with other firms about a possible transaction."
Monday's email said the firm was exploring "potential transactions" but partners were "encouraged" in the email to seek other opportunities, said the partner, who asked not to be named because he was not authorized to publicly discuss the matter.
Duncan Miller, a spokesman for Dewey, said he did not have a copy of Monday's e-mail, and he declined to comment on it. Calls and e-mails to various members of the firm's management were unreturned.
News of Monday's e-mail, which was first reported by The New York Times, followed discussions on Monday between Dewey and a bank group led by JPMorgan Chase & Co as the law firm sought to avoid defaulting on roughly $75 million in loan debt due yesterday, a person familiar with the matter said on Monday.
As of Monday evening, Dewey and its lenders had all but completed a roughly two-week extension of the deadline, that source said.
It was unclear early on Tuesday if the situation had changed.
The firm disclosed on Friday that the Manhattan district attorney's office had opened a criminal investigation into "allegations of wrongdoing" by its former chairman, Steven Davis.
Dewey is in discussions with at least two other law firms about a possible transaction, including Patton Boggs, another person familiar with the matter said on Monday.
Patton Boggs is exploring opportunities short of a full merger, said the source, who spoke on condition of anonymity. SNR Denton on Monday declined to confirm a report in The Times that it was also in talks about acquiring Dewey lawyers.
Partner defections continued. Holland & Knight said on Tuesday that it had hired Stuart Saft, a New York real estate partner at Dewey.