Summary: What’s it really like to be a bankruptcy attorney? What skills will you need to be successful? What type of office will you practice in? Read below for the answers to these questions and more.
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The practice of bankruptcy law has expanded tremendously since the dotcom bubble burst in the 1990s. Massive international companies such as Enron Corp., WorldCom, and GlobalCrossing declared bankruptcy. With the increase in the reorganization or demise of such businesses, many corporate attorneys were moved to the bankruptcy or restructuring departments of their firms.
What is Bankruptcy Law?
Bankruptcy is governed by federal law. Businesses and individuals can seek the protection of bankruptcy courts to sort out their financial affairs. Simply because these companies file bankruptcy does not mean that they stop operating. For example, many companies continue negotiation of their payments during the bankruptcy process. Of course, the bankruptcy courts watch these companies carefully while they undergo this process.
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To read more about bankruptcy law practice, check out the link below.
Adopting Bankruptcy as Your Chosen Practice Area
Bankruptcy law actually dates all the way back to the Roman Empire, with modern statutes dating back to the sixteenth century. These laws were very favorable to creditors in the past, but as time went on, the laws shifted to better protect debtors.
The Chandler Act of 1938 created Chapter X and Chapter XI bankruptcy, which allowed public and privately held companies to reorganize themselves instead of simply liquidating their assets. This allowed bankruptcy to become a tool of survival for companies instead of forcing them to close their doors. The Bankruptcy Reform of 1978 transformed these laws into the modern day Chapter 11 and Chapter 13 bankruptcy rules. In 1984, the bankruptcy courts were reconstituted as district courts. Attorneys during the 1980s had to learn a completely new set of laws to practice bankruptcy law.
Bankruptcy law has continued to evolve. Whereas the practice was formerly seen as a last resort practice for attorneys who could not get other work, Gregory Willard of Bryan Cave LLP notes that now, the stigma has been substantially eliminated since corporations use it now to reorganize and meet long-term goals.
For more about the history of bankruptcy law, read the article below.
Bankruptcy Law: History and Current Trends
How does one become a bankruptcy attorney? First, you’ll need to obtain an undergraduate degree, preferably with a major in pre-law. If you’ve already graduated from college, see what additional courses you need to complete a pre-law major. You’ll need to take the LSAT (Law School Admission Test) your junior or senior year. There are courses you can take and books you can buy to prepare and practice for this test. It’s important to prepare as much as possible for this test—the higher your score, the more likely you’ll be able to attend a law school of your choice. If your score is disappointing to you the first time, do not despair—you can take the exam more than once.
Once you’ve made it to law school, get involved with the community and seek out an internship in a bankruptcy law firm. Once you’ve graduated, study hard to pass the bar exam. You can either open your own firm or join an established practice, but many recommend gaining experience in a firm before you venture out on your own.
For more information about steps you can take to become a bankruptcy attorney, check out the link below.
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How to Become a Bankruptcy Lawyer
While you’re in law school, keep two goals in mind: educate yourself by learning the law and skills in your courses, and make yourself marketable—that is, make yourself attractive to potential employers.
Your law school grades are extremely important. In fact, some firms only consider grades for both lateral hires (attorneys with experience) and new attorneys. So, be disciplined, figure out what study methods work best for you (such as studying alone or with a group), treat each semester like a marathon and don’t burn out—most of all, stay calm. If your first year grades aren’t stellar, you have time to bounce back. Many employers appreciate this as it shows them you are able to learn from your mistakes and improve yourself.
If you are accepted to your school’s law review journal, this can make up slightly for lower grades. These are the academic journals that each law school publishes. Law students serve as writers, publishers, and editors. Law journals teach vital skills for attorneys, such as editing, communication, and teamwork.
Focus on taking courses that will assist you in a bankruptcy law practice, such as bankruptcy, commercial credit, secured financing, civil procedure, corporate finance, real estate, litigation, and federal taxation. Build relationships with your professors.
Another great idea is to participate in legal clinics at your school. These allow the best “hands on” experience for students as you’ll be helping real clients with real issues. Try to work with litigation clinics as opposed to corporate clinics, but either will provide useful skills.
