Dewey & LeBoeuf has refinanced its debt with a $125 million bond offering at an interest rate that is lower than the firm’s bank loans.

The move is “a rare action by a U.S. law firm,” Bloomberg reports. Only a few law firms have raised money through private placements, and this is the first since the economic downturn. Typically law firms rely on bank loans and partner contributions to raise money.

Bloomberg learned of the amount of the bond offering from two unidentified sources who were familiar with the transaction. Insurance companies are buying the bonds.

Keith Wetmore, chairman of Morrison & Foerster, told the wire service that bond offerings give law firms the opportunity to finance debt for 10 to 15 years, instead of the three- to five-year terms typically offered by banks. “You need a pretty good balance sheet to interest institutional investors,” Wetmore said. “Not every law firm is going to have that.” His law firm issued bonds in 2001 and 2002 to refinance debt.

Bond offerings have a downside, including fees that can top $5 million and restrictions that may require borrowers to maintain minimum levels of cash flow or profitability, the story says.

The American Lawyer noted the story. Law firm consultant Peter Zeughauser told the legal publication that observers will see the move as something of a challenge to law firm lender Citigroup, which has been criticized for high interest rates.