Success in the business of bankruptcy law lies in not chasing the run of the mill cases.
Lots of your competitors want the same simple (or apparently simple) cases. The clients are less sophisticated and the market effectively caps what you can charge.
Fewer of your competitors are prepared to do a business bankruptcy well. Business failures are a constant in our economy, whether times are good or bad.
Bankruptcy judges are more likely to have come from the world of business bankruptcies; they have an idea of the issues and the complexities involved. They are more likely to support higher fees for debtor’s counsel.
So, let’s spend some time over the next couple of weeks looking at the issues in business cases: cases where the client has payroll taxes, business premises, partners, and SBA loans.
Since this site is focused on lawyers new to bankruptcy practice, I’m not going to talk about Chapter 11’s. While Chapter 11 is the only form of bankruptcy in which a corporation can get a discharge of its debts, it is no place for newbies.
Chapter 11 is not an oversized Chapter 13. The overwhelming majority of Chapter 11 cases fail, and it is ridiculously easy as a lawyer to lose your shirt in the process.
While I do an occasional Chapter 11, I’ve found I can do lots of good for small business clients with Chapter 7 and Chapter 13.
So, let’s get started.
To be or not to be
The bankruptcy variation on Shakespeare’s question is whether the person sitting across from you in the initial consultation expects to continue to operate the business.
If they arrive ready to shut the business down, I am inclined to go along. Entrepreneurs as a class are the most optimistic, hard working, pig headed people you’ll encounter . When they are ready to quit, they are probably right.
A few questions to run by the client:
- does the business have its own legal identity? is it a corporation or LLC?
- if the business is operated by an entity, is the entity really liable for the debt it’s servicing?
- would the business outlook be different if you weren’t servicing debt from the past?
Next time we’ll look at the impact of each of those questions on your analysis of the options.
I wish you a happy and prosperous New Year.
Image courtesy of Pixabay.