During the summers, work hard to get a summer associate position or summer clerkship. You can also clerk for judges, work with legal clinics, or intern with solo practitioners or small firms. Some may be unpaid, but the experience you’ll gain is priceless and will enhance your skills to make you more marketable later on. Many of these summer positions translate to a permanent position later on.
Judicial clerkships are especially useful as they offer valuable insight into the judicial process. These positions also improve your research and writing skills. Since the bankruptcy legal community is a small one, clerking for a bankruptcy judge will provide you an excellent resource for networking.
For more job tips, read the link below.
Bankruptcy Law: Law School and Internships
When you begin your job search for bankruptcy attorney jobs, don’t simply search on huge public boards, because that’s what everyone else is doing, too. For every job opening on these boards, recruiters may receive thousands of resumes—for one position. To manage the pile of resumes, they use screening software to look for select keywords in these documents to sort through them. It’s a better idea to stick with the smaller, private job boards.
Also, remember that your resume is a marketing document—if you need to, hire a resume writer! Before you submit your resume to be considered for a position, be sure that your most prominent achievements are listed on your resume. Also, practice interviewing by asking yourself tough questions such as why the company or firm should hire you, how you bounced back after a failure, how you handle stress and how you’ve handled a conflict in personalities with your coworkers in the past.
For more job searching tips, read the link below.
Where to Find Bankruptcy Lawyer Jobs
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There are additional resources that can help you land a job as a bankruptcy attorney. For example, your first option is through your law school’s on-campus recruiting. This usually begins the fall before the following job season, so it’s important that you prepare during the summer for interviews.
Work on your resume and keep it to one page. Put the strongest points first, and include all of your law school experience (such as law review journals, clinic experience, and the like). Determine what it is you want out of a job and tailor your resume to fit the firms that meet your list of requirements.
During on-campus recruiting, slots for interviews will be filled by a lottery system once resumes are submitted to the school’s career services office. Interviews are typically at the beginning of a semester, and may take place somewhere on campus, or off campus such as a hotel conference room. Next, you’ll wait to hear from the firm. The firm may call to ask you to have a second interview, or you may receive a rejection letter from the firm.
If you don’t have any luck with on-campus recruiting, you’ll need to attempt off-campus recruiting on your own. Just as you did with on-campus recruiting, choose firms that meet what you want out of a job. It’s often better to choose a dozen firms and specifically target those firms in your job search than sending 100 firms the same cover letter and resume. See if any attorneys at these firms are alumni of your school, and network at bar association meetings and with you professors. Should you land an interview, the interviewers are going to be checking out your personality to see if you’re a fit with the firm. Be sure you dress well (keep it conservative), just be yourself, and send a thank you note later.
For more about on-campus and off-campus interviews, read more below.
Bankruptcy Law: Job Search Basics
After two or three years in practice, many attorneys get restless. At this time, you may want to rethink your goals for your career path. Do you want to stay with your current firm or move on?
If you want to stay at your firm, be sure to do your work well and get to know the other members of the firm, especially the partners. Go to your firm’s social events and develop relationships with clients, which will increase your chances of making partner one day.
If you want to stay at your firm but do not want to take on the responsibility of partner, see if there are flex-time or part-time arrangements you can make with the firm, or if there is a non-partnership track you can follow.
If you want to move to a different firm, take caution in beginning your job search. Don’t update your resume or look for jobs from work. Focus on using your connections in the bankruptcy community to find work elsewhere.
Legal recruiters are also a major asset in a job search. They can help you get your foot in the door. Be sure that your resume is perfect when you send it to a recruiter so that you are not dismissed. Emphasize your broad range of skills to these recruiters as well, since some may not be familiar with the ins and outs of bankruptcy law.
If you want to leave the bankruptcy practice altogether, the skills you’ve sharpened over the years should make you marketable to in-house positions. The creditors and other entities you have met in your career may have a need for in-house counsel.
For more about possible job changes in your career, read below.
Bankruptcy Law: Career Development
What will the practice of bankruptcy law actually be like? Attorneys who practice bankruptcy enjoy the variety within the practice. For example, you’ll have the opportunity to be in court, so these attorneys gain experience in litigation. These attorneys also gain transactional experience in negotiating deals throughout the bankruptcy process.
