Building a Bankruptcy Practice

Building a Bankruptcy Practice

Bankruptcy lawyers are part of a system that offers debtors a fresh start and creditors a systematic way to get paid or write debts off their books. Bankruptcy lawyers should be knowledgeable, well-organized, and have a genuine interest in being part of this process.

Should You Be a Bankruptcy Lawyer?

Bankruptcy petition filings soared following the 2008 financial crisis, and the number of lawyers starting bankruptcy practices also grew. Bankruptcy can be a profitable practice area with an abundance of clients when times are hard. When the economy rebounds, though, there may be fewer potential clients and a glut of bankruptcy lawyers. It helps to pay attention to these trends when deciding whether to open a bankruptcy practice and how best to market it.

There are several types of bankruptcy practices, depending on a lawyer’s interests and temperament.

  • A consumer debtor practice focuses on representing individuals in Chapter 7 and Chapter 13 bankruptcies. Lawyers who are well-suited to this type of practice have a desire to help people, are compassionate and understanding of their clients’ problems, and have the ability to market the practice and bring in a steady stream of clients.
  • A creditor practice focuses on representing financial institutions and other creditors seeking to collect on their debts. A creditor’s lawyer may have just a few institutional clients and does not have to do the same type of marketing as a debtor’s lawyer.
  • A business bankruptcy practice focuses on representing businesses filing bankruptcy, including liquidations under Chapter 7 and reorganizations under Chapter 11. A business bankruptcy lawyer should have an understanding of corporate law and litigation.

Bankruptcy Law Resources

Bankruptcy can be complicated, and the bankruptcy code isn’t exactly known for being user-friendly. An attorney who is new to bankruptcy should attend CLE presentations and read bankruptcy treatises to get up to speed on the law. In addition, lawyers representing consumer debtors might read bankruptcy guides aimed at consumers who are considering representing themselves. These guides can help lawyers understand the client’s point of view and how to explain bankruptcy law in layman’s terms.

Joining bankruptcy lawyers’ organizations such as the National Association of Consumer Bankruptcy Attorneys or the local bar association’s bankruptcy law committee can provide access to additional training, mentors or referral sources.

Most bankruptcy firms invest in software to aid in preparing and filing bankruptcy petitions. Software can be expensive, so it pays to read reviews and demo the various offerings before making a decision. Fillable bankruptcy forms are also available online at local bankruptcy courts’ websites.

Nuts and Bolts of Starting and Running a Practice

Running a successful bankruptcy practice requires organization and close attention to deadlines. Good practice management software and an assistant experienced in bankruptcy filings will go a long way toward keeping the practice on track. Consider hiring a virtual assistant if you aren’t ready to hire a full time staff member.

To file bankruptcy documents with the court electronically, you must obtain a login and password from the court. Each judicial district has its own procedure for obtaining an ID and password and filing documents. The individual districts also offer training on how to use the system.

The marketing tools a bankruptcy practice uses will depend on the type of practice. Creditor and business practices may rely heavily on referrals gained through networking and participation in business and industry organizations. A consumer attorney may market through a website, blog, Facebook and traditional advertising on billboards and at bus stops. Presentations at libraries, churches and other community meeting places may also help a consumer lawyer reach out to potential clients.

Bankruptcy is a complex area of law that offers a real opportunity to help clients make a fresh start after a difficult ordeal. Although business may rise and fall with the economy, a competent and committed bankruptcy lawyer can establish a successful practice, even in hard times.