The following is an excerpt from Practice Perspectives: Vault's Guide to Legal Practice Areas.
Jeff Bjork, Managing Partner of the Los Angeles offices and former Global Vice Chair of the Restructuring and Special Situations Practice, represents public and private companies, creditors, and investors in all aspects of restructuring. Widely recognized as a leading restructuring lawyer in the United States, Mr. Bjork is a fellow in the American College of Bankruptcy and was named one of the Outstanding Restructuring Lawyers for 2020 by Turnarounds & Workouts.
Caroline Reckler, Global Vice Chair of the Restructuring & Special Situations Practice, is a nationally recognized bankruptcy lawyer, advises debtors around the world on all aspects of restructuring and special situations. She serves as Finance Department Chair for the Chicago office and as the Global Chair for the firm’s Women Enriching Business (WEB) initiative. Ms. Reckler is a Fellow in the American College of Bankruptcy and is regularly recognized in leading legal publications, including Chambers USA and The Legal 500.
Describe your practice area and what it entails.
Jeff: Our team advises the full array of stakeholders involved with financially distressed businesses, including debtors and issuers of both public and private securities, all types of creditors, equity holders, new investors, boards of directors, and senior management teams. The practice spans financial and operational restructurings, often with a cross-jurisdictional dynamic. I have a particular expertise in mass tort bankruptcies.
Caroline: Clients look to us for guidance in the most complex, challenging, and often contentious restructuring matters. Whatever the challenge may be—an over-levered balance sheet, litigation overhang, or operations in need of restructuring—our team has the experience and capabilities to meet it. We also bring to bear the strength of Latham’s other market-leading practices in all of the major financial centers around the world, including the tax, M&A, private equity, capital markets, employment and benefits, and debt finance groups.
What types of clients do you represent?
Caroline: We represent distressed companies and creditors of distressed companies, as well as purchasers, lenders, boards of directors, investors, and other stakeholders in distressed situations, both domestically and globally. Our clients span a variety of sectors, including those with a long history of restructuring activity (e.g., retail, energy, health care, manufacturing, and consumer services companies), as well as newer players (e.g., fintech/digital assets).
What types of cases/deals do you work on?
Jeff: Our practice often advises on restructuring through chapter 11. Recently, we helped Paddock Enterprises, formerly Owens Illinois, in their emergence from chapter 11. Similarly, our practice advised Mallinckrodt Pharmaceuticals in its reorganization following chapter 11 and through its recognition proceedings that implemented the first global opioid litigation settlement.
We pursue solutions in and out of court, including creditor compromise procedures, security enforcements, debt rescheduling, liability management transactions, exchange and tender offers, refinancings, new money and distressed financings, debt-to-equity swap transactions, equity capital raises, and strategic and distressed M&A transactions.
How did you choose this practice area?
Caroline: I gained exposure to the restructuring practice in my first year as part of Latham’s Unassigned Program. I didn’t know what type of law I wanted to focus on when I graduated from law school and started at Latham, and the program gave me an opportunity to try out a variety of practice groups and enabled me to make an educated decision of which practice group to join. The fast pace of restructuring, the opportunity to get client contact and external exposure quickly, and the practice’s blend of litigation and transactional work captivated me, and I haven’t looked back since.
Jeff: I had a bankruptcy class in law school, and in talking with the professor I felt encouraged to take more—I ended up taking three or four bankruptcy and finance classes. After that, I was sold and clerked for a bankruptcy judge before moving to my law firm practice.
What is a typical day like and/or what are some common tasks you perform?
Jeff: Our practice’s common tasks run the gamut—days vary between negotiating aspects of a deal, advising a board or senior management of a company, and strategizing with clients on how to navigate distressed situations. Other days I’m in court. I’m in the boardroom as much as I’m in the courtroom.
As the cases grow in size and difficulty, mediation has also become more common, which differs from traditional negotiations because there’s a neutral third party involved.
