UK firms are positioning their restructuring teams in anticipation of further market volatility, although a dearth of talent is hampering expansion.
In the wake of the US sub-prime loan crisis, a number of magic and silver circle firms are preparing for an increased workload in the restructuring arena.
Lovells restructuring partner Joe Bannister said: "We have seven partners in our restructuring team and this has stayed roughly the same for a number of years. What we want to do now is bolster the team to support this group."
Bannister added that recruitment in this area is difficult because of the dearth of specialist lawyers.
Robert Elliot, global head of banking at Linklaters, said: "Firms should have already built up their restructuring teams. You need to ensure you have the right capabilities in the core financial centres of London, Paris, New York, Germany, Tokyo and Hong Kong. Once a correction starts it's too late to go out and hire. You need to be ready at the start."
Markets have experienced a boom period during the past four years. This has boosted finance and corporate practices, with restructuring work taking a back seat. That said, restructuring teams have still received mandates and gained experience in preparation for the downturn, said Elliott.
"There'll always be work to do during boom periods. You have to maintain a strong team to be prepared for when the market changes," he explained.
Regional firms are also gearing up for more volatility by turning their attention to corporate recovery.
In this week's issue (page 6), The Lawyer reveals that Manchester firm Pannone has strengthened its team with two hires from regional rival Beachcroft. The team is expecting further growth before the end of the year.
UK firms are anticipating a surge in restructuring mandates, but lawyers remain uncertain about whether the markets are experiencing a correction or are at the beginning of an economic downturn.
Bannister said: "What I do know is that our team is starting to be kept very busy with more restructuring enquiries in recent months."