Since bankruptcy is based in federal law, you’ll be able to move anywhere in the country if you so desire. Because the bankruptcy bar is small, you’ll get to know a great deal of other practitioners, as well as judges. It’s a good practice if you’re a people person, and you’ll also learn how multiple industries work as you help your clients during the bankruptcy case. It’s exciting as well, as there are many emergency hearings and surprise assaults by creditors. A major bonus for attorneys, this practice is recession-proof, as many practices continue to hire as other areas lay off attorneys.
However, as with any job, there are some downsides. The bankruptcy practice can be very stressful, and it often comes with unpredictable hours. There is a ton of paperwork to complete, which means your nights and weekends may take a hit. Plus, it’s hard to watch employees of businesses go through layoffs during the case if the business winds up.
For more information about the general practice of bankruptcy, read more below.
Bankruptcy is one of the most in-demand areas of law, as both businesses and individuals may be declared incapable of paying their creditors. The employment outlook for bankruptcy attorneys is good, which is excellent news for law students. In 2006, the median salary was $102,470, but of course, pay depends on the employer: firms, non-profits, and corporations all pay different salaries to bankruptcy attorneys.
For more information, read below.
To be a successful bankruptcy attorney, you need to be a “jack-of-all-trades”—that is, you may negotiate with creditors to keep a business going, create employee retention packages, and go to court to litigate issues. You’ll also serve as a “rescue worker” who assists companies and individuals in their most desperate times of need.
The practice is good for those who enjoy the thrill of the courtroom, as well as the art of constructing deals during negotiations. You’ll definitely use all areas of your brain in this practice. Brian Behar of Behar, Gutt & Glazer calls the practice a “safety net” that protects “the honest guy who took an honest chance.” The role as a bankruptcy attorney includes translating and adapting ideas for rebuilding businesses and maximizing the value of assets. At the end of the case, debtors can move on with a new business plan and eliminate old debts, allowing for a fresh start.
For more details on the practice of bankruptcy law, read the link below.
Timothy J. Trott says he enjoys the bankruptcy law practice because it’s so precise, since it is covered only by the Bankruptcy Code. He also enjoys helping his clients, who are consumer debtors. His clients have fallen on difficult times, such as being laid off or becoming ill, and need help getting back on track.
Karen Gross is a professor at New York University School of Law and has twenty-five years of bankruptcy practice under her belt. She calls it a crisis field since these individuals and businesses are desperate to save themselves from financial ruin.
For more information from bankruptcy attorneys on the practice of law, check out the article below.
In bankruptcy, there’s a big divide between litigation and transactional work. Some specialize in bankruptcy, and other attorneys deal with bankruptcy as one of many issues in a law practice.
At big firms, attorneys will get paid more and will obtain experience in many areas of law. However, there’s lot of nights and weekends spent at the office, and there’s a great deal of pressure and anxiety for many big law attorneys. In smaller firms, the salary is lower and the cases may be less sophisticated, but everyone in the firm knows each other and there’s generally a better quality of life working in a small firm.
Clients may be debtors, lenders, unsecured creditors, or trustees. Representing debtors is the most time-demanding client, as it is involved in the entire case. Representing banks can be exciting because they are typically the ones that file the case and have the most to lose out of any party in the case. Typically, the banks are not as involved after they are guaranteed payment. Other clients may include a committee of secured or unsecured creditors. This is a tense group, but it is also diverse and interesting to represent. However, this group is involved in the entire case, so it can get tedious. If you represent the trustee, your role is to represent the court-appointed fiduciary who winds down the debtor’s business and distributes assets. Because the trustee’s role is more of a business one, they typically seek outside counsel to represent them in the bankruptcy process.
Other bankruptcy attorneys may work in the Office of the U.S. Trustee or as a clerk for a bankruptcy judge. Attorneys with the Trustee are the true enforcers of the code, and their jobs are comprised entirely of litigation.
For more details about the different types of bankruptcy practices, click the link below.
As a bankruptcy attorney, it is of utmost importance that you have a reputation for honesty and integrity, especially since you will be working with a lot of the same attorneys and judges, since the bankruptcy bar is not a large one. You must know and be familiar with the code of professional responsibility in your jurisdiction. To ensure that you keep a sterling reputation, be sure that you are clear in your communications when you get assignments, and keep your clients informed of the entire case process—even when things don’t go their way.
