In the years since Dewey & LeBoeuf LLP’s collapse, law firms have cut their reliance on bank loans and leaned more heavily on their partners for cash in times of need, The Wall Street Journal reported yesterday. The change isn’t solely a reaction to Dewey’s high-profile flameout in May 2012, but some law firm leaders say watching Dewey’s mistakes — on display during the criminal trial of three former Dewey leaders — led them to reassess the way they run their operations. Compared with their corporate clients, law firms are relatively simple businesses. Cash comes in from clients and is used to pay expenses, including rent and employee salaries. In theory, partners, as joint owners in the business, split what is left at year-end. A Citi survey of 130 law firms found average bank debt per equity partner fell to $49,700 in 2014 from $77,600 in 2008. Wells Fargo & Co. reports that among about 60 of the nation’s highest-grossing law firms, average debt declined to $8.7 million in 2014 from $15.7 million per firm in 2008.
