California Chapter 7 Bankruptcy Lawyers Stay Busy

In the California city of Santa Clara, bankruptcy lawyers have watched their business expand as the economic crisis has taken its toll many of the other businesses and individuals around them.

The Silicone Valley/San Jose Business Journal tells the story of one area legal firm, Binder and Malter LLP, that took on a full-time administrative assistant in late 2008, when the economy bottomed out. The position was to be temporary.

Instead, the firm found that it was swarmed by potential bankruptcy clients. Now, they are getting more requests for bankruptcy help than they can handle, and that temporary administrative assistant has job security for the foreseeable future.

Partner in the law firm Michael Malter told the Business Journal that they have received ten to fifteen requests per day from potential clients. He hinted that if his firm had a little more courage, they could take on as many as ten new clients a day. The reality, however, is that these cases are, according to Malter, “horrible cases, very difficult, and the whole thing is a depressing mess.”

In the last year, Binder and Malter hired an additional attorney, and another administrative assistant.

In Santa Clara and surrounding cities like San Jose, Monterey and Santa Cruz, Chapter 7 bankruptcy filings have increased by 30 percent from late 2008 to late 2009. There were 132 more filings last December than the same time a year ago.

Overall in the region, there were almost 7,000 filings in 2009, as compared with about 4,600 in 2008. This represents an almost 50 percent rise.

The legal industry has a term for bankruptcy practices: “Hot.” Law firms of all sizes are looking for lawyers who can practice bankruptcy law to meet the demand.

“It’s such a hot practice right now that firms are not only looking for lateral partners, they’re looking for associates and even willing to look at more senior folks without a book of business,” said Julie Brush, who co-founded Solutus Legal Search.

Lawyer Sblend Sblendorio offered his take on the matter, with a sports slant to his metaphor: “It’s like a football team looking for a great left tackle to protect the quarterback’s blind side. You don’t just find that guy right away.”

Sblendorio’s firm, Hoge Fenton, is compensating for the increased demand by having Chapter 7 bankruptcy attorneys work longer hours, moving partners to different practice areas within the firm and negotiating referrals to outside law firms. Because bankruptcy is not limited to a particular industry like real estate or labor and employment, it can be somewhat easier to move partners from one area to another.

Sblendorio has moved at least a half dozen attorneys to bankruptcy, away from fields like intellectual property and real estate. Even as business booms, however, the stories are grim.

“I’m meeting people who tearfully tell me they’ve never missed a payment on anything in 30 or 40 years,” said Malter. “Now they don’t know how they’re going to make ends meet. It’s a horrible plight, and I don’t see any end to it.”