As a new attorney, follow the partner’s instructions, but don’t be afraid to discuss your ideas with them. Be sure you meet the deadlines the partners give you for assignments—if you need extra time, just ask. Research the laws to ensure your points are still applicable law and ask for feedback after projects. If multiple partners start piling the work on you, inform the partners what assignments you’re working on so that the partners can work it out between themselves. See if you can find a mentor as you settle into attorney life.
Don’t forget to treat your staff kindly, as they will help you out when things go awry or when emergency hearings are filed. Your secretary will be your greatest asset when it comes to meeting deadlines and fighting adversaries. Treat everyone with respect. Understand your firm’s culture as well, such as the dress code, hours, and social events.
As you work with opposing counsel, don’t be afraid to challenge them on their points—that’s your job as an advocate for your client. Don’t hesitate to ask the opposing attorney for the case law or rule that backs up his position. When you are negotiating with opposing attorneys, don’t make unrealistic requests, as you will get a bad reputation for being unreasonable.
It’s a good idea to keep a calendar for all deadlines and to have “to do” folders for various tasks that need to get done. Keeping a notebook for each matter will help you stay organized as well. At the end of your work day, take a few minutes to make a checklist for the next day.
Keep up with the latest developments in bankruptcy laws and attend CLEs on the practice as well to keep your mind sharp. Also, you must keep detailed logs of your time, as you only get paid if the judge approves your fee application!
For more practice tips, check out the article below.
Bankruptcy cases vary depending on a number of factors. The purpose of each case is to provide overburdened individuals and companies with a chance to resolve their financial affairs, all while providing protection to creditors. Bankruptcy is a last resort measure.
Most cases involve negotiations between debtors and creditors, and a reorganization of debts follows under Chapter 11 and Chapter 13 of the Bankruptcy Code. Others may dissolve and liquidate assets under Chapter 7.
Read more about the practice of bankruptcy law below.
What It Is Like to Practice Bankruptcy Law
What will the cases be like in a bankruptcy practice? During a Chapter 11 filing, the focus is on reorganizing the debtor. The debtor will seek a bankruptcy attorney because it knows bankruptcy is looming. The attorney will need to negotiate financing with secured creditors throughout the bankruptcy procedure. If those negotiations fail, then the attorney will need to file for bankruptcy to allow the debtor to enter a “bubble of protection.” During the short term, there’s an automatic stay that occurs. This halts all litigation against the debtor, and prevents creditors from filing suits against the debtor without special permission of the bankruptcy court. Debtor in possession (DIP) financing gives lendors special protection and allows them to take priority of payment over other creditors. Administrative expenses also take priority, as well as trade creditors who have incurred debts for good and services provided to the debtor.
The negotiations that attorneys attempt with creditors include budget forecasts, dealing with the spending of DIP money, budget carve-outs for debtors/creditors committee counsel, guaranteeing funds to pay the committee counsel, employee retention plans and bonus plans, and providing key management and personnel with financial rewards for guiding the debtor through the bankruptcy process.
Once the bankruptcy petition has been filed after gathering necessary information, the bankruptcy estate is created. This contains all assets that the debtor owns on that date, and creates the automatic stay mentioned above. At what’s called the first day hearing, attorneys, pre-petition and DIP lenders, creditors and attorneys from the Office of the U.S. Trustee are present. Authorization of orders that will approve debtor actions for continuing its operations will be granted by the bankruptcy judge, as well s DIP financing, the use of any cash, employee payments and retention plans, and the automatic stay.
A group of unsecured creditors will also be selected to protect the interests of all the unsecured creditors involved in the case.
Next, a long middle stretch of proceedings begins. A plan of action will be set into place for debt restructuring, the replacement of management, sales of assets, and creating a new business plan.
Afterward, the debtor can continue business as necessary, but must strengthen its business and leave disadvantageous contracts. Many times, creditors try to get around the automatic stay or will attempt to stop providing goods and services, and debtors have to defend against these aggressive acts.
