June 3 (Bloomberg) -- Martin Bienenstock, the lawyer who led the Enron Corp. bankruptcy case, left Weil, Gotshal & Manges late last year. The restructuring business he helped build may be exiting right behind him.

After topping the list of firms acting as lead legal adviser in bankruptcies for decades, Weil has been displaced so far this year by Kirkland & Ellis. The 1,316-lawyer firm, based in Chicago, is handling six of the 12 largest U.S. bankruptcies by debt, according to data compiled by Bloomberg News, including the $2.43 billion restructuring of casino operator Tropicana Entertainment LLC. Weil has none of them.

``I always thought Weil Gotshal was the go-to firm'' for bankruptcy work, said Nancy Rapoport, a law professor at the University of Nevada-Las Vegas and co-editor of a 2004 book on Enron. ``Once Martin left, I think it was an opportunity for other firms going for a power grab.''

Now led by former Gibson, Dunn & Crutcher partner Richard Cieri, the Kirkland bankruptcy practice also suffered the loss of its leader Jamie Sprayregen, who moved to Goldman Sachs Group Inc. in 2006. Cieri, 51, headed Gibson Dunn's bankruptcy practice and was the lead lawyer on the $9.6 billion bankruptcy of Federated Department Stores Inc. and the $3.3 billion restructuring of Solutia Inc.

Even before Bienenstock's departure, Kirkland had lured away Weil's Paul Basta, whose clients included Footstar Inc., Global Crossing Ltd. and Acterna Corp.

2008 Filings

With nothing on the horizon of the size of Enron at $65.5 billion in assets or WorldCom Inc. at $103.9 billion, business bankruptcies are being filed at rates not seen since those two historic cases.

The credit crisis and rising cost of oil are taking a toll on retailing, airlines, homebuilding and the auto industry, pushing the number of companies seeking bankruptcy protection in 2008 up to 18,328 by the end of April. That represents a 48 percent increase from the year-earlier period.

``The water has been rising quickly, but the big wave is still some months away,'' said Denis Cronin, chairman of Vinson & Elkins's bankruptcy group.

Legal fees are rising as well. The peak so far is $975 an hour, according to court filings, one-third higher than the $700 high point during Enron's restructuring.

Kirkland stands to make about $70 million on the six cases, based on the companies' reported assets and previous fees, said Joseph Doherty, director of the empirical research group at the University of California at Los Angeles Law School. That is 5.3 percent of the firm's 2007 revenue as reported by the American Lawyer, a trade magazine.

Kirkland Cases

Besides Tropicana, Kirkland represents moving company Sirva Inc. in its $1.23 billion restructuring; polyester-fiber producer Wellman Inc., $753 million; vitamin maker Leiner Health Products Inc., $689.2 million; and homebuilders Kimball Hill Inc., $631.9 million, and Tousa Inc., $2.24 billion.

``We expect to see a continuing increase'' in filings, Cieri said.

The largest bankruptcy filing this year based on debt went to neither Weil nor Kirkland. Quebecor World Inc., the Montreal- based printer of Time and Cosmopolitan magazines, owes more than $2.77 billion, according to court filings, and is being represented by Washington-based Arnold & Porter.

Bienenstock left Weil in November with partner Judy Liu and associate Timothy Karcher for New York-based Dewey & LeBoeuf. There he started a business solutions and governance group to help clients reduce the risk of bankruptcy.

21st-century Practice

``It is becoming what I thought a 21st-century restructuring practice should be,'' Bienenstock said of his new job.

While he said he took all his clients with him except for General Motors Corp., a longtime Weil client, Dewey isn't lead debtor's counsel in any bankruptcy this year involving a company owing more than $100 million.

Marcia Goldstein, who heads Weil's bankruptcy group, said the departure of Bienenstock and Liu didn't change ``the nature or the scope of what we do.'' Weil still has a practice with about 100 lawyers versus 90 at Kirkland. It is also home to Harvey Miller, one of the top restructuring lawyers in the U.S. and former vice chairman of merger advisory firm Greenhill & Co.

``That's really only two partners that left,'' said Goldstein, who led the WorldCom bankruptcy. ``It was not a major impact.''

ResCap Restructuring

Weil might claw back to a top spot if it were to become lead counsel in a bankruptcy filing by Residential Capital, which is in the midst of trying to refinance $14 billion in borrowings to stave off a Chapter 11 filing.

The Minneapolis-based residential lending unit of GMAC LLC has been trying to avoid that step by selling assets. GMAC and Cerberus Capital Management LP are acquiring about $2.88 billion of ResCap's assets, according to a regulatory filing today.

Goldstein declined to comment on whether her firm is advising ResCap in its restructuring. She said it is a client.

The law firm is also giving out-of-court restructuring advice to LandSource Communities Development LLC, a joint venture majority-owned by the California Public Employees Retirement System with more than $1 billion in debt, Goldstein said.

Weil's other bankruptcy clients so far this year include PRC LLC, a customer-services provider based in Plantation, Florida, with $261 million in debt; Charys Holding Co., an Atlanta communications and data provider, $255 million; Sharper Image Corp., the San Francisco-based electronics retailer, $103.7 million; and Lexington Precision Corp., a New York-based auto- parts maker, $88.7 million.

Partner Moves

It's common for law firm partners to seek greener pastures in mid-career, sometimes taking their clients. In an extreme case, Tower Snow quit his job as chairman of Brobeck Phleger & Harrison in 2002 and took 16 partners with him to open the San Francisco office of Clifford Chance.

Brobeck collapsed into bankruptcy the year after the departures. Ex-partners and employees of the San Francisco-based firm sued London-based Clifford Chance, which agreed to pay $5.5 million to settle the case out of court.

To contact the reporters on this story: Lindsay Fortado in New York at lfortado@bloomberg.net; Christopher Scinta in New York at cscinta@bloomberg.net.

Last Updated: June 3, 2008 11:47 EDT