Autopsy: The Dreier Empire

Two months after Marc Dreier's arrests by ? of NAFTA, the ?neutron bomb-like effect? of his downfall on the house-of-cards Dreier Empire is still playing out in some quarters. The cornerstone Dreier LLP, of course, succumbed to receivership and Chapter 11 shortly after its namesake's initial bust in Toronto, with lawyers already streaming for the exits by the time Dreier returned to New York and traded Canadian bracelets for American. The 250-plus attorneys in the central firm scattered, with some lucky souls catching on with competitors and others striking out on their own; a skeleton crew stayed on through the bankruptcy filing, and the firm technically still occupies 8½ floors of prime Park Avenue real estate.

The smaller Dreier affiliates, meanwhile, faced the daunting challenges of replacing allegedly ill-gotten sources of equity and rebranding without their hallmark name. In the case of labor law boutique Pitta & Dreier LLP, Dreier?s no-bail confinement proved disabling to the firm?s ability to operate in the most basic of ways: Despite Vincent Pitta's rank as lead name partner, Dreier retained outsized control over firm spending, and premiums on health insurance and malpractice policies lapsed as he sat in a Manhattan jail. (The physical reality of Dreier?s confinement even prevented Dreier LLP from conducting an inventory check to ensure departing attorneys didn?t make off with firm property because "in Mr. Dreier's absence, no one is in charge of Dreier LLP or empowered to authorize the expenditure needed for an inventory to be taken.")

The apparent survival (for now) of the labor law boutique and another former Dreier subsidiary in New York registers, in my view, as a surprise (this should already be evident to those of you who read my initial prognosis for the Dreier conglomerate, filed as the scope of Captain Eyebrows? alleged mega-scheme began to take form). Pitta, without so much as a press release, has apparently recruited one Vincent Giblin to fill Dreier?s slot on the letterhead of both the boutique and its consulting and government relations arm (the former Pitta, Bishop, Del Giorno & Dreier LLP, which is now registered as a corporation). If its placeholder website is indicative of overall development, the latter entity is still working out the kinks of reformation. Giblin, once an assistant U.S. Attorney in New Jersey, joined the former Pitta & Dreier LLP as a partner in May 2008 to focus on the representation of unions and Taft-Hartley trust funds.

Dreier's West Coast legal outpost, on the other hand, has not displayed the same cohesive resolve: Dreier was the sole owner of L.A. entertainment litigation and corporate transactions firm Dreier Stein Kahan Browne Woods George LLP, and other Southland firms began raiding the office soon after the Toronto arrest went public. By the end of December, Dreier Stein's dissolution appeared imminent, and small groups of lawyers grabbed at lifelines proffered by firms looking to add entertainment practices or open new offices in the region; others instead opted for the independent route. In perhaps the most telling example of the destruction Dreier's arrest wrought on his subsidiaries, powerhouse name partners Larry Stein and Robert Kahan were forced to part ways after 33 years of co-management. Stein and Kahan, former chiefs of the crumbling firm?s entertainment lit and corporate practices, respectively, led teams of survivors from each department to two unrelated L.A. firms after they failed to find an acceptable bid for an all-inclusive merger; Stein and Kahan had joined Dreier to form the first incarnation of Dreier Stein in January 2007.

?Silver lining,? demand ye? You got it: Aside from the tenuous survival of Dreier's former New York affiliates, it appears that sports marketing and consulting enterprise Dreier Sports Opportunities may still have a heartbeat. The company?s website remains functional?unlike those of other former Dreier holdings?and while the firm?s status as a subsidiary of Dreier LLP suggests its funding should have evaporated months ago, the fact that a former Major League Baseball exec?and not Dreier?is in charge means that its continued operation isn?t entirely implausible.

More likely, however, is the possibility that Dreier, locked up 3,000 miles away, couldn't sign the expense release to pay the tech guy to dismantle the website.

-posted by ben fuchs