Dewey & Leboeuf, one of the biggest law firms in the world, filed for Chapter 11 bankruptcy on Monday night after failing to find a merger partner, it has been reported.
Dewey has been plagued by heavy debt and compensation concerns in addition to the loss of a majority of its partners, roughly 300.
In the Chapter 11 filing, the firm said it had decided to wind down its business following unsuccessful negotiations with other law firms to strike a deal, according to a Reuters report.
"During the first quarter of 2012, the firm was confronted with liquidity constraints that led to the precipitous resignation of over 160 of the firm's 300 partners by May 11," Reuters quoted the firm as saying.
The law firm considered closing down its operations a month ago and even warned its employees about the possibility, said the agency report. It is keeping less than 100 employees to assist the firm in the process of liquidation which would take several months.
"Dewey's failure is rocking the industry in the sense that most firms are saying to themselves, if Dewey could go down, could we?" Reuters quoted Kent Zimmermann, a legal consultant at the Zeughauser Group as saying.
Dewey & Leboeuf employs over 1,000 lawyers globally and is known for its expertise in the fields of corporate, insurance, litigation, tax and restructuring practices.
The firm's listed liabilities stand in the range of $100mn to $500mn, according to the bankruptcy filing, and the redundancies in its New York office number 433 out of a total of 533, Reuters reported quoting the statistics from the state's labour department.
Dewey & Leboeuf was formed by the merger of Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae in 2007.