A Biglaw Firm Bids Bye-Bye To Its Bankruptcy Department

Is bankruptcy practice slow right now, and what will happen to the dismissed lawyers?

This afternoon we heard a rumor that a major law firm was bidding farewell to its bankruptcy practice. The report we heard was that the group would be gone by the end of the year.

It turns out that the rumor is true (as is so often the case). The firm in question just confirmed the news….

Here’s the statement that Wiley Rein issued to Above the Law in response to our inquiry:

Wiley Rein confirmed today that the firm and its Bankruptcy Practice are separating. The firm’s Managing Partner Peter D. Shields stated: “This very difficult decision to spin off the Bankruptcy Practice follows an in-depth analysis of the current and future needs of the firm’s clients, and is aligned with the firm’s new Strategic Plan that we launched at our recent annual partner/of counsel retreat. We all value the bankruptcy team, and we hope to work collaboratively with them in the future.”

Jason Gold, chair of the Bankruptcy Practice, agreed: “As an independent practice dedicated to offering bankruptcy and restructuring services, we will be able to provide flexible alternative fee options and greater value to our bankruptcy clients. We have enjoyed working with our colleagues at Wiley Rein, as partners and friends, and we look forward to working with them on client matters in the future.”

And that’s all they wrote. The firm declined to take follow-up questions at this time.

It’s uncommon but not unheard of for a firm to drop a practice area that isn’t sufficiently profitable or that doesn’t fit well with the rest of the enterprise (because of divergences in fee structures, client conflicts, or other reasons). Back in February 2013, for example, Debevoise & Plimpton ditched its trusts and estates practice.

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What exactly will happen to the Wiley bankruptcy lawyers? Will they start their own boutique? Or will they end up getting absorbed into a larger firm (like the Debevoise T&E lawyers who wound up at Loeb & Loeb)?

Good luck to the Wiley Rein bankruptcy team as they travel on their independent path. I’m no economist, but I have a feeling that rough seas lie ahead for the economy — so perhaps a bankruptcy boom could be just around the corner.

UPDATE (6:25 p.m.): Here’s additional coverage from the Washington Post, which describes the eight-attorney practice as “a relatively small but well-known group whose attorneys have represented distressed businesses including the Washington law firm Howrey.”

Earlier: Debevoise Ditches Its Trusts and Estates Practice

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