In the insular world of bankruptcy court, law firms exert extraordinary control over which districts handle billion-dollar cases and receive substantial legal fees by strategically targeting courts they believe will be favorable. This practice, known as forum or judge shopping, is notably employed by Kirkland & Ellis LLP, the largest law firm internationally by revenue, as highlighted in a Bloomberg Law analysis.
Kirkland stands out for its aggressive use of venue shopping to influence outcomes in large corporate bankruptcies. The firm’s pattern of shifting its cases in response to unfavorable rulings or controversies is particularly evident in districts like Houston, Delaware, and Richmond. According to Lynn LoPucki, a bankruptcy expert and professor at the University of Florida Levin College of Law, “If a court doesn’t come through for Kirkland in one case, Kirkland won’t take them another one.”
In Houston, for instance, a scandal involving a judge and a local lawyer resulted in Kirkland abruptly stopping its filings in that district despite earlier frequent filings. The move followed increased scrutiny after the relationship was made public. Similarly, Kirkland paused its presence in Delaware after a judge made scathing remarks during a high-profile case, only to resume filings in the state later. Richmond experienced a similar pattern where a critical judicial ruling caused Kirkland to cease new cases, as detailed in an academic analysis by LoPucki.
The firm’s strategy of selecting favorable courts impacts not only legal outcomes but also local legal economies. Georgetown University law professor Adam J. Levitin has commented on Kirkland’s significant influence, noting that “unlike any other firm around, Kirkland exercises market power over bankruptcy courts.” This influence allows Kirkland to essentially “make” or “break” courts based on where it chooses to file its cases.
Despite controversy surrounding its tactics, Kirkland continues to seek out new venues to maintain its edge. Recently, the firm has moved its focus to New Jersey, which has become a preferred venue due to the favorable handling of cases by local judges, including a notable victory for Kirkland in the genetic testing company Invitae Corp.’s bankruptcy case. Chief bankruptcy judge Michael B. Kaplan of New Jersey credited the increase in filings to the professional and efficient manner of the court, adding that Kirkland has been a key player in driving this trend.
As these practices evolve, concerns about the broader implications for the bankruptcy system persist. Legal experts like Stephen Lubben of Seton Hall Law highlight the potential erosion of public confidence in the corporate bankruptcy system due to perceptions of bias and unfairness. The full details of Kirkland’s tactics and their consequences on bankruptcy courts can be explored further in the original Bloomberg Law investigation.