The $61 million resignation letter

May 9, 2012

Sometimes lawyers, like bankers, seem to write their own headlines. The most recent example: Morton Pierce, the ex-vice chairman of unraveling of law firm Dewey & LeBoeuf, reportedly said in his resignation letter that the firm owed him $61 million. In one sense, penning an “I quit and you owe me $61 million” letter as you move to a competitor with seven senior colleagues is an example of off-the-charts 1%er chutzpah.

But it’d be easier to cue up the outrage if we had the details of Pierce’s $61 million claim, or under what circumstances he’s owed it. It’s likely that the bulk of the sum comes from a combination of deferred compensation and some form of equity Pierce held in Dewey. That means it’s also likely that given Dewey’s precarious position and Pierce’s departure, he knows there’s only a small chance he’s getting that money in the short term.

Yet lawyers choose nothing if not their words carefully, so what was Pierce trying to do? Two things, I think. First, as a large equity holder, assuming Dewey’s current leadership do not file for bankruptcy (as they say they won’t), Pierce is offering the first indication that he will try to recover as much of that $61 million as he can. Second, he’s trying, albeit in a perverse way, to justify jumping ship by pointing to the pile of money he left behind.

Both motivations are a cue to play the world’s smallest violin, and its understandable why an aggrieved Dewey employee would leak the letter. But it’s unlikely Pierce is concerned. He got out of Dewey while he could, landed a new senior role at a top firm and is happy to play out whatever option value he has on that $61 million.

Superficially, what Pierce did was a bit shocking. But it’s not really surprising. Just like with bankers, altruism is rarely a dominant trait in the best M&A lawyers. If someone won’t even negotiate the best deal for themselves, how can you expect them to do it for you?

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