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WEEKLY RECRUITER SPEAK

Adopting Bankruptcy as Your Chosen Practice Area [Éamonn Markham] Should you consider transitioning your practice to bankruptcy? This week’s Recruiter Speak looks at bankruptcy and what it means to adopt it as your chosen practice area

Question

ing a temporary or permanent change.

Contrary to popular belief, businesses do not stop operating when they file for bankruptcy,

I hear that bankruptcy law is a practice area that is really busy these days. Is it something

An important distinction should be made

and most businesses that have filed for

that I should consider transitioning to as a

between experienced and newly minted

bankruptcy continue their daily operations

career?

attorneys. That distinction is driven, in my

with the same pre-bankruptcy management

opinion, by the concept of an attorney’s

and personnel. One example is Texaco, which

“brand.” What is an attorney’s brand you may

filed for bankruptcy in the 1980’s after losing

Answer

well ask? Practicing attorneys have a brand

a multi-billion dollar lawsuit to Pennzoil. The

Bankruptcy has been a hot topic in the legal

that is a combination of their expertise and

bankruptcy process allowed Texaco to con-

market ever since the dotcom bubble burst

education. Do you realize that every task per-

tinue to operate its business while it negoti-

in the late 1990’s. Although many of the

formed by an attorney develops (or hinders)

ated payment of the lawsuit with Pennzoil.

dotcoms disappeared with nary a whimper

their brand? Therefore, choosing and chang-

However, businesses in bankruptcy operate

(because many of these firms did not have

ing practice areas affect your brand, and

under the watchful eye of a court, and they

significant assets), the quick and public

any such arrangement should be considered

cannot dispose of any of their assets without

demise of huge international companies such

carefully. In my experience, well-branded

court permission. Of course, a company’s

as Enron Corp., WorldCom and Global Cross-

attorneys get the best work and consistent

creditors are busy scrutinizing the company’s

ing increased the amount of bankruptcy work

recognition, and managing your brand cor-

books too!

at many firms around the United States.

rectly will help your success at your firm.

In addition to the increase in activity in the

Bankruptcy Law

ney is to assist their client in realizing the

bankruptcy and restructuring markets, the

First, let us consider the practice of bank-

maximum value of a debtor’s estate so that

United States capital markets have been

ruptcy law. The bankruptcy practice is, for

creditors can receive the maximum return

quiet as the economy has slowly recovered.

the most part, a federal practice before

on their debt. Maximizing return to creditors

In the recent depressed market, many cor-

Article III courts. Under the United States

frequently occurs in the form of the sale of

porate attorneys who were not billing enough

Constitution, businesses (and individuals) can

assets or business operations or the whole

hours were approached by their firms to “re-

seek the protection of the bankruptcy courts

business in an auction process. Bankruptcy

tool” and work with the firm’s bankruptcy or

as they seek to sort out their business and

attorneys are frequently called upon to assist

restructuring group.

financial affairs. Bankruptcy is a code-based

their clients with the daily components of

practice which relies on the bankruptcy code

running a large firm while in bankruptcy.

A primary function of a bankruptcy attor-

Consequently, I am frequently asked by

(Title 11 of the United States Code), a set of

midlevel, junior and summer associates how

rules which are loosely drawn to determine

Bankruptcy can be loosely divided into

they should approach the current economic

the arena in which creditors and debtors can

creditor and debtor practice areas and

recession from the perspective of their prac-

determine how they are going to proceed to

restructuring and bankruptcy practices. The

tice areas, and whether they should consider

resolve a company’s financial situation. The

creditor and debtor practices are essentially

a short stint in other busier areas of law such

Bankruptcy Code has been modified by case

similar practices; attorneys represent either

as bankruptcy or even litigation. The answer

law, but much of the bankruptcy practice

creditors (generally financial institutions) or

for any individual is case by case, however,

never reaches published judicial decision

debtors. Frequently a firm will specialize in

there are some common threads that all can-

because the parties negotiate a solution that

creditor or debtor work to prevent inter-cli-

didates will have to consider before accept-

is blessed by the supervising court.

ent conflicts.

