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The Death of the Law Firm Bankruptcy?

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The end has come for Sedgwick, which announced in November its plans to dissolve at the end of 2017, but if all goes according to plan, the firm won’t head into bankruptcy court. Instead, the U.K.-based law firm Clyde & Co has agreed to hire a number of Sedgwick lawyers and staff members post-dissolution.

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“My advice is stay out of bankruptcy at all costs,” says Blank Rome partner Leslie Corwin. He crafted winddown plans for WolfBlock, which avoided bankruptcy, and for Heller Ehrman, whose bankruptcy case started in 2008 and is still ongoing. (Corwin’s current firm, Blank Rome, absorbed about 100 lawyers from Dickstein Shapiro in February 2016, a move that helped keep the latter firm out of bankruptcy as it dissolved.)

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Keeping bankruptcy at bay typically requires the crafting of a careful dissolution plan, says Corwin. He suggests that a struggling firm hire a legal team that can help reach deals with creditors outside of court. “You want to get someone like me to write up a plan of dissolution that keeps you out of bankruptcy,” says Corwin. “If it’s a plan that’s well run and well thought out, it’s going to cost partners a lot less than a bankruptcy situation will.”

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"The Death of the Law Firm Bankruptcy?," by Scott Flaherty was published in The American Lawyer on January 3, 2018.