Whats it all about?
When a company runs into financial difficulties a number of professional advisers, including insolvency lawyers and accountants, are called in to remedy the situation. A company is technically insolvent if its debts are greater than its assets.
If a company fails to pay its bills then its creditors (the individuals and institutions a company owes money to) may call in the administrators to help rescue the company from financial collapse. Administrators are typically partners at accountancy firms for instance the administrators for collapsed car manufacturer MG Rover were Pricewaterhouse-Coopers partners Ian Powell, Tony Lomas and Rob Hunt.
When a company goes into administration a number of things can happen. Some of the companys assets may be sold off to decrease its debt, or the company may be sold off in bits to repay its debt. If these solutions prove unsuccessful then the company may be wound up; this is also referred to as liquidation.
The working culture
Insolvency lawyers will go through periods of intense work followed by quieter moments. Insolvency work tends to pick up when the economy slows down as more companies find themselves in financial difficulty. For instance, in recent months a number of retailers, including the likes of womens clothing chain Kookai and off-licence chain Unwins, went into administration due to difficult trading conditions.
Insolvency involves a lot of research because regulation is changing constantly and much of this is carried out by junior lawyers. In contrast, senior lawyers will find themselves leading cases, drafting documents and meeting clients.
Why is this interesting?
Although insolvency is quite a specialised area, lawyers will advise on companies working in a range of sectors, from energy to media to leisure. Insolvency practices are also normally split into contentious (a situation where parties are in disagreement) and non-contentious work, so it helps if lawyers have a working knowledge of both areas, as some insolvencies often involve litigation.
Personal and legal skills required
Insolvency lawyers need a good knowledge of all the regulatory issues surrounding administrations and should have the ability to pick up knowledge about different industries very quickly. Lawyers also need the temperament to be able to work in an area that involves the end of something, rather than the beginning of something new.