Date : 12-22-2008
Dreier LLP Lawyers Can Expect No Further Compensation
As the case against Marc Dreier builds and now encompasses a $380 million fraud, many of the Dreier LLP assets have been depleted and what assets are left are subject to freeze orders. Mark Pomerantz of Paul Weiss Rifkind Wharton & Garrison, formally appointed by Southern District of New York Judge Miriam Goldman Cedarbaum to identify and preserve assets in connection with the civil suit filed against Dreier. Pomerantz informed employees who have not yet left the firm that ''we cannot provide you with any comfort level to the continue payment of salary or benefits. Indeed, it is very unlikely that the firm will be able to make its payroll commitment on December 15, 2008.'' He also warned lawyers that no information may leave the office without receipts. Dreier was the sole equity partner of the firm, and he leaves behind ten separate affiliates. Pomerantz said ''certain practice groups may be able to continue, but the business of Dreier LLP will not continue as before.'' These employees are out of luck and will likely have to make fresh starts elsewhere.
Dreier Firm Will Now File for Bankruptcy
Mark Pomerantz, receiver assigned to the Dreier law firm, just announced that he has ''advised counsel for the SEC and counsel for Mr. Dreier of [his] intention to seek bankruptcy protection.'' Pomerantz further added, ''I believe that Mr. Dreier himself will file a personal petition for bankruptcy in the near future. As the investigation continues against Dreier, he has been accused of stealing some $380 million from investors. He is also facing criminal charges in federal court and Canada, where he was recently caught impersonating someone in a large meeting. He is in a lawsuit with Wachovia Corp. who alleges Dreier has defaulted on more than $10 million in loans. Gerald Shargel, Dreier's attorney, says though his client is considering bankruptcy, that he has not yet definitely decided on it.
Nonequity Partners Buying Equitable Partnerships
DLA Piper may have started a trend by requiring its nonequity partners to buy into equity status; now at least two more law firms are considering doing the same. The aim is to improve the law firm balance sheets, says William Henderson of Indiana University. ''It's getting rid of a fixed cost.'' It was just last month that DLA Piper invited 275 of its nonequity partners to buy their way into equity ranks by making a capital contribution which is a percentage of the individual's net income. For higher-up nonequity partners, this fee could be as high as $150,000. The purpose behind this move is to get rid of the cost of the fixed salary assigned to nonequity partners and have money supplied to the firm. By doing this, each partner wishing to move up would be even more motivated to bring in more clients. The other option may be to downsize, so nonequity partners may strongly consider this option if it is offered.
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