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10 Things To Know About Bankruptcy Practice

Here's what you need to know if you're considering a career in this specialty.

By Ira Levee  
on

bankruptcyEd. note: Welcome to the latest installment of Better Know A Practice Area, a series introducing readers to different practice areas. Each post is written by an editor at Practical Law who previously practiced in that area and currently writes about it. Prior columns have covered capital markets and corporate governance, securities litigation and enforcement, patent litigation, executive compensation, commercial transactions, labor and employment, real estate, and startup law.

Today’s topic: life as an attorney practicing bankruptcy law.

  1. What do you do in a typical day?

Bankruptcy is a very diverse practice area so there is no typical day. Each bankruptcy case presents different challenges and tasks, which are heavily impacted by whether an attorney represents the debtor or a creditor, and among creditors, whether the attorney represents those holding secured, unsecured or priority claims. The age of a case also dictates an attorney’s activities. Newer cases may require more attention than cases that were filed months or even years earlier.

Generally, a junior bankruptcy associate will:

  • Prepare and review court filings (petitions, statements of financial affairs, schedules of assets and liabilities, and all types of motions such as use of cash collateral and relief from the automatic stay).
  • Draft responses to motions and other filings.
  • With guidance from a senior associate or partner, participate in telephone conferences with the client and adversary to discuss pending motions and other requests for relief in an effort to amicably resolve disputes.
  • Engage in discovery in a contested matter or adversary proceeding.
  • Strategize with co-counsel or colleagues on seeking relief, opposing relief, coordinating discovery, or oral argument on a motion seeking relief.
  • Be called upon to do other tasks as dictated by the case.
  1. Who do you work with?

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Junior associates primarily work with senior associates. In some smaller firms, a junior associate may work directly with a partner. For large cases, the bankruptcy department may set up a team comprised of junior- and senior-level associates and partners. As associates grow more senior, their responsibilities increase and they have more direct contact with clients and adversaries. In bankruptcy, depending on the client, adversaries may include the debtor; creditors’ committee; secured, unsecured or priority creditors; the United States Trustee; and other parties in interest that may oppose the relief sought on behalf of the client or are seeking relief to which the client objected.

Bankruptcy attorneys generally confer with financial advisors and accountants representing clients and adversaries. Other non-lawyer professionals with whom a bankruptcy attorney may work include appraisers, auctioneers and trustees. In addition, bankruptcy attorneys may work with other attorneys in the firm specializing in different practice areas.

  1. What does a common career path look like?

The career path for a bankruptcy attorney is no different than that for any other law firm attorney. Typically large law firms have a two-track system for advancement: partner and non-partner tracks. For both tracks, attorneys start out as associates and, in some firms, progress to counsel. At that point (either associate or counsel), the attorney may or may not advance on the partnership track. At some firms, attorneys who are not on the partnership track may be asked to remain with the firm as a senior attorney or of counsel. Many attorneys will stay with a large firm for several years to gain experience and exposure and then move on to a smaller firm where advancement may be easier.

  1. If variety is the spice of life, how spicy is this practice area?

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Bankruptcy is truly an area where variety abounds. Bankruptcy attorneys may be called on to address corporate, tax, environmental, employment, real estate, finance, securities, class actions and litigation issues in the bankruptcy case. Most large firms have separate departments to address these issues, but a medium to small firm may have only a few limited practice groups. Therefore, bankruptcy attorneys will need to know these areas as well as general bankruptcy law. Regardless of whether a firm has separate specialty counsel, bankruptcy attorneys need to understand these issues in order to effectively represent their clients in the proceeding.

In addition to the different legal issues that arise, bankruptcy involves a large amount of motion practice. Most bankruptcy motions are fact sensitive and therefore tend to vary by the parties involved. Bankruptcy attorneys must craft the motion or objection by applying the law to the facts of each case. As a result, no two motions or responses are exactly the same.

  1. How much wear and tear?

Bankruptcy is extremely fast-paced. Cases generally move very swiftly through the courts. Motions are heard by order to show cause or on shortened notice (depending on local rules). Some reorganizations of major corporations have been accomplished in less than a matter of months. At the onset of a case, it is common for the debtor to file a large number of first-day motions seeking many different forms of relief. These motions may be heard initially on just a couple of days’ notice, with a final hearing being scheduled only two weeks later. The speed at which a case proceeds can be daunting at times and attorneys must make sacrifices in order to meet the demands of the practice.

Junior associates will be called upon to review motions and other pleadings, some on an emergent basis, and provide summaries and recommendations within very short periods of time.

  1. Of the people in this practice group who hate it, what exactly do they hate about it?

The largest pet peeve among bankruptcy lawyers is the failure of some lawyers to know and follow correct procedures. Most bankruptcy lawyers know the law, but are unfamiliar with procedures. Attorneys also dislike when adversaries seek emergent relief when it is not necessary or set unreasonable response or hearing dates.

  1. Of the people in this practice group who love it, what exactly do they love about it?

Not only is the variety of cases a positive factor, but both lawyers and judges in this area tend to be smart and competent. The intellectual stimulation from working with or against such attorneys or appearing before the bankruptcy bench is very rewarding. Bankruptcy lawyers’ skills must be sharp. Obtaining a positive result that will allow the client to emerge from reorganization can be gratifying.

  1. Are there common avenues out of this practice area?

Bankruptcy is not a practice that lends itself well to transition to an in-house corporate counsel position. That move is rare. Bankruptcy attorneys may pursue a judicial career after practicing for several years or seek a position with the United States Trustee’s office, charged with monitoring and overseeing bankruptcy cases. Non-practicing positions exist with companies that provide research materials and programs for bankruptcy attorneys.

  1. What are some market trends that impact this practice area?

Bankruptcy cases abound during a recession. However, even in a good economy, relief under the Bankruptcy Code is sought by many companies seeking to shed their debt for better or more favorable economic terms.

  1. If you had to recommend one candidate from a room crowded with recent bar exam graduates, what specific qualities would he or she have that would ensure success in this practice area?

A successful bankruptcy lawyer must be creative. Bankruptcy relief requires that counsel demonstrate an ability to develop resourceful and practical ways to achieve success for the client. He must understand the needs and goals of the client. As in other practices, a bankruptcy attorney must exercise good judgment, pay attention to detail, be a team player and be able to express himself clearly both orally and in writing.

ira_levee_1Ira Levee is a senior legal editor on Practical Law’s Bankruptcy team and focuses on bankruptcy litigation and general bankruptcy law. Prior to joining Practical Law, he was of counsel with Lowenstein Sandler.

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