Insolvency is now a dirty word.

It may be dropped into one of those awful silences in partner meetings, when the insolvency team mentions a forthcoming 'insolvency boom' which could have fatal consequences for the rest of the firm.

But to clients, solicitors speak only of 'rescue'.Over the past 18 months, firms of all sizes in all parts of the country have been busy rebranding their insolvency departments as 'turnaround' or 'corporate rescue'.

The trend for assigning failing companies a doctor rather than a gravedigger has a strong economic drive, as it is often cheaper for creditors to restructure than bury.The government is also fostering a rescue culture with its Insolvency Bill -- published in the autumn last year and currently half-way through the House of Lords -- which aims to facilitate the prevalence of non-terminal procedures over liquidations, and will allow debtor companies to drive their own insolvency proceedings.But for law firms, the rescue culture is also helping to bring more new clients through the door.

Companies are being encouraged to take legal advice at early signs of trouble, rather than waiting to be sued by the banks.

The vogue for this 'turnaround' approach to insolvency is a US import, a fact reflected by the success in the insolvency advice market of the relatively small London offices of US firms, notably Cadwaller Wickersham & Taft -- whose UK base set out its stall from day one to focus on distressed turnarounds within the financial markets and continues to be one of the most active players in this sector.In the current benign economic climate, with a consequently depressed market for legal advice on insolvency, all law firms are focusing on debtor-driven work.

Philip May, the head of insolvency and turnaround at newly merged Bristol law firm TLT, says that his three-partner insolvency department has been increasing the amount of advice which it gives to companies in financial difficulties.He explains: 'We have a strong relationship with the official receivers, and with banks and accountants.

However, a significant proportion of our work is now debtor-driven turnover.'Hammond Suddards followed this trend when it set up multi-disciplinary Hammonds Business Support -- which offers an independent service for attempting to solve cash flow problems to companies experiencing financial difficulties -- as part of its insolvency and corporate recovery unit.Unit head Paul Rhodes explains: 'When you're a lawyer, you're waiting for the accountants or banks to say they're restructuring a business and ask for help.

But HBS is talking directly to the companies themselves.

I wouldn't say it's changed the culture of our insolvency department, but it shows we recognise what's going on in the market.'There can be more money in turnaround than there is in liquidation, because it is often more complex, takes longer, and is more likely to generate long-term relationships.

However, a rise in straightforward insolvency work is expected towards the end of the year, with some of the smaller banks seriously concerned about an expected economic slump.The changing economic climate, coupled with many changes in the banking world, such as the Royal Bank of Scotland's takeover of NatWest, is causing some major banks to restructure their panels.

Relationships with banks are increasingly vital to law firms.However, insolvency solicitors are also looking to new markets, such as that of the dot-coms.

When Boo.com went belly up in May, the business world recognised that dot-coms might be the 21st century equivalent of the South Sea Bubble.City firm Stephenson Harwood's insolvency department has spotted the need for advice, and is focusing on developing expertise in the emerging field.

One industry specific issue faced is the fact that it is hard for investors to salvage anything from their investment in dot-coms because the companies' value is based not on tangible assets but on intangible potential.

One of the best solutions for a dot-com creditor may be to cash in on the rescue culture by allowing the stricken company to continue to trade under supervision.The head of the recovery and insolvency department at Stephenson Harwood, Paul Gordon-Secker, adds: 'Dot-coms find it difficult to borrow money, so they are tending to issue shares.

As the market moves towards people with rehabilitation skills, rather than liquidation skills, we're trying to get involved much sooner, and restructure the debtors.'For the largest firms, an alternative to seeking new UK markets for insolvency advice has been to export insolvency expertise to countries whose economy is less buoyant.

When the 'Asian Flu' started to spread two years ago, market leader Allen & Overy began sending insolvency partners to boost the banking expertise in its Hong Kong office, where there was a tremendous demand for insolvency advice.Nick Segal, a lead partner in the firm's business restructuring group, says: 'We've been trying to develop a global insolvency practice for the last-three-and-a-half years.

The work in the Far East is some of the most challenging and complex around.

You have to devel op an insolvency system at the same time as you do the deal.'The lucrative markets of south-east Asia have tended to overshadow crisis-stricken eastern Europe.

Many Western insolvency practitioners have given Russia, in particular, a wide berth, believing that the political crisis in the former Soviet state prevents effective company rescues.However, Mr Segal, whose firm was recently involved in the restructuring of Russia's Uneximbank, believes that the Russian economy is preparing to stabilise.

'If the economy improves there will be increased incentives for reorganising businesses,' he says.

'I'm aware of a couple of major restructurings that will happen soon in the Russian market.'Despite all the soothing talk about turning around failing companies, there are still lawyers back at the UK coal-face making money through aggressive, contentious liquidation.

London law firms Moon Beever, Davies Arnold Cooper and Howes Percival are members of a new multi-disciplinary forensic accountancy recovery service set up by the Official Receiver that is targeting individual company directors of failed companies (see [2000] Gazette, 20 July, 6).

The firms are acting on a conditional fee basis.Moon Beever partner Nick Oliver says there is still plenty of insolvency work for smaller firms which cannot boast of relationships with banks.

And he adds: 'The stuff about turnaround is not entirely what the market's about at the moment.

Many businesses are too small to be worth turning around; they're owner-managed so a restructuring of the management is inappropriate.

At the low end of the market, there's still a lot of straightforward, medium to small-sized burial work.'However, whatever the state of the economy, insolvency lawyers never need to fear that their bread and butter work will fall off altogether.

Many company failures are caused simply by poor management.For proof, one need look no further than Greenwich in south-east London, where despite continued financial backing for the Millennium Dome, the New Millennium Experience Company is in crisis.

In what must be the insolvency instruction of the year, City firm Simmons & Simmons was last week called in by the company's directors to advise on whether it was possible for them to continue trading.

But if the rescue culture continues to grow, and more failed managements are turned around at a pre-crisis stage, insolvency lawyers will have to develop a very different set of skills.THE INSOLVENCY BILL-- In order to promote the use of company voluntary arrangements (CVA), it is proposed that the voting threshold for acceptance by creditors be reduced below the present level of 75%;-- It is proposed that advance notice be given to a company of the potential appointment of an administrative receiver, with the effect of enabling a company to obtain an administration order or a CVA;-- The government is considering abolishing the Crown's status as a preferential creditor; and-- There are a number of proposals to reform the law relating to the security which may be given to companies, because in the inability to raise further funds is a major barrier to successful turnaround.