Philadelphia: Slowdown Raises Demand for Bankruptcy Lawyers

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Slowdown raises demand for bankruptcy lawyers Source: Florida Today Publication date: 2001-02-19 Arrival time: 2001-02-24

Slowdown raises demand for bankruptcy lawyers

Associated Press

PHILADELPHIA -- As she prepared her move out of North Carolina last fall, Juliet Sarkessian didn't know what to expect from the resumes she casually sent to Philadelphia law firms.

But within weeks, Sarkessian had been interviewed several times and hired by one of the city's most prominent firms. Her appeal: She's a bankruptcy specialist.

As the slowing economy backs many weaker companies into a financial corner, law firms around the country are scurrying to beef up their bankruptcy practices.

"The (job) market does seem to be good," said Sarkessian, 39.

Bankruptcy filings by large publicly traded companies last year jumped to 176, a 21 percent rise from 1999 and a 44 percent increase from 1998, according to the American Bankruptcy Institute.

"It's quite busy," said Samuel J. Gerdano, executive director of the Alexandria, Va.-based institute. "Every day there's some new household name either considering filing or filing for bankruptcy."

In recent months, those names have included Trans World Airlines, Montgomery Ward, Bugle Boy, Sunbeam Corp. and sneaker maker Converse Inc. Many other companies are talked about as being vulnerable, among them Chiquita Brands International and Xerox Corp.

Meanwhile, Owens Corning and Armstrong World Industries have filed for bankruptcy protection in an increasingly popular tactic to help cap potential asbestos-related liabilities against them.

TWA and Vlasic Foods International Inc. filed for bankruptcy last month as part of deals to be acquired by larger companies, while several other industries including steel, automobiles and power utilities are under stress, law firms say.

Nationwide, legal recruiters report a growing demand for bankruptcy attorneys, particularly in larger cities where major corporations are located.

Much of that demand is in Philadelphia, a result of its proximity to Delaware, where many companies make their legal home to take advantage of favorable state laws.

"There's a tremendous amount of work to be done," said Sandy Mannix, a legal recruiter for the Philadelphia-based Abelson Legal Search, which serves Pennsylvania, Delaware and New Jersey. "There are a number of openings -- they're all looking."

In other large cities, like New York and Chicago, demand for bankruptcy attorneys has more than doubled during the past year, recruiters say.

Alan Rubenstein, recruiter for Chicago Legal Search, reports a fourfold increase in bankruptcy openings. He said it's typical for such lawyers to be hit with 15 interviews and snapped up within a month, a much hastier process than when the economy was bustling.

"It's the same firms who were looking for corporate and mergers- and-acquisitions associates like gangbusters two to three years ago who are looking for bankruptcy associates now," Rubenstein said.

In some cases, the demand has resulted in signing bonuses of up to $10,000 to attract top associates, some recruiters say.

New York law firm Weil, Gotshal & Manges may have to expand its 85- lawyer national bankruptcy practice to meet a growing need, said Harvey Miller, a partner in the firm's business and restructuring group.

"Today, the companies ending up in Chapter 11 (bankruptcy reorganization) are not only overleveraged but they have basic operational problems," Miller said. "This is going to take a while to work out even if there is a 'soft landing.' "

As an example, Miller cited the movie theater business, which has been battered by overbuilding. Four large cinema companies have filed for bankruptcy during the past year.

Ronald R. Peterson, a partner at Chicago's Jenner & Block, said his firm's bankruptcy department, now 10 strong, is looking to boost its ranks to 15. For now, the current staff is working harder to make up the difference.

One region not caught up in the trend is California's Silicon Valley. Despite a shakeout of Internet businesses, legal recruiters there are reporting only a slight increase in demand. They say bankruptcy filings by small Internet startups tend to be simpler, with less lawyer involvement.

"There's not much to argue about to divide up maybe some computers, a lease, some desks and some bad art," said Robert A. Major Jr., a partner at the recruiting firm Major Hagen & Africa in San Francisco.

Philadelphia's Dechert law firm, which hired Sarkessian, reports that it is "quite eager" to add to its 15-member bankruptcy practice.

Sarkessian described her pay as more than fair. At large law firms around the country, salaries start at more than $100,000, and can easily top $200,000 for senior associates.

"I was very pleased with the compensation being offered," Sarkessian said, though adding with a laugh, "nobody has offered me a corner office yet."

Publication date: 2001-02-19

-- Rachel Gibson (rgibson@hotmail.com), February 26, 2001


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