Similar to how general counsels operate, the hot-button issue of the moment dictates my day, whether it’s an employee issue, a default under financing facility, or something else. The day-to-day tasks vary but are “typical” in that all involve working with the client in their most challenging moments and finding a way to simultaneously make it through the day while also planning long-term strategy.
What training, classes, experience, or skills development would you recommend to someone who wishes to enter your practice area?
Caroline: Restructuring is a rapidly developing and wide-ranging subject area, but our clients (often high-level corporate decision makers) expect clear, practical advice that shows an understanding of their business. It’s beneficial to have a grounding in commercial and financial principles and to stay up to date on market developments. But as a starting point, I’d take a bankruptcy, corporate finance, or tax class and understand at least the basics of how secured financing works. Those with interest both in corporate law and in litigation tend to find our practice a good fit. I’ll also plug two of Latham’s resources: our Restructuring & Special Situations Virtual Experience Program and our Book of Jargon.
I’d also recommend honing your negotiating skills because those are critical to being an effective restructuring lawyer. Yes, sometimes we litigate, but in most if not all matters, a negotiated resolution is the objective. Understanding parties’ commercial incentives, in addition to the legal backdrop, is key to understanding the art of the possible and finding that solution.
What do you like best about your practice area?
Caroline: The human side—I love that I use my skills to help people at their most trying moments. I’ve been at this long enough that I can find a practical solution to most issues and offer the necessary assurances to alleviate our clients’ uncertainty. The unpredictable nature of our practice also keeps the appeal fresh—I’m always doing different things, learning new industries, and getting into the weeds.
Jeff: I enjoy the complexity of the problem solving. I often get to engage in game theory, which ensures matters stay interesting. For example, I often encounter a common fund with more creditors than assets. I also like combining corporate and litigation in one practice. But most of all, I get to meet board members and CEOs and some of the biggest clients in the world, and across industries as well. Every day is varied because it’s such a broad practice.
What misconceptions exist about your practice area?
Caroline: One of the more common misconceptions I hear about restructuring is that we are effectively specialists, but our practice is far more of a generalist practice that requires at least a passing knowledge of a wide range of topics, including corporate governance, finance, nuts-and-bolts litigation, M&A, securities law, and more. We advise on out-of-court restructurings or sales, we advise boards on strategic alternatives, and we work with financing colleagues on hybrid or unique financing transactions. Our practice covers nearly every aspect of corporate law and every issue for companies facing any type of stress.
What are some typical tasks that a junior lawyer would perform in this practice area?
Jeff: Junior associates can expect hands-on experience very early in their tenure with the practice. Their typical slate of tasks includes preparing for court if we have a litigation dispute in a bankruptcy, working directly with our clients to give strategic guidance, and drafting memos and various transactional documents. Our junior associates interact often with partners and clients—they learn how to negotiate and think strategically, and how to think about litigation and use litigation leverage as a tool.
Caroline: In addition to the overview of tasks Jeff provided, I’ll emphasize that junior attorneys in the restructuring practice with interest in court experience gain it sooner and more frequently than in a classic litigation practice. Junior associates can also expect to frequently sit in board meetings and get valuable time with C-suite clients.
What are some typical career paths for lawyers in this practice area?
Jeff: A restructuring practice makes you one of the last generalists in the law and requires touching multiple practice areas—litigation, corporate, M&A, employee benefits, tax, finance, etc. That broad base of experience creates opportunities to go in-house or work for hedge funds. Different doors open because you’re specializing in bankruptcy but have a general knowledge of a lot of critical business areas.
Caroline: I agree, and what may be appealing to those considering a restructuring practice is how your experience translates across industries—you’ll pick up a broad range of knowledge that will allow you to navigate what’s hot based on the economic cycle. The generalist nature of restructuring practice provides great training for in-house counsel roles, regardless of industry, private equity and other investment management work, or investment banking roles.