hen Biopure Corp. decided to file for Chapter 11 bankruptcy protection in July, the biotech was already working with Ropes & Gray LLP, the largest law firm in Boston.

But Biopure CEO Zaf Zafirelis decided to tap a much smaller firm, a 26-lawyer Boston-based outfit called Craig & Macauley PC with virtually no name recognition, to handle its bankruptcy proceedings.

“I was very, very impressed with the clarity with which they outlined what was going to happen,” said Zafirelis. “It’s a traumatic event for any company to file for bankruptcy. I can honestly say that working through this whole thing with (Craig & Macauley) made it a lot simpler for us.”

Like Craig and Macauley, bankruptcy boutiques across the country have been quietly booming in this economy as bankruptcies and workouts soar. Unlike large law firms which have been pummeled by the recession, forcing them to fire lawyers and entirely rethink established business practices, these smaller bankruptcy shops say the current economy is actually an opportunity to shine.

In major U.S. cities, Chapter 11 bankruptcy filings have spiked during the past 12 months as companies run out of cash and banks come to collect. In Boston, Chapter 11 filings have nearly doubled over the past year to 115 total cases in Boston during the period between January 1 and September 30, 2009, compared to 58 Chapter 11 bankruptcy filings during the same period last year, according to a review of filings at the Boston office of the U.S. Bankruptcy Court in Boston.

Bankruptcy boutiques are in a unique position to cash in on the boom because nationally, there are literally only dozens that focus specifically on business bankruptcies, as opposed to individual bankruptcy filings. Smallfirms that have substantial bankruptcy practices include Craig & Macauley, Hanify & King PC in Boston, Warner Stevens LLP in Fort Worth, Texas and Shaw Gussis Fishman Glantz Wolfson & Towbin in Chicago. While most large law firms have bankruptcy practices, they are conflicted out of handling many

cases because they also work with large financial institutions. The sparse number of boutique bankruptcy firms can also be explained by the fact that the work is cyclical and once the boom arrives, the matters are deeply complex.

Peter Roberts a partner with the bankruptcy law firm Shaw Gussis Fishman Glantz Wolfson & Towbin LLC in Chicago, says his firm began to see an uptick in work about six months ago for the types of companies the firm works with, which tends to be smaller to middle market businesses. In Chicago, Chapter 11 filings have more than doubled to 241 during the first three quarters of 2009, compared to 96 during the same period last year, according to U.S. Bankruptcy Court filings.