Studying bankruptcy law in school and learning how to practice in bankruptcy courts are two distinct endeavors. Here are a few things I have figured out that I didn’t know when I crossed the threshold of the law school, diploma in hand.
1. Bankruptcy court is a fast-paced place. Unlike other litigation practices, bankruptcy cases can move at a lightning pace. The Federal Rules of Bankruptcy Procedure and the U.S. Bankruptcy Code are designed to provide prompt administration of a bankruptcy proceeding.
Motion practice, such as a motion for relief from stay, initiates much of what occurs in a bankruptcy case. The typical litigation progression — of pleading, discovery and trial/hearing — is unavailable, because there’s not enough time or the timeline significantly accelerates.
In many instances, attorneys must prepare to conduct evidentiary hearings with very limited — or no — discovery. "Discovery" takes place when a witness is on the stand or through a pre-hearing review of information from the client. As a consequence, attorneys must learn as much as they can about case issues and facts as early as possible, so they don’t have to try an evidentiary dispute with an empty briefcase.
2. Credibility with the court and other counsel is essential. While not unique to bankruptcy practice, earning credibility with the court, its staff, the U.S. trustee and other counsel involved in a case is an absolute necessity in successfully representing a client. Although bankruptcy is by necessity a litigation-based practice, particularly on the commercial side, it is also a partially cooperative practice, which lends itself to multiple-level negotiations and many-faceted resolutions.
A successful reorganization lawyer must have credibility with and the respect of other counsel. A lawyer’s effectiveness hinges on the ability to deliver as promised and a willingness to litigate matters where resolution eludes the parties. Lawyers should do what they say they will and be forthright with other counsel.
Bankruptcy attorneys earn or diminish credibility with a judge over time and based upon performance. Credibility depends not just on expertise and advocacy skills but also on a track record for truthfulness and candor with the court. Lawyers who the court knows will admit the weaknesses in their clients’ cases but be persuasive with respect to their strengths are far more successful with most judges than lawyers who build their reputations by attempting to fool judges or shade the facts.
3. Bankruptcy court personnel are invaluable resources. Court staff, the U.S. trustee’s office and the bankruptcy clerk’s office do a tremendous amount of work at the courthouse behind the scenes. In addition to learning the local rules of each court, lawyers should familiarize themselves with individual procedures published by bankruptcy judges for handling specific types of matters (e.g. telephone appearances); lawyers must follow these to streamline the process of obtaining judicial review of and action on a matter.
Maintaining positive, effective working relationships with court staff is an important component of insuring that the judge timely considers a client’s matters and helping the lawyer present them in the best possible light. My experience is that court staff and the bankruptcy clerk personnel are more than willing to help counsel do things the right way and follow appropriate protocol in bringing matters before the court. They are an invaluable resource when treated with respect and courtesy.
4. Take responsibility for moving the case. It is a misconception that bankruptcy judges administer bankruptcy cases. Bankruptcy judges hear only the matters lawyers bring before them by way of motion and/or adversary proceeding. They do not monitor the progress of a case, unless a matter gets their attention for a particular reason (usually bad).
Whether lawyers are debtors’ counsel or represent creditors, they need to be proactive in bringing matters to the court’s attention to bring about resolution. It is unusual for the court to review issues sua sponte. Attorneys who want something to happen must initiate the examination by the court by filing an appropriate pleading to bring the matter to light.
5. Prepare for boom and bust cycles. More than any other practice area, the bankruptcy practice is cyclical and substantially impacted by events in global, national and local economies. Bankruptcy lawyers, and particularly those involved in a commercial practice, are often very busy during economic downturns or are waiting for the phone to ring during a robust economy.
Bankruptcy lawyers are the economy’s undertakers and emergency room physicians. Economic trends, which often are beyond prediction, substantially influence the volume of work available. That fact compels the bankruptcy lawyer to be aware of personal finances in light of fluctuating workloads and to develop the ability to work in other or related practice areas when clients aren’t filing bankruptcy cases. When I started to practice in the bankruptcy courts, I was told, "Work hard and take advantage of the opportunities when the work is there, but enjoy the slow times when they’re not, because neither will last forever." It was excellent advice.