Building a top-tier company-side bankruptcy practice has long been a formidable goal for ambitious leaders in Big Law. Since Harvey Miller of Weil Gotshal & Manges pioneered restructuring as a Big Law business in the 1970s, only a select few firms have managed to secure leadership positions, enjoying prolonged success once they establish their brands. In the past year, Sidley Austin made waves in this closely-knit community by announcing its ambitious plan to challenge the status quo and carve out its place as a formidable competitor.
Building the Team
Upon announcing its intent, Sidley Austin strategically hired Stephen Hessler to lead the bankruptcy practice. Hessler’s initial focus was on optimizing the restructuring group’s associate-to-partner ratio. With the group comprising about 60 lawyers and slightly partner-heavy, Hessler rectified this by bringing in more associates, aiming for a more balanced leverage profile. Currently nearing 75 lawyers, the goal is to reach 100 lawyers by 2027, with internal promotions expected to play a significant role.
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Strategic Approach
With a robust talent roster, Hessler set a target for the group’s workload, informing the number of cases they need to secure. This systematic approach, undisclosed in specifics, aligns with Sidley Austin’s qualitative goal of attracting suitable cases.
Finding the Right Work
The cornerstone of success for any restructuring practice lies in securing significant cases. However, Sidley Austin has some ground to cover, with Kirkland & Ellis maintaining a dominant position. While Sidley has made progress, representing six companies in “prep mode,” Kirkland continues to lead the practice with 19 company-side representations. Sidley’s international restructuring group, buoyed by China’s property bust, boasts 20 company-side representations.
Private Equity Focus
One driving force behind Sidley Austin’s restructuring aspirations is the desire to capture Chapter 11 filings and out-of-court work from its private equity clients. Winning the representation of Reverse Mortgage Investment Trust Inc. in its Chapter 11 filing in late 2022 illustrates its success in leveraging pre-existing relationships. This strategic move aligns to target company-side representations due to their lucrative nature.
Beyond Chapter 11
Sidley Austin’s pursuit of company-side representations also involves cultivating relationships, as demonstrated by a case originating from a connection Stephen Hessler developed while at Kirkland. The consolidation of legal work from AppHarvest highlights the firm’s expanded capabilities over the last 18 months, signaling a significant shift.
Worth Your Time
Recent developments in the broader legal landscape include Cravath, Swaine & Moore raising the salary scale, impacting the wage dynamics in Big Law. Additionally, integrating generative artificial intelligence in law firms poses challenges regarding client disclosure. Former bankruptcy judge David R. Jones seeks defense from the Justice Department against a civil suit related to disclosure issues.
In conclusion, Sidley Austin’s journey into the competitive arena of bankruptcy practice shows promising growth, with strategic hires, a focus on private equity relationships, and an expanding portfolio of representations. The next few years will be crucial in determining the firm’s success in establishing itself as a significant player in the field.
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