Attorney rides rollercoaster by helping clients in crisis

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Attorney Bruce G. Arnold stepped onto a rollercoaster 26 years ago when he joined Whyte Hirschboeck Dudek, S.C., in Milwaukee and he has enjoyed the ride ever since. Arnold compares his dual practices in bankruptcy and health care to the adrenaline rush of a coaster car reaching its summit and the journey of twists and turns that inevitably follows.

A self-titled “crisis manager,” Arnold has carved out a uniquely intertwined career, which has included high-profile corporate clients in both bankruptcy and health care. He sat down with Wisconsin Law Journal reporter, Jack Zemlicka on Oct. 8 to discuss the challenges of each field, how he landed his first big case and why he roots for the University of Michigan football team.

Wisconsin Law Journal: You have built a successful career in what would appear to be two distinctly different legal fields — bankruptcy and health care. How do you maintain that balance?

Bruce G. Arnold: [A]lthough the areas are intellectually discreet, particularly in the sense of how the regulations that arise in them are unique, there is an incredible amount of overlap by the way the practices play out in my career. The common element has been putting together disparate groups of people and I’ve really enjoyed it.

I acknowledge that I get a thrill out of serving our clients, who are in crisis. In health care and bankruptcy, it’s very much about crisis management. There’s a special satisfaction that I get when I’m able to save a company or resolve a potentially career-ending dispute on the health care side of things.

WLJ: Which did you begin practicing first?

Arnold: I started in the bankruptcy arena because of the opportunity at this firm to get litigation experience very early on. Many of the issues resolved in a bankruptcy setting are done in court and although bankruptcy is ultimately consensual, there are times when the only way disputes are resolved are in a federal courtroom.

The Tudor Oaks nursing home case was the one which really whetted my appetite for the opportunity to forge a unique practice that combined both the health care and bankruptcy practice. At different times in my career, the health care or bankruptcy parts of my life have been more robust, but I’ve thoroughly enjoyed keeping my foot in both.

WLJ: How did you develop your practice in the other?

Arnold: The big bridge occurred in the mid-1980s. If memory serves, there was a huge influx of crack cocaine into Milwaukee in the mid-’80s which had a devastating impact on the managed care industry. With the crack cocaine epidemic there was an extraordinary spike in both emergency room admissions and the severity of complications and care needed, particularly for young moms.

That led to the out-of-court restructuring and near bankruptcy of a number of Milwaukee’s independent practice associations. That gave me the first opportunity to participate in nearly weekly board meetings with these physician-driven organizations and really got me interested in working more directly in the health care industry.

WLJ: What are the single biggest challenges facing each field today?

Arnold: Unquestionably, on the health care side the biggest issue is the effective use of information technology. Electronic access to patient information has been shown to reduce testing costs by between 9 and 14 percent. And one in seven hospitalizations in our country are said to occur due to missing patient information.

On the bankruptcy front, I don’t think there’s any question that the sub-prime mortgage crisis is the key driver. I think it’s fair to ask whether sub-prime loans put people in homes, or out of them. If the prognosticators’ predictions are correct, as bad as 2007 has been with the spike in foreclosures, 2008 is going to be even worse, because a huge number of those so-called adjustable rate mortgages reset throughout 2008 and I think the market could face another wave of defaults and foreclosures.

WLJ: You have handled high-profile bankruptcy cases including Bucyrus-Erie in the early 1990s and more recently Keystone Consolidated in 2005. What was your first big case and how did you land it?

Arnold: The first big case I was privileged to work on was what was remembered as the Boston Store bankruptcy in 1989. Because of our firm’s representation of Levi Strauss, I had the opportunity to interview for the engagement to be the attorney for the official committee of unsecured creditors. We were successful and won that engagement and that led to a process in which I can say I was literally in bankruptcy Judge (Russell A.) Eisenberg’s courtroom every week for almost three years, as we successfully helped reorganize P.A. Bergner.

WLJ: It has been two years since the bankruptcy law revisions. How have those impacted corporate bankruptcies?

Arnold: From my perspective as a reorganization lawyer, the biggest impact is with respect to the treatment of key vendors at the outset of a case. Prior to the famous K-Mart decision by the 7^th Circuit and the changes to the bankruptcy code, it would be fair to state that there was an implicit promise in virtually every major Chapter 11 case that the critical vendors would be taken care of.

After the reforms, that’s no longer possible. We now have to front-end load to a much greater extent the planning that goes into reorganizing a company. While Chapter 11 is still a spectacular model for reorganizing companies, it’s now less available to small- and medium-size companies than it was prior to the reform legislation.

WLJ: As an outside attorney working with prominent health care companies, what’s the secret to developing to relationships with inside counsel?

Arnold: I think the key is developing a personal relationship. I really pride myself on not just being a lawyer, or advisor to the health care institutions I serve. I’m fond of saying to the people who I serve that practicing law is what I do, but not who I am. And the relationships I’ve been able to forge with individuals at health care institutions go far beyond the particular legal issue that might come up from time to time.

WLJ: How many hours do you work a week on average?

Arnold: My total professional commitment is about 2,500 hours a year. There isn’t an average week in the kind of profession that I’m in. Particularly one that is so driven by, in a sense, being the equivalent of an emergency medicine physician for the practice areas that I’m in. When a lot of your practice is driven by crisis, there are spikes.

There have been times in my career when a particular case was stunningly demanding and the famous Bucyrus case was one of them. After the Chapter 11, our firm commence
d litigation against a New York law firm and one of its attorneys for bankruptcy fraud. You’ll get confirmation of this from my spouse there was a time in the midst of that case when I literally did not have a day off for almost four months.

WLJ: Even though you are from Milwaukee, I was told you are a huge Michigan fan. How does that happen?

Arnold: I am a huge Michigan fan, primarily because that’s where I met my wife. We both were at Michigan in the same era. Having gone to Georgetown undergrad, which at the time didn’t really have a football program, I was quite honestly smitten by Big 10 football, so I went to Michigan where football is not just an activity, but a culture. Whole books are written on what it means to be a Wolverine. Although our children chose not to attend the University of Michigan, I can tell you that they all knew the Michigan fight song before they could walk.