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Hartgen
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STUDY SHOWS
FRAGMENTED, COMPETITIVE MARKET FOR CORPORATE BANKRUPTCY
COUNSEL
size='3'>February 2, 2007, Alexandria, Va.
— A recent study of 275 large chapter 11 cases revealed that,
contrary to the impression given a handful of newsworthy mega cases, the
market for corporate bankruptcy counsel is highly competitive and
includes professionals from a number of firms that vary in size. The
results are summarized in an article by Prof.
face='Times New Roman' size='3'>Stephen J. Lubben
size='3'>of Seton Hall University School of Law, and published in the
Winter 2006 issue of the
size='3'>American Bankruptcy Institute Law Review
size='3'>.
Lubben used Prof. Lynn
LoPucki’s Bankruptcy Research Database to find large corporations
with assets greater than $100 million that filed for bankruptcy between
2001 and the first half of 2005. The average debtor in the sample had
assets of more than $2.5 billion and more than 6,500 employees prior to
the filing. Lubben’s study uncovered a
highly fragmented market of more than 100 unique law firms represented
as counsel in the sample, ranging in size from 12 attorneys to over
1,000. No firm had more than 10.4 percent of
the market as debtor counsel, although six firms (Weil, Gotshal &
Magnes; Skadden Arps, et
al.;
w:st='on'>
size='3'>Kirkland
Ellis; Pachulski Stang,
size='3'>et al; Jones Day; and Latham and
Watkins) accounted for 39 percent of the total
representations. No other firm had more than
3 percent representation. An increase in both the number of debtor
employees and size of debtor assets correlated to the likelihood that
the debtor would select one of the three leading firms (Weil, Skadden
and Kirland), though Lubben found that case size and complexity are only
partial explanations for the selection of these firms.
The article complements
Lubben’s forthcoming study on professional fee practices in
chapter 11 cases, to be released this fall.
size='3'>Lubben’s two-year study is funded by the ABI
Endowment. Some scholars have argued that
the selection of certain debtors’ counsel steers cases to
jurisdictions like
size='3'>Delaware
resulting in high costs to the detriment of the reorganization and
bankruptcy system in general.
The
face='Times New Roman' size='3'>ABI Law Review
size='3'>, published twice a year by Thomson West, is among the most
respected scholarly publications in the bankruptcy community.
Distributed to all ABI members as a benefit of membership, the
ABI
face='Times New Roman' size='3'>Law Review has
the largest circulation of any bankruptcy law review.
###
ABI is the largest multi-disciplinary, nonpartisan organization
dedicated to research and education on matters related to insolvency.
ABI was founded in 1982 to provide Congress and the public with unbiased
analysis of bankruptcy issues. The ABI membership includes more than
11,500 attorneys, accountants, bankers, judges, professors, lenders,
turnaround specialists and other bankruptcy professionals, providing a
forum for the exchange of ideas and information. For additional
information on ABI, visit www.abiworld.org. For additional conference
information, visit
href='http://www.abiworld.org/conferences.html'>
color='#0000ff'>http://www.abiworld.org/conferences.html.