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Study Shows Fragmented Competitive Market for Corporate Bankruptcy Counsel

Contact: John Hartgen
             (703) 739-0800
             jhartgen@abiworld.org

 

STUDY SHOWS FRAGMENTED, COMPETITIVE MARKET FOR CORPORATE BANKRUPTCY COUNSEL

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. Stephen J. Lubben of Seton Hall University School of Law, and published in the Winter 2006 issue of theAmerican Bankruptcy Institute Law Review.

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.; Kirkland and Ellis; Pachulski Stang, 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.  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 New York and Delaware, resulting in high costs to the detriment of the reorganization and bankruptcy system in general.

The ABI Law Review, 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 Law Review has the largest circulation of any bankruptcy law review.

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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 http://www.abiworld.org/conferences.html.