5 Things to Know About the Dewey & LeBoeuf Trial

Opening arguments begin Tuesday, May 26, in a criminal trial stemming from the downfall of Dewey & LeBoeuf LLP, a 1,300-lawyer New York institution. The trial comes three years after the Manhattan district attorney’s office was investigating firm leaders for alleged financial fraud, and just over a year after the D.A. filed an 111-count indictment.

#1: Who’s on trial?

Dewey & LeBoeuf’s three former leaders—ex-chairman Steven Davis, former executive director Stephen DiCarmine, and onetime chief financial officer Joel Sanders—are accused of conspiring to use fraudulent accounting techniques to keep the firm in compliance with bank loan covenants. They’re also accused of misrepresenting Dewey’s finances to a group of insurance companies that participated in a $150 million bond offering in 2010. They’ve denied wrongdoing. A lower-level employee included in last year’s indictment will be tried separately. Seven other former employees have pleaded guilty to crimes related to the firm’s collapse.

#2: What’s the argument for the defense?

Lawyers for the defendants will likely argue that none of Dewey’s accounting techniques rose to the level of fraud. They’re also likely to argue that partner defections are what crippled the firm, and that publicity about the D.A.’s investigation in April 2012 played a crucial role in driving away potential merger partners that could have saved Dewey.

#3: What’s at stake?

The three defendants face between 8 1/3 years and 25 years in prison if convicted. Since the firm collapsed, Mr. Davis has been largely unemployed, apart from a brief stint as a legal adviser to the government of Ras al Khaimah in the United Arab Emirates. Mr. DiCarmine is taking a break from fashion school, and Mr. Sanders is on leave from a position as a consultant to Florida law firm Greenspoon Marder. The firm said it is standing by Mr. Sanders.

#4: How will the case unfold?

Their fates rest in the hands of the eight women and four men on the jury, including two traders, two retirees, an unemployed high-school graduate and a software engineer. The evidence against each defendant must be weighed separately and could result in a mix of acquittals and convictions. Prosecutors are expected to call dozens of witnesses in the trial, estimated to last between four and six months.

#5: Why does the case matter?

Law firms have gone out of business before Dewey, but this is the first case in decades to allege that a law firm failure was the result of criminal activity in addition to the usual causes of debt, drop in client work and fleeing partners.