* As lawyers scatter, so do clients
* Arab Bank’s case delayed due to “extraordinary” events
* Disruptions, but no lasting damage seen
By Nate Raymond and Jessica Dye
NEW YORK, May 28 (Reuters) – For eight years, hundreds of
victims of militant attacks in Israel have pursued litigation
against a Jordanian bank they claim provided financial services
to Hamas and other militant groups. Now the plaintiffs have a
new legal hurdle to overcome: the collapse of law firm Dewey &
LeBoeuf.
A group of lawyers from the New York-based law firm
represent Arab Bank Group, the defendant in the suit.
Now, with Dewey on the verge of shuttering and those lawyers
scattering, U.S. District Judge Nina Gershon of Brooklyn, New
York, granted the bank a 60-day reprieve from several court
deadlines.
Gershon cited the “extraordinary” events at Dewey, which
Arab Bank said have “decimated” its defense team. Janis Meyer,
Dewey’s general counsel, who is helping to oversee the wind-down
of the firm, did not respond to requests for comment.
Dewey & LeBoeuf, until recently one of the largest law firms
in the United States with at one time up to 1,300 lawyers around
the world, has been saddled by debt and unable to make good on
compensation promises to key partners. Just a handful of lawyers
remain, and it is considering filing for bankruptcy.
When a law firm fails – and Dewey is the largest-ever U.S.
firm to confront that fate – it obviously can be traumatic for
the partners, associates, and support staff who called that firm
home. But clients can be buffeted, too, whether they decide to
move their legal work to their lawyer’s new firm, hunt for
different counsel, or spread the work around.
Litigation and deals can be delayed as lawyers relocate and
legal teams are dismantled and reconstituted. Massive amounts of
client and case files – both the digital and physical varieties
– must be transferred and merged into different systems.
It is not unusual for lawyers or groups of lawyers to defect
to other firms and to take their clients with them. What is
unusual in the Dewey situation is that this exodus has happened
on a massive scale, and in a very short time frame.
THOUSANDS OF CLIENTS AFFECTED
“Thousands of former Dewey clients are now seeking new
counsel, leaving hundreds of thousands of client records waiting
to undergo this process,” a Dewey associate who has since left
the firm, Douglas Mateyaschuk, said in a court filing.
Dewey’s major clients included Lloyd’s of London, Allstate
Corp and eBay Inc. All of them declined to
comment or else did not respond to inquiries about the demise of
Dewey.
Among other clients, Oclaro Inc, an optical
components maker, moved its proposed $177 million purchase of
competitor Opnext Inc to Weil, Gotshal & Manges, after
Silicon Valley dealmaker Keith Flaum defected to Weil, Gotshal
from Dewey earlier this month. And when the NFL Players
Association last week sued the league, claiming that teams
colluded to set a secret salary cap, it relied on longtime
counsel Jeffrey Kessler, who recently defected from Dewey to
Winston & Strawn.
There are no indications that any of Dewey’s now-former
clients have suffered any actual harm as a result of Dewey’s
downfall. But at least one other matter has been delayed.
NewPage Corp, a paper producer, shifted its
bankruptcy case to Proskauer Rose, sticking with its lawyer
Martin Bienenstock, formerly a member of Dewey’s leadership
team. As in the Arab Bank case, a judge has approved a delay in
the NewPage proceedings, ruling that the “period of
extraordinary difficulties” justified pushing back a key filing.
Bienenstock said in an email that court delays are routine
and are granted for all sorts of reasons, “such as attorneys
wanting to attend their kids’ graduations.”
LITIGATION INTERRUPTED
The Arab Bank case started in 2004, when dozens of victims
of violence in Israel claimed that the bank bore some
responsibility for a series of suicide bombings and other
attacks carried out by Palestinian groups served by the bank.
The plaintiffs are seeking an unspecified amount in monetary
damages from the bank, one of the largest financial institutions
in the Middle East. Many similar lawsuits have since been filed,
and the cases were consolidated.
The bank has denied the claims, arguing that there is no
proof that its actions could be linked to any attacks, or that
senior bank officials were aware of any links between some of
its clients and Hamas. A spokesman for Arab Bank declined
comment.
Hamas leaders have offered a long-term truce with Israel in
return for a viable Palestinian state in the occupied West Bank
and the Gaza Strip. The Islamist group continues to say it will
not formally recognise Israel and its 1988 founding charter
calls for the destruction of the Jewish state.
The Arab Bank litigation now includes more than 1,000
claims, said Michael Elsner of Motley Rice, one of the lead
plaintiff’s firms in the litigation. Elsner has generally gone
along with the recent delays, though in a court filing he
emphasized his clients’ interest in bringing the case to trial
“as expeditiously as possible.”
Arab Bank has had to navigate a change in counsel before –
when its lead lawyer on the case, Kevin Walsh, left Winston &
Strawn in 2005 to join LeBoeuf, Lamb, Greene & MacRae, which
later merged with another firm to form Dewey & LeBoeuf.
This time around it is more complicated, as Arab Bank’s
legal team has fractured. Walsh, who left Dewey for DLA Piper,
is still lead counsel on the matter. But Arab Bank said that 17
Dewey lawyers were working on the case, and only five of them
are joining DLA Piper.
Several of those Dewey lawyers, according to an affidavit by
former Dewey associate Mateyaschuk, now with DLA Piper, have
been focused on “little more than administrative and
organizational tasks” related to moving the case to DLA Piper.
Walsh must now assemble a new team, which according to an
Arab Bank brief “will face the enormous task of mastering the
sprawling factual record generated by over eight years of
intensive discovery.” Walsh declined comment.
MILLIONS OF PAGES
That record, Arab Bank said in a court filing, includes
nearly 1 million pages of documents, expert reports, and
exhibits as well as 1,000 hours of depositions – some by
victims, attack eyewitnesses, and emergency responders in the
Middle East. Much of that is contained in electronic files and
in hundreds of boxes housed at the firm’s New York headquarters.
Dewey, like all major firms, has an internal process
designed for the careful transfer of files. Nevertheless, Dewey
& LeBoeuf, confronted with this task for multiple cases at the
same time, estimated it would take up to four weeks to hand over
the material, Arab Bank said in the court filing.
It is not clear how long it will take until Arab Bank’s
legal forces are ready to jump back into the case, but no one
should be surprised by additional delays.
“Once the defendant’s legal team is in place,” Judge Gershon
said in a May 15 order, “any further scheduling applications can
be considered based on the then situation, as necessary.”
