Law Firm Finds New Life, Not Death, in Bankruptcy
A First: Law Firm Finds New Life, Not Death, in Bankruptcy
The Wall Street Journal’s Law Blog Jacqueline Palank reports:
A South Florida law firm recently used bankruptcy to do something no one in the legal industry has done before: sell itself to another firm.
Companies across corporate America, from Blockbuster to General Motors, have sought court protection while they try to sell continuing businesses to potential white knights. But until last week, law firms usually used bankruptcy to shut down.
So the $7.8 million cash-and-debt sale of midsize law firm Ruden McClosky out of bankruptcy to fellow South Florida law firm Greenspoon Marder made legal and bankruptcy history, as I reported in this WSJ story. What’s more, the deal will likely inspire other struggling law firms to turn to bankruptcy as a place to find new life rather than a place to die, restructuring professionals say.
That’s because law firms are facing unprecedented financial pressures, brought on by the economic downturn and fierce competition. Past fixes, from layoffs to mergers, are no longer enough to keep the lights on and save jobs.
“I am seeing much greater interest on the part of law firms that are experiencing financial stress to consider ‘out of the box’ solutions to their financial dilemmas, including bankruptcy,” says Bill Brennan, a principal with legal consulting firm Altman Weil. “I expect that this will become much more common in the very near future.”