The massive job losses due to the effects of COVID-19 do not stop with work. When a man loses his job, he can’t pay his bills, and if he can’t pay his bills, he is forced into bankruptcy. In response to this, the Wall Street Journal reports that law firms are preparing for a wave of bankruptcies.
The nation’s bankruptcy industry is bracing for a wave of business collapses triggered by the coronavirus pandemic as its ranks have been thinned by a decade of economic growth.
The slowed pace of corporate chapter 11 bankruptcy filings—which crested in 2009 with 13,700 cases and has fallen to about half that amount in recent years—has led restructuring firms to shed bankruptcy lawyers and advisers.
Now the firms are preparing for the rush.
O’Melveny & Myers LLP, Paul Hastings LLP, DLA Piper and Sidley Austin LLP are among the law firms looking to hire bankruptcy lawyers at locations across the country, said Dan Binstock, a partner at Garrison & Sisson who is president of the National Association of Legal Search Consultants.
‘If you’re looking for that midlevel associate who really knows what they are doing, they are hard to find,’ said Thomas Horan, a law partner in Wilmington, Del.
Scott Love, a Washington, D.C.-based legal recruiter, calls it a “frontier free-for-all,” adding that “candidates that weren’t that attractive a year ago are now shining.”
Restructuring advisory firms are staffing up too, including FTI Consulting FCN 2.27%▲ Inc., which began reassigning some of its corporate finance professionals to handle distress work in March.
Even as firms shift resources, their pool of available talent is shallow because the bankruptcy practice has been mostly at a lull in recent years.
“That missing generation—that’s a real thing,” said Thomas Horan, a partner at the Fox Rothschild LLP law firm in Wilmington, Del. “If you’re looking for that midlevel associate who really knows what they are doing, they are hard to find.”
The financial crisis triggered a rise in business failures, creating full demand for bankruptcy lawyers, restructuring advisers and legal support businesses. But filings have declined since then, leading to a contraction of the industry. (source)
Bankruptcy is a very sad and hard thing to endure. Unfortunately it will become far more common as the national economic and financial situation worsens and people cannot pay their bills.
Times are going to become very hard for everybody. One will need to work hard for oneself, but also to help others with their needs, as life in America is going through a fundamental transformation, and what the US looked like even months ago will be significantly different in the months and years to come.