Law firms across the United States may be dismissing partners and staff, cutting bonuses and freezing salaries, but every cloud has a silver lining: experienced bankruptcy and restructuring lawyers are hotter than ever as the number of corporate failures surges.

According to BankruptcyData.com in January and February this year 36 publicly traded companies filed for bankruptcy in the US, up from 17 last year and 11 in 2007. The companies involved were also larger, with a combined value of $66.5 billion, compared with $10.6 billion last year.

And the fees being charged are setting records for the United States. Kirkland & Ellis, a Chicago firm, requested a UK-style rate of $1,100 (£790) an hour for advising Tronox, a chemicals company.

Jon Lindsey, a managing partner of Major, Lindsey & Africa, the biggest legal recruitment firm in America, has seen “substantially greater demand” for attorneys specialising in bankruptcy and restructuring: “There's a lot of activity, a lot of movement.” He added that the big bucks on offer meant that there was no longer any squeamishness about bankruptcy work: “There was a time years ago when it was seen as unseemly and the [elite] firms wouldn't handle it, but those days are long gone. On the creditor side, you're working for some of the most sophisticated financial institutions in the world.”

Leading bankruptcy lawyers can command seven-figure compensation packages, including multi-year bonus guarantees, Mr Lindsey said, supporting the suspicion that the boom in busts has lured back to the fold former bankruptcy stars who left their firms to work for investment banks.

Harvey Miller, the king of American bankruptcy attorneys, returned to Weil Gotshal & Manges last year after five years with Greenhill & Co. The 75-year-old's move has proved a winner for Weil. He is heading a team handling the liquidation of Lehman Brothers, the biggest corporate bankruptcy in history, with fees for the work ranging from $650 to $950 an hour for partners and counsel and $355 to $595 for associates.

In return for large fees, bankruptcy lawyers are working hard. Mr Miller's days begin at about 8am and finish near 11pm. At other times he works through the night.

The prospect of such hours is unlikely to scare off law school graduates, who are making a beeline for bankruptcy. Marcia Goldstein, chairwoman of Weil's business, finance and restructuring department, which is handling filings by Washington Mutual and Pilgrim's Pride, among others, said: “It's somewhat evident from chatting to academics that courses on subjects such as Chapter 11 [of the US Bankruptcy Code] are gaining popularity.”

Junior lawyers who specialised in the area before the recession are in a good position. “At the associate level there's very little hiring, except in well-trained bankruptcy associates,” Mr Lindsey said.

Ms Goldstein said that bankruptcy teams pulled in experts from other areas of the firm, such as corporate, litigation and tax, to handle large cases.

Eric Friedman, who will become executive partner at Skadden, Arps next month, said that the wider economic turmoil had ensured that the firm's regulatory, banking, mortgage, consumer lending and white-collar crime specialists were also busy.

A successful restructuring could be spun out into a long-term relationship with a company, he said — but he was reluctant to speculate on how long the boom in bankruptcy would last, other than to say “for the foreseeable future”.

Over the pond

British bankruptcy lawyers are just as busy but have nowhere near as high a profile as their American counterparts. This is because in the United States bankruptcy is a court-run process in which lawyers take centre stage, whereas in the UK bankruptcy is run by administrators (usually accountancy firms) who act without court approval.

This means that although figures such as Tony Lomas and Neville Kahn, administrators for Lehman Brothers and Woolworths, are well-known names in corporate Britain, the lawyers advising them are in the back seat.

Some observers in the UK believe that administrators have too much discretion and that a US-style system, in which big decisions require court approval and can be challenged by third parties, would better suit the complex restructurings of the recession.

Such a change seems far away. Lehman-exposed hedge funds that tried to force Mr Lomas's PwC team to expedite certain calculations by taking him to court had their case thrown out in hours, with the judges refusing to step on the administrators' toes. (Michael Herman)

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