Lawyer Networks and Corporate Bankruptcies

57 Pages Posted: 18 Aug 2020

See all articles by Vidhan K. Goyal

Vidhan K. Goyal

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Joshua Madsen

University of Minnesota - Twin Cities - Carlson School of Management

Wei Wang

Queen's University - Smith School of Business

Date Written: August 3, 2020

Abstract

Exploiting a setting in which lead counsel lawyers are selected before the random assignment of bankruptcy judges, we examine if past interactions between lead counsel lawyers and judges influence corporate bankruptcy outcomes. Debtors' counsel who are familiar with the judge speed up the bankruptcy process---connected cases resolve 16% faster compared to otherwise similar cases with no connections. The most effective connections arise through previous clerkships and in-court interactions, and the effects concentrate in cases with smaller legal teams where connected lawyers have more influence. We find no evidence that connections lead to judge favoritism or pro-debtor biases. The results suggest that lawyers use knowledge of judges' judicial discretion to improve the efficiency of court processes.

Keywords: network, lawyers, Chapter 11, corporate bankruptcy, law firms

JEL Classification: G14, G15, G32

Suggested Citation

Goyal, Vidhan K. and Madsen, Joshua and Wang, Wei, Lawyer Networks and Corporate Bankruptcies (August 3, 2020). Available at SSRN: https://ssrn.com/abstract=3666263 or http://dx.doi.org/10.2139/ssrn.3666263

Vidhan K. Goyal

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong
852-2358-7678 (Phone)
852-2358-1749 (Fax)

HOME PAGE: http://www.vidhangoyal.com

Joshua Madsen

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Wei Wang (Contact Author)

Queen's University - Smith School of Business ( email )

Queen's University-Smith School of Business
143 Union Street
Kingston, Ontario K7L 3N6
Canada

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