Hiring Mr Enron for global domination

If you start from the basis that 90% of partner moves aren’t that interesting, the proportion of the noteworthy 10% this year hailing from bankruptcy is now verging on the ridiculous.

As if there hadn’t been enough top-level recruitment already, the newly-merged Dewey & LeBoeuf, of all firms, has just waded in with arguably the most eye-catching of all, the hire of Weil Gotshal & Manges’ co-head of bankruptcy, Martin Bienenstock.

This is a lawyer with serious pedigree, leading what is viewed (historically, at least) as America’s top bankruptcy team. Bienenstock’s considerable profile was further raised by his work leading Weil Gotshal’s army-sized team on the largest and most controversial insolvency in US history, Enron’s Chapter 11, which netted the law firm over $150m (£73m) in fees.

Leaving aside surprise that even the chippily post-merger Dewey could secure such a name, many will now be watching Weil Gotshal for signs that the crown is slipping. Some already argue the firm has lost a good deal of the dominance it enjoyed when entering the last downturn, a factor some put down to the 2002 departure of legendary bankruptcy chief Harvey Miller.

The theory, according to Weil Gotshal critics, is that the firm lost focus handling too many mega-insolvencies of scandal-hit US corporates and is ill-prepared for a new environment that will be more defined by M&A-related work-outs, sabre-rattling hedge funds and hyper-complex capital structures.

The critics were handed further ammunition this summer when Cadwalader Wickersham & Taft recruited a four-partner team from Weil. In this environment, not everyone is sure that the recent return of Miller, now well into his seventies, can bring back the magic.

This flurry of top-level recruitment in bankruptcy also illustrates  the level of determination among leading US law firms to position themselves correctly for the predicted wave of work, with Cadwalader lurching bankwards in the wake of the departure of London rainmaker Andrew Wilkinson for Goldman Sachs. Likewise, Cravath Swaine & Moore, which has a history of missing out on hot markets thanks to its distain for lateral hiring, this summer bit the bullet to recruit a partner from Skadden Arps to launch a bankruptcy team.

To London firms this kind of recruitment will seem somewhat alien but, of course, the fees in the US are staggering. On Enron at one stage more than half the US’s top 200 law firms were advising on related matters, while the three highest-billing law firms on its Chapter 11 earned over $300m (£146m) in fees between them.

On the global stage, bankruptcy will be a key battle-ground if the market really slows. A repeat of the conditions of 2002-03 would be a massive boost to those leading US law firms with the requisite profile in the sector. That is a bet half of Manhattan has already placed.

alex.novarese@legalweek.com