It is a lawyer’s nightmare: learning at the last minute that a well-earned contingent fee has evaporated. When clients declare bankruptcy, counsel who have invested time and money in a client’s pre-bankruptcy case risk losing the fruits of their labor.
Consider this example. On behalf of client company X, litigation counsel sues a competitor, company Y. During the pendency of the suit, the client-plaintiff declares bankruptcy and hires bankruptcy counsel. Litigation counsel now risks losing hard-earned fees for work on Company X v. Company Y, unless he takes steps to protect his financial interest. Here’s what litigation counsel needs to do.
