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Now that it has become painfully clear that the new economy has given way to a persistently stagnant version of the old one, what is the best strategy for young lawyers hoping to start or maintain careers in uncertain times? By his own example, Jonathan S. Henes, of Chicago-based Kirkland & Ellis, offered counsel: if for no other reason than to make yourself recession-proof in tough employment times, bone up on bankruptcy law. With reference to the short but rosy era of only a few years ago, Henes said, “We saw something we’ve never seen before — this incredible market bubble, which made people really believe there was a new economy, and that the business world had changed. Companies believed the rise in the stock market and so-called growth would never end. “We all know now that these companies came to a crashing halt,” said Henes, 33, whose firm named him a bankruptcy partner earlier this month. “What this tells us is that even in good economic times — even when a deal looks like a no-lose situation — there’s always the potential that something can go wrong. “Understanding that is important.” Perhaps Henes understates his understanding. After four years as a corporate associate at New York’s Weil, Gotshal & Manges, he launched a computer software venture in May of 2000, just in time for the Nasdaq’s first major nosedive. He returned to the law a year later, as an associate in Kirkland’s restructuring, workout and bankruptcy department. “I saw what a small company goes through when the economy takes a turn for the worse,” said Henes, a graduate of the Benjamin N. Cardozo School of Law. “I saw the human side, the psychology of a management team that finds its company in financial distress. It’s scary.” Nathalie S. Mu, a bankruptcy associate at New York’s White & Case, suggested that representing clients at the distressing end of things can be just as jazzy as being part of the euphoric outset of a deal. This, however, does not seem to translate into law school students signing up in droves to learn about financial restructuring. “But honestly, bankruptcy is extremely interesting,” said Mu, 30. “At the bankruptcy stage, you really, truly understand the dynamics of a deal. “In the last couple of years, [lawyers] were focused on doing deals. They weren’t thinking about bankruptcy,” said Mu, a former transactional and litigation associate who earned a law degree in Paris and an LL.M. at Georgetown University Law Center in Washington, D.C. “Every transactional lawyer should have some understanding of bankruptcy law, and the mechanisms that come into play in a workout context. “I think the two [transactional and bankruptcy law] are very, very much related.” DOING ONLY DEALS A THING OF THE PAST Jacquelyn J. Burt, assistant dean for professional development at Cardozo, said the days of young corporate lawyers doing deals and nothing else are over — if such a time ever actually existed. “We’re talking to our students about the reverse end of deals,” said Burt. “We tell them, If you’re going into corporate law, you’d better learn bankruptcy.” In a pinched economy, Burt further suggested, the more well-rounded corporate attorneys are obviously the ones more likely to hang on to their jobs. “We’ve had alumni say, ‘I’m in the corporate department but I was asked if I’d be willing to do bankruptcy or litigation.’ They ask, ‘Is that a bad sign?’” said Burt. “I think that a firm that values [a young attorney's] skills to the point they would rather move you than lose you is a good thing. “So again, I tell students and alums — be flexible. “This is really critical, and I hope the idea gets beyond corporate attorneys talking about it around the water cooler,” Burt said. “The message should be loud and clear: in the best of economies, fields of law are integrally connected and [young lawyers] need to have what I call a secondary field of focus.” For example, Burt asks Cardozo students in corporate law: “Beyond mergers and acquisitions and derivatives, have you developed some other skills if the economy goes bad?” In terms of corporate law, said Henes, the answer to Burt’s question requires a young attorney to accomplish some intellectual acrobatics. From the client or clients’ point of view, after all, the psychologies and incentives at the outset of a deal are fundamentally different from those at a time of restructuring. “I don’t think you have to go so far as to adopt another personality, but you do need to look at things from a far different perspective,” said Henes. At the outset, he added, “It’s typically a two-party transaction. With a restructuring, it’s a multi-party transaction. “What you’re doing [in restructuring] is making deals, but those deals are contingent on making deals with other parties as well. It’s much more complex. You need to have a much broader view.” Mu agreed. “In order to be a better negotiator and to structure a deal properly [at the outset], attorneys have to have some understanding of what could possibly happen if an end should come,” said Mu. “At this point in our economy, I think you just don’t have a choice [of intellectual disciplines].” Still, on first hearing the word “bankruptcy,” young lawyers are not much more mentally agile than the general public, said Henes. “They think of an individual who can’t pay his debts, or a company that shuts its doors and fires everybody and is gone forever. That’s not what we do,” said Henes. “What we do is really just another part of corporate deal-making — working with companies in distress rather than positions of strength. “Which makes it more challenging.”

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