Dewey & LeBoeuf Opens Eyes With $125 Million Bond Offering

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In what it describes as “a rare action by a U.S. law firm,” Bloomberg is reporting that Dewey & LeBoeuf has raised $125 million in a bond offering to refinance its existing bank debt.

It remains unclear what such a moves signals, but therehas been plenty of speculation. As noted by Bloomberg, which broke the story, law firms generally receive capital from bank loans and partners’ contributions. Looking to outside investors doesn’t occur often.

Bloomberg reports this is the first law firm private placement since the credit crunch and its one of just a few ever. Stephen Gillers, a legal-ethics professor at New York University, notes firms cannot sell shares to raise capital because it is illegal for non-lawyers to have ownership in a law firm. But, “law firms can borrow money,” Gillers said. “As long as it’s debt, it’s OK.”

  

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Keith Wetmore, chairman of Morrison & Foerster sees the move as a positive sign. He notes MoFo issued bonds in 2001 and 2002 because of debt incurred by office build-outs, and the firm would consider it again in the future. “You need a pretty good balance sheet to interest institutional investors.” he said. “Not every law firm is going to have that.”

According to Wetmore, through private placements firms are able to borrow for 10 to 15 years with private placements rather than the typical three to five years with banks.

Dewey & LeBoeuf underwent a round of layoffs earlier this month when 30 administrative staff members were let go at the firm’s offices in Los Angeles, New York City and Washington D.C. The firm also saw an 11.3 percent fall in gross revenue in 2010, though profits per partner and revenue per lawyer were up.

Dewey & LeBoeuf was founded in 1909 and is based in New York City. The firm has over 1,200 attorneys with 25 offices across North America, Europe, Africa and Asia.