Law firms and banks are adding staff to their restructuring practices from Houston to New York City to scoop up new business as oil prices sink, pressuring energy companies to slash debt or file for bankruptcy.

At least two investment banks and one law firm have bulked up their energy and restructuring departments with new hires to handle the building workload. Another three law firms have re-jigged staff for the new work, and other restructuring advisors have partnered with banks who already have deep roots in the oil and gas world, centered in Houston, the world's energy capital.

The 17-month downturn in oil prices has reached far and wide across the oil and gas industry, forcing companies, who had hoped for prices to rebound quickly, to begin negotiations with their creditors. With oil expected to trade below $50 a barrel through nearly all of 2017, according to recent pricing models, the lower-for-longer climate has generated a deep pipeline of work for bankers and attorneys, who began many of the staffing changes this summer.

Well-known energy dealmaker and former Barclays Americas CEO Hugh "Skip" McGee, who launched his Intrepid Financial Partners in May opening offices in New York and Houston, said plummeting oil prices made restructuring more of a priority in his advisory business, which also includes mergers and acquisitions.

"It became clear it was something we wanted to do," McGee said.

McGee hired Matthew Hart, an alumnus of Lazard Freres & Co., to lead the restructuring practice. The bank has already scooped up restructuring assignments, including advising on capital structure options for Emerald Oil, an exploration and production company.

Vinson & Elkins, a Houston-based law firm known for its energy expertise, beefed up its New York City office by hiring a partner and two associates from Kirkland & Ellis partly in preparation for the energy bust. The U.S. finance capital, New York, is the home of the hedge funds and private equity firms that invest in distressed energy companies.

Millions In Fees

Boosting New York presence was also important because companies file for bankruptcy in New York and Delaware in addition to Texas, said Bill Wallander, practice group leader for the firm's restructuring and reorganization practice.

Investment bank Houlihan Lokey, which had been planning a Houston office for several years, said it will open one early next year after having assembled the right team. The bank hired a former senior Credit Agricole banker to lead the team, which will grow to 20 people, and will focus on acquisitions and spin-offs, a strategy many distressed oil and gas firms are pursuing to reduce debt and generate cash.

Such deals put millions of dollars in fees on the table for bankers and attorneys. Generally, law firms bill by the hour, and bankers charge clients monthly fees and a fee based on how much debt their clients have, roughly between one-third and three-quarters of a percent.

Fitch Ratings expects an 11 percent default rate in energy next year, equating to roughly $28 billion in high-yield bonds, up from a rate of 6.8 percent for the past 12 months, and a total of $17 billion.

The law firm Haynes & Boone has tallied at least 36 bankruptcy filings by North American energy firms this year with more than $13 billion in total debt.

To be sure, some law firms, boutiques and big banks have not bulked up staffing or revamped their rosters, sending their existing workers to Houston on early Monday morning flights instead. They say restructuring is "industry agnostic", and that attorneys and bankers can parachute in to distressed situations and make sense of them quickly.

Law firms and bankers who have reallocated existing workers to energy and restructuring assignments rather than hired new staff fear that they would not have enough work for new hires once prices recover and the industry shake-out cycle ends.

"I've been through several downturns, and the problem with expanding bankruptcy lawyers when it's hot like this, is what do you do with them when it's over?" said Alan Baden, partner at the Houston office of Thompson & Knight, which is shifting attorneys to serve the influx in business.

Law firm Kirkland & Ellis, and energy management consultant Opportune LLC, both moved high-level staff to Houston from New York City in the past couple months.

Haynes & Boone moved up the start date of its newest associate in Houston to cope with the heavy work load. It plans to draw on its energy and finance groups to augment its restructuring team.

"So far this year we have been engaged in over three dozen energy industry workouts and bankruptcies. We fully expect this number to grow before the year closes," said partner Buddy Clark.