Arent Fox’s Mark B. Joachim, a partner in the firm’s corporate group, as well as in the firm’s bankruptcy and financial restructuring group, was interviewed in a recent issue of the Dow Jones Daily Bankruptcy Review for an article titled “In Industry-Wide Shift, Law Firm Bankruptcy Practices Do It All.”

The article focuses on a trend by which many law firm bankruptcy practices that once focused on a specific type of player in a major corporate bankruptcy, like a debtor or bank lender, now proclaim that their attorneys, at one time or another, have represented just about every possible player.

In discussing this industry trend, the Dow Jones publication notes:

Also attracted to restructuring work are the attorneys who traditionally represented private equity firms and hedge funds, which have become major investors in distressed companies.

“The private equity client wants the law firm to represent the portfolio company that’s in distress,” said Arent Fox partner Mark B. Joachim.

While firms may have different reasons for broadening their bankruptcy practices, what’s keeping those practices diverse is the resulting increase in competition as well as the quickened pace of most Chapter 11 restructurings. Joachim said companies today face new pressure from the Bankruptcy Code and their creditors to get in and out of bankruptcy. As a result, Chapter 11s are no longer the steady fee generators they once were.

“If you think about it as inventory, you’ve got to turn it over more quickly,” Joachim said. “Instead of staying pigeonholed, people are going outside of that one area of practice in order to diversify and keep themselves busy.” …

Of course, there are ethical questions that bankruptcy attorneys must constantly ask themselves.

“The big elephant in the room when it comes to having this kind of bankruptcy practice is it requires you to be very vigilant when it comes to conflicts,” Joachim said.

Firms run a thorough search for potential conflicts with each new assignment. If that search turns up an attorney who represented an adversary of the company that’s now looking for representation, state ethics rules require the firm to ask both the new and existing clients for a waiver of that conflict.

“Every client is different,” Joachim said. “Some institutions will be OK with you being adverse to them in a bankruptcy case, and some institutions won’t.”

In the latter case, that means turning down a job. “Every single bankruptcy lawyer you talk to has this story about the great case they were ready to take and, at the last minute, they figured out that they couldn’t because there was a conflict,” Joachim said. If a law firm does get a waiver to represent a debtor, its retention is still subject to the approval of a federal bankruptcy judge, who must also approve the legal fees and other payments a debtor’s looking to make.

To read the full article, which begins on page 2 of the publication, please click here.

Dow Jones Daily Bankruptcy Review is a premier source of information for law firms, consultants, turnaround managers, accountants, asset management firms, broker dealers, investment bankers/ledgers, rating agencies, portfolio managers, risk managers, credit professionals, and auctioneers. It features news on major Chapter 11 cases throughout the United States and follows the entire scope of reorganization from petition through plan confirmation.