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WEEKLY RECRUITER SPEAK

Creditor practice is frequently portrayed as

frequently generates the common perception

With experienced attorneys, the issue is more

the more intellectual and enjoyable practice

that an attorney can easily transition into or

complex. Experienced associates have (pre-

because the attorney is not involved in the

away from the bankruptcy practice. While the

sumably) developed expertise in one area of

day-to-day minutia associated with running

bankruptcy practice straddles transaction

law and have managed their career to get the

businesses in the bankruptcy process. Howev-

work and litigation work, it is not the same as

widest range of experience in their practice

er, these practices really are two sides of the

practicing in either of those areas of the law.

area. However, a dilemma arises when your practice area is quiet, and the partner has

same coin, with creditors’ attorneys required to respond to and engage in the same motion

Graduating Associates

asked you to “help out” in another depart-

practice as their debtor counterparts. In ad-

Recent law school graduates frequently do

ment.

dition, the personal side of a debtor practice

not realize that they have a “brand” and their

can be extremely rewarding because clients

career depends on the continued development

Temporarily working in a related practice

tend to be very grateful for their attorney’s

of that brand. Most recent law school gradu-

area may be perceived as being beneficial to

assistance in navigating them through the

ates have invested more than $120,000 in their

an experienced associate. The associate can

bankruptcy process. In addition, associates

legal education and law school living expenses

make new contacts with different departments

with a debtor’s practice frequently liaise at a

to develop their brand. With attorneys, the

and partners of the firm. The attorney believes

very senior level because bankruptcy neces-

brand starts with your pre-law school educa-

they will also demonstrate their commitment

sarily streamlines the personnel structure in

tion. In most cases, this will be the primary

to their firm, and wants to see their firm suc-

a business.

factor that will decide which law school you

ceed.

attended. Next, your law school and your Whereas creditors and debtor re-negotiate the

grades generally determine the scope of em-

However, an attorney’s skills in their chosen

terms of existing debt, restructuring is rarely

ployers and training that you receive once you

practice area will atrophy over time, and the

as complex or as lengthy as a full-blown

have graduated.

attorney is not being trained in their chosen

bankruptcy. In general, this practice involves

practice area. It is hard to focus on the de-

financial institutions and corporate executives

A graduating associate is different from an

mands of the training and reading associated

working to renegotiate a company’s private or

experienced associate because the graduat-

with one’s favored practice area when one is

public debt.

ing associate has yet to develop their practice

busy working in a foreign practice area. In ad-

area. The biggest career choice that graduat-

dition, there is the chance that the associate

One advantage of being a bankruptcy attorney

ing associates make when they join a firm is

will be removed from the roster of associ-

is that the attorney has the opportunity to act

deciding their practice area. Consequently,

ates available for assignments because the

both as a litigator and as a transactional at-

I would recommend that graduating law

transferred associate’s hours have increased.

torney. One day, the attorney may be required

students find an area of practice that they are

Associates asked to transition should consider

to do research, engage in motion practice or

prepared to commit to from the start. Choose

whether the firm is giving them a subtle hint

attend court hearings, while the next, the at-

an area of law that is right for you rather than

that they are not fitting in with their peers

torney may liaise with corporate attorneys, tax

being “hot.”

in their own practice areas. For example, do some of your colleagues remain busy while

attorneys, ERISA and employment attorneys, intellectual property attorneys, corporate

Changing practice areas later is not neces-

you are idle? Perhaps it is time to dust off your

finance, and in the case of public companies,

sarily easy, especially if the associate has

résumé and consider looking for a new home.

securities professionals as they work to nego-

been branded as a bankruptcy associate. For

tiate a deal on certain of the debtor’s assets.

example, many junior attorneys overlook the

Having said all that, if you like the idea of

A bankruptcy attorney does not need to know

fact that law firms are seeking laterals with

bankruptcy as a career then I would encour-

these areas of the law, but should develop a

experience in an advertised practice area.

age it. I worked as a bankruptcy attorney at

thorough understanding of the concepts as-

Junior associates can lateral into a differ-

one of the large New York firms and I still

sociated with these practice areas. Conse-

ent practice area, but frequently they must

consider that experience to be one of the best

quently, the practice of bankruptcy law can

compete against candidates who have the pre-

in my legal career. The work was hard, the

be bewildering to the junior attorney, as they

requisite experience and all else being equal,

hours were long, but, in retrospect, I learned

endeavor to understand not only their own

it is most likely that the experienced candidate

an enormous amount about how to get deals

practice area, but also learn to integrate other

will fill an available job.

done and what it means to run a business. Finally, bankruptcy, in many ways, is not like

areas of the law into their practices. This straddle between transaction and litigation

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Experienced Associates

other aspects of the law. I found it to be very

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WEEKLY RECRUITER SPEAK

1.800. 973. 1177

creative because bankruptcy lawyers operate in one of those rare spheres in the business and legal worlds where the legal process drives some of the business decisions. Éamonn Markham is a recruiter with BCG Attorney Search and can be reached at eamonn@bcgsearch.com or via phone at 212232-0400.

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Adopting Bankruptcy as Your Chosen Practice Area