These are boom times in the bankruptcy world. 1,547,699 bankruptcy petitions were filed between October 1, 2001 and September 30, 2002 -- more than any previous 12-month period, and an increase of 7.7 percent from the previous year.^vi

The rise of the Chapter 11 mega-bankruptcy

These Chapter 11 statistics are somewhat of a misnomer for the aspiring corporate bankruptcy practitioner. Chapter 11 -- through which corporations (and some individuals) reorganize their businesses and continue to operate through, and usually after, bankruptcy -- is the core of the bankruptcy departments of most large firms and many smaller ones. These proceedings are often complex affairs, with major financial players and involving cutting-edge legal issues. The numbers above underplay the significance of Chapter 11 in the corporate world -- although Chapter 11 bankruptcies only account for 7.54 percent of all bankruptcies, they actually accounted for 27.38 percent of all business bankruptcies during this twelve month period (10,701 out of 39,091 petitions).1

Major corporate Chapter 11 proceedings are on the rise, changing the face of the profession. Enron, MCI Worldcom, United Airlines parent UAL Corp. -- all complex Chapter 11 proceedings, and all are among the ten largest bankruptcies in history (as measured by value of assets). In fact, seven of the ten largest bankruptcies in history are happening at this very moment -- with five filed just this past year. These are often long and windy processes, involving thousands of creditors and employees, sophisticated asset sales, and complex litigation, often about cutting-edge legal issues. Any one of these mega-bankruptcies involves dozens of law firms, working with and against each other through months of negotiations and arguments, with the results splashed across newspaper front pages and CNN monitors.

This is indeed the era of the mega-bankruptcy.^vii And for the attorneys who work on these cases, these mega-bankruptcies present new and exciting challenges and the opportunity to exercise all of their legal muscles.

The bankruptcy gold rush

Not surprisingly, one practical result in this surge of bankruptcy filings is that the bar is booming. In 1999 every firm wanted transactional and securities attorneys. Now, those same attorneys are victims of round after round of layoffs, with few job prospects in sight. In contrast, these are glorious times for bankruptcy attorneys.

Gavin Rubin, a Los Angeles legal recruiter (and former litigator), notes that in the past five years, the bankruptcy market, which he describes as "thriving," has gone from "a 2 to an 8 on a scale of 1 to 10." Opportunities particularly abound at smaller firms, which have no calvary of other attorneys to transfer into their bankruptcy departments.

Many observers think this boom will continue for several more years. And when the bankruptcy bull market is over -- or, rather, when the economy gets back on its feet? Will demand for bankruptcy lawyers decline -- will there be a corresponding bankruptcy bust? Surely some of the rules that applied to the recent dot-com implosion will apply here, as firms that over-expanded their bankruptcy departments will be forced to layoff, or at least shift to other to other departments, some of bankruptcy attorneys. Like any other practice, bankruptcy is cyclical.

Nonetheless, many bankruptcy practitioners believe that the bankruptcy bar will hold onto recent gains, and, in fact, continue to grow, as the economy improves. The reasons are several: bankruptcy courts continue to gain respect and publicity, drawing in new practitioners; the increasingly complex nature of bankruptcy proceedings, as debtors grow larger and increasingly complex; and the rising acceptance by debtors of bankruptcy as just another tool in their financial planning arsenal.

"The evaporation of the stigma of filing for bankruptcy has been breathtaking," says Gregory Willard of Bryan Cave LLP, echoing many practitioners' thoughts. "No one is afraid to speak about bankruptcy anymore," adds Florida's Brian Behar. Corporations are now more willing than before to go through the bankruptcy process and use it to reorganize further long-term goals. Bankruptcy no longer means the end; more and more often, it means a new beginning, with a debtor emerging slimmer and trimmer than before. Bankruptcy is now part of the economic fabric, recession or not.

This increasing use of bankruptcy as part of corporate existence has changed the face of corporate dealmaking. In the 1980's, tax specialists were on the front lines of corporate transactions, notes Willard, structuring deals to navigate the tax code. Now, bankruptcy lawyers have joined tax specialists, or even taken their place, in the trenches, anticipating the ramifications of a future bankruptcy by any of the involved (or potentially-involved) parties, and structuring these deals to protect their clients.

These trends indicate that even in flush economic times, bankruptcy lawyers will continue to be very much in demand.

ii. The Oxford Companion to American Law, 54 (2002).

iii.The Oxford Companion to American Law, 55 (2002).

iv. The Oxford Companion to American Law, 55 (2002).

v. Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50s, 102 S. Ct. 2858, 73 L.Ed. 2d 598 (1982).

vi. Bankruptcy Court Decisions Weekly News & Comment, Volume 40, Issue 11, December 10, 2002, page 1.

vii.Daniel Altman, Chapter 11? Or Time To Close The Books? NY Times, December 15, 2002, Money & Business Section.