The Benefits of Practicing Bankruptcy Law

But I wanted to be Atticus Finch, not a bankruptcy lawyer!

Let's face facts - most aspiring lawyers don't grow up dreaming about arguing on behalf of reorganization plans in Bankruptcy Court. Lots of folks go to law school thanks to the passion of such mythic (albeit fictional) lawyers as Atticus Finch from "To Kill A Mockingbird." They go to law school because they believe in passion and justice and all that is good about America.
 

Others jumped into the legal game for the power and the money - they wanted to be Michael Kuzak and Grace Van Owen when they grew up, wearing fabulous suits and driving their Mercedes off into the L.A. sunset. Justice is great, but so are stretch limos and pinstripes.

But bankruptcy law doesn't even hit the radar screen. Go ahead. Find a pre-law student who dreams of preparing bankruptcy petitions and securing confirmation orders. Not so easy, right?

So why? Why bankruptcy law?

Uppers

More channels than DirecTV

Has this guide mentioned that a bankruptcy lawyer wears many hats? For many bankruptcy attorneys, the variety within the practice, the opportunity to be a generalist, is bankruptcy's number one drawing point, and keeps them coming back for more.

But you are also a specialist

Within bankruptcy, specialization is the yin to the generalist's yang. Your practice might deal with everything from secured financing to environmental regulation, but all through the prism of bankruptcy. It's like a buffet at an Italian restaurant that includes every food group, but adds a taste of garlic and Parmesan to each. So you get the best of both worlds - you are both a generalist, touching on most areas of law, and a specialist, with expertise in the seemingly arcane world of bankruptcy. "Bankruptcy is mysterious to most people," notes Orange County-based bankruptcy attorney Roger Friedman of Rutan & Tucker LLP LLP, "so being a bankruptcy attorney gives you an opportunity to become a specialist, which makes you a commodity," giving you unique value in the marketplace.

And, if you want, a super-specialist

Ironically enough, another benefit of bankruptcy's variety is the chance to be a "super-specialist," in the words of bankruptcy tax specialist Mark Wallace, of counsel at Los Angeles-based Stutman, Treistcr & Glatt. Although one of bankruptcy's biggest draws is the chance to be a generalist, it also can provide you with the opportunity to carve a niche within a niche, like having a double major. The biggest divide, of course, is litigation versus transactional. Some bankruptcy practitioners focus on the courtroom aspects of the practice, while others focus on the M&A or secured financing aspects of the trade. And some choose truly unique specialties, like bankruptcy tax. While bankruptcy is at heart a wide-frame practice, opportunities abound for zooming in on one piece of the picture.

A portable practice

"Bankruptcy gives you a national presence," notes Aram Ordubegian of Los Angeles bankruptcy boutique Weinstein, Eisen, Weiss & Rothschild LLR Bankruptcy cases take place in federal courts, under federal laws, based on federal case law. Although each district and circuit has its own unique and often-conflicting standards and nuances, the essential law has the same foundation and is based on the same principles. It's easy to have a national practice given the uniformity of bankruptcy law, and a simple matter to relocate to a different city without wasting all of your hard-won knowledge.

An argument a week, and then some

For aspiring litigators, few practices afford so many opportunities for court time. In bankruptcy, "you are a lawyer from day one," says Leonora Long, an attorney with the Office of the U.S. Trustee. The court must approve each of the debtor's major decisions, and plenty of the smaller ones. Accordingly, bankruptcy cases involve an endless stream of hearings. Some are complicated and sophisticated affairs - a sale of the debtor's business, for instance, might involve arguing against twenty separate objections (after attempting to settle each of them in the courthouse hallway before, or even during, the hearing). Others are straightforward - a fee application hearing, for instance, where an attorney's main function is to present an uncontroversial fee request to the court. (Leonora Long is an employee of the United States Department of Justice, Office of the United States Trustee. The information that she has provided is in her individual capacity and not on behalf of the Office of the United States Trustee.)

Bottom line: Any given bankruptcy has monthly, weekly, sometimes even daily hearings, providing plenty of opportunities for the young litigator to get courtroom experience, regardless of her seniority. "Part of the beauty of bankruptcy is that there are lots of little things to get your feet wet with, with responsibility for a motion - and hearings - from beginning to end," notes
James Bromley.

And given that any bankruptcy proceeding involves the same judge and group of attorneys throughout the same process, each provides a comfortable environment in which to stand up and speak. After two months of attending weekly hearings before the same judge and with the same attorneys, getting up at that podium is a little less frightening than it was on that first day. The junior bankruptcy associate usually gets far more court time than a majority of her non-bankruptcy colleagues; few practices give you this much time before the bench.

