bankruptcy-petition

COVID-19-related slowdowns could find many businesses engaged with bankruptcy or restructuring proceedings. But whether or not that translates to an uptick in bankruptcy tech sales from law firms still remains anyone's guess. While many law firms will likely be devoting more internal resources to their bankruptcy practices, there's no sure signs that they will flock to the platforms en masse.

To be sure, there are some factors that Ed Walters, CEO of legal research company Fastcase, believes could bolster the adoption of bankruptcy tech among firms. Fastcase acquired NextChapter, a cloud-based software for preparing complex bankruptcy forms and filing them in court, in September 2019. Walters predicts that similar products will be in sudden demand by small firms who need to fold bankruptcy related services into their practice to meet the needs of clients hit hard by a COVID-19 economy.

He indicated that the number of subscribers to NextChapter's bankruptcy software doubled over the course of March and April, up 100% year over year from 2019. "I think we're going to see a major shift in 2020. We're already seeing it. Small firms who don't do bankruptcy law will have to do a little bit of bankruptcy law. It will be a structural change in law firms," Walters said.

But that may not be true for all firms. While Chris Ward, chair of the bankruptcy and restructuring practice at Polsinelli, does expect that attorneys will continue to see a rise in bankruptcy-related activity, he thinks most of that work will likely go to firms who are already established in that area rather than small firms who are adapting on the fly.

"Bankruptcy is kind of a very niche practice, like most very particular, statute-driven practices. So it's not that easy to just step in and start representing companies in Chapter 11. It's much easier to represent creditors in Chapter 11 bankruptcy cases and push their interests. We see that all the time," Ward said.

He pointed to the 2008 recession as an example of how firms might adapt to the influx of bankruptcy cases by temporarily repurposing attorneys from slower disciplines like loan origination or real estate finance to help with the increased workload. But will those lawyers be on boarding more tech?

The answer is likely "yes." But people who spoke with LTN were mixed on whether this tech would be bankruptcy-specific tools or industrywide products like videoconferencing platform Zoom that enable remote working or court proceedings. "We've been required to adapt and do more remotely," said Stephen Selbst, co-chair of the finance litigation and restructuring group at Herrick, Feinsten.

However, Nathan Cemenska, director of legal operations and industry insights at Wolters Kluwer's ELM Solutions, thinks attorneys will likely gravitate towards bankruptcy-specific tools that can assist with bankruptcy filings or more mindless work like the preparation of forms and notices.

"It's definitely going to be good for companies that sell this kind of software," Cemenska said.

Whether it will be good for the attorneys themselves is possibly another story. Per Cemenska, firms looking to swiftly meet new client demand may find their progress impeded by the amount of training required to get lawyers up to speed with bankruptcy tools. Lawyers without much prior experience with those solutions may not get the value they were hoping to extract.

"It's going to be an effort for them to get trained on it and get integrated into their processes in a very sudden way. I think the people who are really going to benefit are the people who adopted this technology long ago," Cemenska said.