In 2012, the international law firm Dewey & LeBoeuf LLP filed bankruptcy after a long slide into financial ruin. Originally created in 1909, the firm gained name recognition when former presidential candidate Thomas Dewey (as in the Dewey of “Dewey Defeats Truman” fame) became a partner. In 2007, the Dewey firm merged with the LeBoeuf firm to form Dewey & LeBoeuf LLP. The firm was particularly hard hit during the Great Recession, which started about a year after the merger. The firm that employed more than 1,000 attorneys in 26 offices across the world eventually collapsed on itself.
Last week, several leaders of the firm were indicted by the state of New York for allegedly cooking the books during the tumultuous decline of the firm. If convicted, prison sentences of up to 25 years can be issued. In addition, the district attorney for Manhattan announced that seven former Dewey employees have already pleaded guilty in a separate case to various criminal charges also associated with the collapse.
Among the claims, the state of New York is alleging that newly indicted Dewey leaders represented that the firm had revenue it did not have, made improper accounting adjustments to hide debt, and lied to its lenders and bond investors.
The failure of a business is a touchy thing. There are attorneys and other business consultants who specialize in assisting companies that need help turning around their fortunes. As the Dewey situation reminds us, a person’s true character is exposed when times are hard. As a business owner, what is your true character? What would you do?