Community and camaraderie

There are two principal types of camaraderie in this practice - the micro and the macro. First, as discussed above, each proceeding has a relatively set cast of characters, who frequently work together in court and in meetings. And you're always negotiating with each other, reflecting bankruptcy's emphasis on compromise. "Bankruptcy necessarily has a 'let's make a deal' mentality," notes David Unseth of the St. Louis office of Byran Cave LLP. "You're trying to work towards a solution rather than puffing out your chest. It's a much more collegial effort in getting to the finish line."

You really get to know each other during these months of meetings and deal-making. A few months into a bankruptcy case, a courtroom hearing can have the warmth of any regular clubhouse meeting (well, at least before arguments begin). Reunions of the attorneys involved in particularly large bankruptcies are not unheard of, even years after the end of the case.

Beyond each case, the bankruptcy bar is small enough, particularly within each city, to guarantee that you get to know a good portion of your fellow bankruptcy practitioners. "As a senior litigator, it is a pleasure to practice in bankruptcy court - you know the judges, you know the other attorneys," says bankruptcy litigator Elissa Miller of Los Angeles-based SulmeycrKupetz.

In many ways, the bankruptcy bar exists within its own small universe -bankruptcy attorneys argue before the same judges within the same courthouses, attend the same professional conferences (American Bankruptcy Institute, Practicing Law Institute, and others) and continuing legal education events, and dine at the same annual dinners. In addition, each bankruptcy proceeding often involves many - often dozens - of law firms, given the sheer number of interested parties in each case. Any first-day hearing likely has upwards of twenty law firms in attendance; go to enough first-day hearings and you'll meet most of the bar in the city. "You tend to know the players in your community - everybody knows everybody," notes one lawyer.

This congenial atmosphere is one of bankruptcy's most unique qualities, and makes it a welcoming place for a young practitioner.

"I'm a people person"

If that's true, this is the practice for you. Most bankruptcy attorneys spend the day with a telephone receiver glued to their cars (although speaker phones have done much to ease their lives). As discussed above, bankruptcy is a dealmaker's sport, filled with deals big and small, as parties try to figure out how to slice a pie in as many - and as large - slices as possible. "In bankruptcy, so much of what we do is talk with other parties, adversaries and clients," notes David Unseth. This is not a practice for the pathologically shy; but if you enjoy working with other people, it might be for you.

Better than an MBA

Often the best way to learn about a business is learning what went wrong. Bankruptcy attorneys must understand the debtor's business in order to provide effective advice. You must understand relationships with suppliers. debt and equity structures, the dynamic between management and labor -every aspect of the business. This requires that bankruptcy counsel have unique access to the mechanics of the debtor's business, all with the benefit of 20/20 hindsight. Talk about an education.

"Bankruptcy is a great opportunity to really learn how an industry works," says Shari Siegel, of counsel at the New York City office of Latham & Watkins LLP, listing the airline, retail clothing and mining industries among those she has learned about through her bankruptcy work. By the end of a bankruptcy proceeding, most practitioners feel like an expert in the debtor's industry. Usually, they are.

And it's exciting!

As stated in the introduction, bankruptcy attorneys are in the business of trying to rescue a sinking ship, with all the drama that entails. Like all rescue workers, the life of a bankruptcy practitioner is full of excitement -emergency hearings, surprise assaults by creditors, and so forth. "There's an immediacy to everything about bankruptcy, and you always have to get up to speed quickly, go to court quickly. There's a real triage aspect to the practice," says James Bromley. Just when you've had enough downtime, something explodes, requiring emergency court dates, motions and negotiations. Rarely a dull moment here.

Satisfaction of the new - and fresh - start

Contrary to popular belief, bankruptcy often signals a fresh start, not a death sentence, for many debtors. Many practitioners find satisfaction in guiding a distressed entity, individual or corporate, to a new beginning; individual debtors and reorganized corporate debtors typically leave bankruptcy proceedings in far better shape than when they entered the courtroom doors, giving counsel pride in helping their clients survive a very rocky road.

"You can stand back and say 'the system works'" when the debtor emerges up and running, employees and all, at the end of a successful Chapter 11 reorganization, says Brian Behar "and that's a good feeling." He adds that this satisfaction extends to all sorts of proceedings, especially those on behalf of individuals: "I meet couples in bankruptcy who arrive in my office holding hands, terrified. Once they find out that they can make it through the system, they can sleep through the night."

Even in large corporate Chapter 11 cases, particularly when representing the debtor, bankruptcy lawyers get to know management and employees on a very personal level. If the reorganization is successful and your new friends keep their jobs, you know you've made a difference for people you care about.