Through a series of actions, the sale of assets will occur, and the remainder of the case focuses on distributing the proceeds to lendors. The terms of the sale must be approved by the court.
One way attorneys try to increase the value of the estate is by avoidance actions, which attempt to avoid or reverse payments and other transfers to creditors made prior to the bankruptcy proceeding. This also helps the debtor avoid any pre-petition conveyances that may have been fraudulent.
Throughout the case, monthly financial reports will need to be submitted, and committees must be kept informed of proceedings. Attorney fee applications must also be presented and approved by the court for payment.
A plan of reorganization or liquidation will then be created to determine the value and validity of creditors’ claims, and how those claims will be satisfied. Once the debtor receives the discharge that absolves it of liability for pre-petition debts, it can continue business with a “clean slate.” After the case, assets are free and clear of debts. If the company is completely liquidated, then there is no discharge.
For more detail about Chapter 11 bankruptcy filings, read the link below.
Bankruptcy Law: A Typical Chapter 11 Case
In addition to Chapter 11 filings, there are also bankruptcy cases that are filed under Chapter 7. Instead of reorganizing as in Chapter 11, Chapter 7 filings shut down a debtor and liquidate all assets. The Office of the U.S. Trustee appoints a Chapter 7 trustee to wind down the business, which includes liquidating assets and distributing their proceeds to different creditors.
Many Chapter 7 proceedings are involuntary as they are initiated by creditors. Creditors file such an action to protect their claims from a debtor that should commence bankruptcy proceedings on its own.
The procedure is similar to Chapter 11 cases. A petition is filed, schedules of assets and liabilities are created, but there is no DIP financing or other methods put into place to allow the operations of the business to continue since the debtor will ultimately dissolve. All employees will lose their jobs, with the exception of a few members of management who stick around to wind things up.
The trustee is often a bankruptcy attorney, and that trustee will oversee the winding up procedure. The trustee’s role is to function as a business-person—outside counsel will perform any necessary legal work for the trustee.
The assets of the debtor will still be enhanced by avoidance actions as in a Chapter 11 case, and administrative reports, fee applications, and monthly financial reports are all filed with the bankruptcy court.
During disbursement of the estate, assets are sold, claims are reconciled, and proceeds are distributed to creditors according to priority. Old debts are not discharged.
For consumers, Chapter 7 filings liquidate all property except certain exempt items, and of course post-petition property. A discharge of most pre-petition debts is given, but many are exempt—such as student loans.
If the consumer’s income is above a certain threshold, that person can apply for rehabilitation through Chapter 13, where the debtor satisfies debts through a plan approved by the bankruptcy court that allows payments to creditors over a period of several years. The consumer keeps his assets, and future income is part of the funds plan for paying off debts.
Alternatives to conventional bankruptcy cases include out-of-court restructurings to negotiate with creditors to restructure the terms of certain debts. Many attorneys help consumers understand these options. For example, assignments, which occur when a debtor assigns and estate to an assignee, who will liquidate assets and distribute proceeds, are a cheaper and speedier option than filing bankruptcy. Other times, receivership proceedings, which are still guided by the court, allow a receiver who is either appointed by the court or nominated by the debtor to oversee a winding down of business and distribution of asset proceeds to creditors. However, these options do not offer all the protections that the bankruptcy code offers, such as a complete discharge.
For more information about Chapter 7 filings, read below.
Bankruptcy Law and Chapter 7 Explained
One of the most important practices in bankruptcy law is to keep up with your time in detail. All fees must be approved by the bankruptcy judge. In 2012, many bankruptcy attorneys were involved in a dispute with the Justice Department over fees. The issue was whether the fees were inflated, unjustified or wasteful. The attorneys charged for things such as limousines and clothing, and billed at a rate of $1000 per hour. One firm, Weil Gotshal & Manges, earned a fee of $383 million after the dissolution of the Lehman Bros.
Read more about this dispute below.
Bankruptcy Lawyers Face Off Justice Department Over Fees Scrutiny
Many bankruptcy attorneys have stated that large firms with complex Chapter 11 cases are the most demanding. Often, these attorneys are required to bill over 50 hours per week (so they must work a minimum of 60 hours per week). This means the attorneys must work on evenings and weekends. Right before a filing, attorneys can easily work up to 80 hours per week.
