It should come as no surprise that restructuring is big business right now. Restructuring attorneys at large-enough law firms are getting calls from headhunters telling them things like “restructuring is a hot practice area” and that it is a “great time to make a move”. While this is true, anyone with an internet connection and a set of eyes can draw this conclusion with little analysis. Let’s dig deeper to cover why this is happening and what it means for different classes of attorney.
1. Partners with a Strong External Reputation
We talk to a lot of partners in all practice areas, but let’s face it: bankruptcy partners have not been in fashion for a long time. Certain firms (Kirkland and Weil, to name two) have always had their heavy hitters, but they were not going to move and hiring senior people with business was not something they have ever pursued heavily. Less profitable firms have jettisoned these practices as often as they have bolstered them. The bull market of the last decade-plus has absolved company after company of its sins and caused bankruptcy and restructuring to be an unfashionable skillset. That situation has now changed. The inherent value of a debtor-side restructuring practice is that fee applications are approved by the courts, and as long as the fee application comes with the firm’s actual rack rates for the attorneys, it will be approved. Thus, if there are significant debtors winding up in the bankruptcy courts and you are a partner at a less profitable firm who has the ability to capture those clients, you are leaving a lot of money on the table keeping yourself busy at rates lower than the “big shops” are charging for their third and fourth year associates. As one bankruptcy partner told me last week, “Five more of my client firms are entering bankruptcy court next week, two of them big boys. What am I doing charging $850 per hour?” Let’s have a conversation if this describes you as well.
2. Senior Associates, Counsel, and Junior Partners
Large firms set rules against hiring non-partners into partner positions, but rules are made to be broken. Especially in the current environment, with regard to restructuring, these rules are being broken regularly. There has probably never been a better time for a bankruptcy counsel or income partner to jump ahead to obtain the “P” or equity, respectively. Of course, even in such an in-demand practice area, associates and counsel must be strong contenders for partnership at their own firms as well, meaning that they show strong emotional intelligence, business sense, and legal skills. But if you have these things and are just jammed up, this a way for to jump the line. Because of the weakness in the restructuring practice area generally over the last several years described above, this problem is endemic. Just the other day a client told us that, while they would like to hire a senior associate/counsel candidate or ours with strong skills and experience in restructuring, they could not hire her right now because there are three very senior lawyers in her class at the firm in restructuring, all working like crazy, and all hoping to get the elevation to partner. The likelihood at that firm, mind you, is that none of them will make it – but that’s a different story and not one for print.
In this as in all games, timing is everything. But the time is now for promotions in restructuring. Recently, we worked with an Amlaw 100 firm to recruit a counsel/senior associate from a tier-1 restructuring practice. He joined as partner. Talking to the MP of the hiring firm yesterday, we learned that listing this new partner on a pitch helped this firm win a debtor-side bankruptcy representation in the new partners’ third week. Given the firm’s institutional client base, the thing most special about the representation is that it was not lost to a restructuring powerhouse. The managing partner raved about this new partner because with this one deal, he probably just paid three years of his own partnership share. Another example is a candidate with a similar pedigree as the first attorney – senior associate at a tier-1 restructuring practice with very little opportunity for upward mobility. The only difference is, he did his search in 2019 instead of 2020. At that time, he was turned down by a number of firms with smaller restructuring practices. The attorney did end up being placed as partner at an Am Law 200 firm, but with much less fanfare. Come to think of it, we need to check on him!
The takeaway is that not only is this a time to try to get a lateral promotion, but that we are constantly in touch with law firm leadership about their needs and strategies.
3. Local Restructuring Counsel
One of the perqs we provide our clients, candidates, and friends is a daily newsletter listing the week’s lateral moves, articles about firm expansions, and a section on bankruptcy filings. The bankruptcy filing section lists the case, court, and all the law firms listed on the matter, from the “big cheese” law firm leading the deal to local bankruptcy counsel. Local counsel lawyers with the pedigree and experience typical of a top-tier restructuring firm can use this opportunity to lateral to a larger shop for a pay raise. Of course, this is also a boom time for these local counsel partners who are fed work from the larger restructuring shops. But a more junior lawyer who does not yet have these relationships should consider a move – it’s the same work and you’ll be paid better.
Feel free to reach out to us anytime at jobs@kinneyrecruiting.com to reach the whole team (and get the whole story).