Breaking the Code

The Code, the Code, the Code. Everything in bankruptcy revolves around the Code, and the better you know the Code, the better a practitioner you are.

There is a certain comfort in having a rulebook for your practice, set parameters within which to advise. There is an even greater satisfaction in mastering that rulebook, especially for you academic types.

Extra! Extra!

The facts of bankruptcy also make it fun. "There are stories in every case," says Ben Becker. Lots of businesses and individuals go bankrupt because of a rough economy or natural forces. But others are either part of a larger story - say, the airline bankruptcies, and the larger saga of the industry's post-regulation evolution - or have their own unique narratives, sometimes involving fraud or underhanded dealings (although, to clarify, most bankruptcies are not the result of shady activity, and any inference that most bankruptcy debtors were anything but scrupulous in their business practices is inappropriate, to say the least).

The story behind each bankruptcy is often fascinating, and as an attorney in the process, you have both a front-row seat and a crucial supporting part.

A recession-proof practice

Now for the dirty little secret - practice areas don't get more recession-proof than this, and in these days of economic uncertainty, business is booming. Even in the best of times, there is usually plenty of bankruptcy work to go around. And when times are rough, forget about it.

That sounds horrible - no one likes to think that they profit off of others' financial hardships. But take a hard look around the legal market over the past few years. Firms are laying off securities law and corporate associates; they're not touching the bankruptcy practice. In the midst of industry-wide layoffs, they're hiring new bankruptcy associates and redirecting attorneys in other groups into their insolvency departments. In a profession of risk-averse personalities, bankruptcy is one of the most secure practices available, booming in rough times and teaching you skills that remain vital in flush times.
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Downers

Full disclosure: Despite all of the incentives for becoming a bankruptcy practitioner, the practice area does have (surprise) a few drawbacks.

Stress and unpredictable hours

Continually putting out fires generates a good deal of stress. All of the emergencies that make the practice exciting also make it unpredictable and stressful. Last minute motions and preparation for out-of-nowhere hearings can mean a lot of late nights and anxiety. You might think that you have a nice dinner planned for the evening until you receive that nasty order to show cause.

Unpredictability alone is stressful enough - then there's the sheer volume of work that is often part of a bankruptcy case. "There's lots of paperwork, lots of telephone work, lots of sophisticated work in a short time frame with incomplete information - it can be stressful," notes bankruptcy attorney Ben Becker.

The beginning of a case is bad enough, often involving all-nighters and weekends. Even worse can be what Shari Siegel describes as the "fire drills - the false starts before the actual filing," where debtors' counsel prepares for an imminent bankruptcy filing which suddenly isn't imminent, two or three (or more) times before the actual filing. During those periods of a case, bankruptcy is an all-encompassing practice. Fortunately, the best thing about the beginning of the case is that it doesn't last forever. Nonetheless, at times bankruptcy can be a hectic and exhausting practice.

Watching the ship go down

For those of you who are sensitive souls, any reorganization or liquidation process can be just plain sad. There are usually unhappy reasons for the bankruptcy - a failing economy, executives cooking the books, a disastrous business plan, or just a simple lack of foresight. The bankruptcies themselves frequently involve layoffs and severance disputes. One of the satisfactions of debtor representation is getting to know employees of the debtor; the flip side is what happens when they get laid off. It can be rough watching people whom you have befriended losing their jobs as the debtor winds down its operations. Not only do you witness all this, but you are often involved in these decisions.

Bankruptcies also impact on a larger universe of "little guys" - the baker who gets pennies on the dollar for his old invoices, the elderly couple whose 401k plan is now valueless. And then there are consumer bankruptcies, full of hard luck stories about normal people like your families and friends in the midst of hard times. It's easy enough dealing with massive banks and corporations. But the impact of bankruptcies on individuals is often emotionally draining.

Being misunderstood

One of the most frustrating aspects of the practice is the extent to which it is misunderstood by the rest of the world. As already discussed, few practices teach you about as many areas of law as does bankruptcy. As a practical matter, a few years in bankruptcy is great training for an in-house counsel position, or for a multitude of other practice areas. "What you are learning in bankruptcy is not off in a corner," notes James Bromley. "Negotiation, thinking on your feet, all these skills translate to all areas."

