After the debt bubble burst a dozen years ago, a cascade of business failures turned bankruptcy practices into a bright spot—and set off a rush for talent—among law firms grappling with the Great Recession.
But firms don’t want to be playing catch-up when the next major recession hits.
Data on partner moves, combined with interviews with lawyers, recruiters and consultants, show that firms have been remarkably proactive in building up their bankruptcy practices over the last three years, energizing the lateral market long before the arrival of the anticipated downturn. With two months still remaining in 2019, the year has already ushered in more lateral moves than in both 2017 and 2018.
Every law firm that legal recruiting firm Major, Lindsey & Africa has visited has cited growing its bankruptcy practice as a top priority, according to founder Jon Lindsey. He said lateral movement in the practice area will likely reach its peak in the next year, but that the timing has been different than in recessions past.
“The demand for restructuring and bankruptcy partners is as dynamic as it’s been in the last 25 years,” he said. “Firms in the past waited until a wave hit to look for a lifeboat. Now, the sense that they need to have people in place before the storm hits is much more acute.”
More than a decade after the last recession, threats to the economy’s health are slowly becoming apparent as more indicators point to an imminent slowdown. But unlike the sudden worldwide financial crisis of the last decade, the slow plod toward the next recession has allowed law firms to be more deliberative in building out their bankruptcy and restructuring practices.
Lindsey emphasized that the U.S. is not in a recession right now, but in light of global economic concerns, trade disputes with China and other factors, “it’s coming—and there’s a lot of work to be done.”