Blog sponsored by Bankrupt-Law.com



Lynne Marek
The National Law Journal

Despite what's expected to be a 12-year low in bankruptcy filings this
year, major U.S. law firms are starting to beef up their ranks of
restructuring attorneys in anticipation of heavier caseloads next year.

Restructuring preparation with some companies behind the scenes is
already picking up, some bankruptcy attorneys said, declining to
identify any. Companies in the automotive, telecommunications, retail
and health care industries are most likely to encounter trouble, they
said.

"We've been very busy, and we're very bullish for the coming year as
well," said Jim Conlan, co-chairman of the restructuring group at Sidley
Austin, which is representing global auto parts maker Federal-Mogul
Corp. in bankruptcy, among others.

Sidley, which currently has 50 attorneys in its corporate reorganization
group and another 70 in the firm who work on bankruptcy cases, is
recruiting a "significant number" of new associates to continue building
the practice, Conlan said. He declined to say specifically how many
attorneys his firm is seeking.

New York-based Skadden, Arps, Slate, Meagher & Flom plans to add as many
as 35 bankruptcy lawyers who will be "Skaddenized" over the next 14
months, said Greg Milmoe, a co-head of that firm's restructuring group.
Skadden currently has 85 such attorneys, down from a peak of 120 at the
end of 2003.

The restructuring practices of Chicago's Jenner & Block; New York-based
Weil, Gotshal & Manges; Chicago's Kirkland & Ellis; Akin Gump Strauss
Hauer & Feld; Sonnenschein Nath & Rosenthal; and New York's Milbank,
Tweed, Hadley & McCloy all said that they're hiring or seeking to pull
in more attorneys from other groups in their firms. They're generally
looking to boost the head count by 10 percent to expand the practices
and replace lawyers who defected to investment banks, hedge funds or
smaller firms.

"Midlevel lawyers are being wooed, and they're jumping," Milmoe said.

There have been seven bankruptcy filings this year for companies with
more than $235 million in assets, and there is likely to be 14 for the
year, which would be the lowest number since 1994, said Lynn LoPucki, a
law professor at the University of California at Los Angeles. Firms
responded in recent years by letting attrition reduce their
restructuring ranks and by shifting bankruptcy attorneys to different
work.

Many of the firms are still busy pushing previously filed major Chapter
11 cases, such as Delphi Corp. and Refco Inc., through the bankruptcy
process. They're also working on restructurings outside court and
readying some companies for future filings.

"We live in fear that as the cases we do have run off that there's not
going to be something to replace them," said Fred Hodara, who leads Akin
Gump's restructuring group.

Still, Hodara said that his attorneys are "too busy right now," and he
wants to be ready for future needs. He's looking to boost his bankruptcy
ranks by five to 50 people.

Distressed companies are skirting bankruptcy for now because of a stream
of capital from hedge funds and private equity firms, several attorneys
said.

"There probably will be some modest increase in the interest rates, and
money will probably not be as free as it has been over the last couple
years," said Dan Murray, head of the restructuring practice at Jenner &
Block.

Murray said some firms, like Jenner & Block, see the current lull as a
good time to lure restructuring attorneys from rivals to fuel growth. He
plans to boost the size of his group by 15 percent.