But this often seems to be a well-kept secret, and many non-bankruptcy practitioners mistakenly consider bankruptcy a limited specialty area. "You can get pigeonholed," adds Aram Ordubegian, of Wcinstcin, Eisen, Weiss & Rothschild LLP. Associates who spend five years preparing securities prospectuses (quite often mastering the art of neatly transcribing partners' comments along the way) seem to have their pick of in-house positions when they start looking to leave law firms. In contrast, bankruptcy associates feel overlooked by headhunters and human resources managers, who often don't take the time to educate themselves about the virtues of someone with bankruptcy experience, virtues that often make the bankruptcy associate better prepared for in-house life than their non-bankruptcy peers.

While it's not difficult to overcome the presumption that you are a specialist, it is still incumbent on the bankruptcy attorney to educate others, which can be a frustrating burden.

The stigma

Bankruptcy lawyers are often all too aware of the residual stigma attached to the practice. Part of this is the perceived unpleasantness of the whole process - as opposed to the opening bell of a new securities offering, bankruptcies are full of layoffs and rejected contracts. More ethereal is bankruptcy's history. Prior to 1978, corporate bankruptcy was more of a liquidation process than it is today, with relatively little money to be made by lawyers, and overseen by bankruptcy referees and colorful, street-smart characters, as described by Ben Becker, who entered the bankruptcy practice in 1980. The bankruptcy bar had a reputation as a group of bottom feeders who couldn't get more "legitimate" work, an unfair characterization even at the time.

Bankruptcy has changed considerably. The modem bankruptcy system, presided over by a highly respected judiciary, filled with cutting edge issues and cases on the front pages of America's newspapers, now attracts many of the best and the brightest law school graduates. Most major law firms have thriving bankruptcy departments, given the fees to be made from today's sophisticated and complex proceedings; in this economy, many bankruptcy departments are the engines keeping the rest of the firm afloat.

Appropriately, bankruptcy no longer has the same stigma and the bar receives more and more respect. Nonetheless, many practitioners must still tolerate the occasional ill-informed person whose ideas are still thirty years behind the times.

Forms, forms and more forms

Bankruptcy has its dull, administrative side. Any practitioner who has prepared a fee application - pages and pages of entries of time diaries - can tell you that. Debtor's counsel has it worst - monthly operating reports, notices to creditors, lots of what feels like administrative grunt work. And of course, there is the bane of the existence of debtor and committee counsel -that requirement of keeping time records in six-minute increments. Yep, you read correctly - fee applications must contain time diaries by the tenth-of-an-hour (fortunately, not each and every tenth-of-an-hour - you are allowed to combine them into larger time slots, as long as they are multiples of six minutes).

On the one hand, the relatively straightforward and often quiet administrative part of the job provides a nice contrast to the more frenetic part of the practice. On the other hand, it's, uh, well, boring. Be forewarned.

Too much fighting

As collegial as the bankruptcy world might be, it also has a very adversarial side. There is plenty of fighting in any bankruptcy process, given the limited assets available to go around to creditors. Add to that the rise of preference litigation, where debtors demand refunds of certain pre-petition payments. The constant squabbling in court creates tremendous stress, often - but not always - compensated for by the practice's greater focus on cooperation and compromise.

Fees in the balance

One of the biggest complaints of bankruptcy practitioners is the contingent nature of fees. Most attorneys simply send their client a bill, and receive a check in the mail a few weeks later. Not bankruptcy, at least for debtor and creditors committee counsel, who only get paid with the approval of the court. And even if the court gives its stamp of approval, you can't draw blood from a stone; if the bankruptcy proceeding fails, leaving little money in the bankrupt estate, there may well be no funds with which to pay the attorneys. The devil that haunts bankruptcy practitioners is this threat of non-payment.

On and on and on...

"Sometimes cases drag on and on," notes Tad Davidson of Andrews & Kurth in Houston, Texas. And that can be exhausting. Some proceedings take on a life of their own and never seem to end. Complex Chapter 11 cases in particular fall prey to the "never say die" syndrome; it takes time to negotiate and confirm a plan of reorganization, reconcile claims, and accomplish all the other tasks attendant to Chapter 11. Add to this all of the ancillary litigation that often pops up in bankruptcy, such as a particularly nasty equitable subordination adversary proceeding, and a case can go on for years.

Many cases, especially consumer and smaller corporate Chapter 7 proceedings, clip along at a fast pace. Nonetheless, one hazard of bankruptcy practice is the risk of falling into a neverending Chapter 11 case.

The Good and the Bad, Taken Together

For most bankruptcy practitioners, though, these disadvantages are minor frustrations at most, compared to its rewards. Bankruptcy practitioners interviewed for this guide were remarkably consistent in discussing the practice, applauding the warmth of the bankruptcy community, the endless opportunities for practicing the entire legal canon, and the satisfaction of mastering what many consider an arcane system. For these attorneys, the few complaints are a small price to pay for having found a professional home.
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