Due to the nature of bankruptcy cases as described above, debtor representation is the most time-consuming practice. Representing individual creditors or consumers typically does not require as much time. Bankruptcy cases are very busy at first, then have a long middle period and finally a conclusion. Case length varies, of course.
Pay for bankruptcy attorneys varies significantly as well. An attorney in a small firm in the Midwest may earn $30,000 per year, whereas New York City firms may pay $125,000.00, plus bonuses. Government positions pay less, but offer more stability and a better work/life balance than bigger firms.
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If you primarily represent consumers, you won’t have to travel too much. However, if you deal with lots of Chapter 11 filings, you may travel quite a bit. Government attorneys do not travel much, but since bankruptcy is a federal practice, many are admitted pro hac vice (“for this occasion”) in other states for certain cases.
Read more about the different types of practices below.
What do attorneys say about the practice of bankruptcy law? Dean Harvey Miller is a partner at Weil Gotshal & Manges and is known as one of the deans of the bankruptcy bar. Miller handled the bankruptcy filing of the Lehman Bros. He has been with Weil Gotshal since 1969 and helped the firm gain an excellent reputation for handling bankruptcy cases. The Wall Street Journal reported that he is “one of a handful of people responsible for the development of modern bankruptcy practice.” He’s also a professor at New York University and a lecturer at Columbia University. In the past, he’s taught at Yale Law School. He’s listed in Chambers USA as a Senior Statesman in bankruptcy, and in the 2008 version of Legal 500 as one of the top ranked attorneys for finance and corporate restructuring.
Read more about Miller’s career in the article below.
The Life and Career of Harvey Miller: Bankruptcy Dean
What about other attorneys? A couple of associates gave us insight into their typical days. A third year associate in New York arrives to the office around 9:20, scans the news for bankruptcy headlines, and drafts motions for his cases. He also has to handle automatic stays in and the issues that arise from them, such as state court litigation actions. At the end of the day, he receives a fax on another case from opposing counsel. The deadline is that day and the other attorney has faxed a document at 6:00 p.m. The associate works on a response until 11:00 p.m. and calls it a night.
A sixth year associate in St. Louis tells us that he arrives in court at 8:30 a.m. His job is to represent a secured lender. After the hearing, he goes back to the office and reviews a motion that an associate wrote and submitted to him. This attorney practices in other states as well, and prepares for hearings he has in those states. He submits an application for pro hac vice admission, and then goes about his day, handling foreclosure issues in another case, reviewing documents and drafting responses, and finally leaves around 6:00 p.m. as he does not have anything pressing to take care of.
A seventh year associate in Los Angeles heads to court around 7:30 in the morning to go to a state court proceeding for the first time. There’s a breach of contract matter, and, although the attorney explains the bankruptcy issues to the judge, the judge decides to continue the hearing because of the bankruptcy issues. The attorney returns to his office, helps a friend with a bankruptcy issue, and prepares documents for the sale of a building on behalf of a trustee in s separate case.
Read more of these “Day in the Life” Accounts below.
Bankruptcy Law: A Day in the Life
Other attorneys also filled us in on their practice. Stephanie Harnett of Olmsted Williams Communications, Inc. works with Brian Davidoff, who is the chair of the bankruptcy group at Greenberg Glusker Los Angeles. They help middle market companies whose earnings are in the $50 million to $200 million range. She’s helped with workouts of several such firms. Dawn Moynihan Cohen is a Commercial Specialist at Greenberg Traurig. This is one of the largest bankruptcy practices in the world, and has 1,750 attorneys worldwide.
Read more about these fascinating attorneys below.
What is a Typical Day in the Life of an Elite Corporate Bankruptcy Attorney
Finally, don’ t forget about one of the most important people in your practice—your paralegal! Your paralegal will assist with client interviews and will meet with those clients to complete petitions and schedules for filing with the court. The paralegal will also draft motions, file and organize files, schedule important events, and will take phone calls from creditors. Sometimes, your paralegal may attend court with you.
For more about the role a paralegal plays in the bankruptcy world, read below.
Working as a Bankruptcy Paralegal
Finally, for a complete review of bankruptcy law, check out our guide below.