In 1998, an ambassador needed a bankruptcy lawyer.

Russia was building a commercial legal system from almost nothing. There was no reliable way to take a lien on a car, no way for an individual to pledge land, no framework for the kind of secured transactions the rest of the world took for granted. The country’s agricultural sector needed an insolvency law, and someone had to go explain how one worked.

The ambassador knew a partner at Patton Boggs. That partner knew Sarah Sparrow.

She went twice, in 1998 and again in 2000, the second time after she had joined Tuggle Duggins. She worked alongside Judge Thomas Small of the Eastern District of North Carolina, who had helped develop this country’s farm bankruptcy law, and lectured to officials in the Russian agriculture ministry. On the second trip they left the ministry buildings and went out to a former collective farm that had been converted into limited partnership interests, and sat with the people who lived and worked there, explaining how American law handled situations like theirs and what had worked.

Almost no one at the firm knows this happened. Asked what she is proudest of, it is the first thing Sarah brings up.

Her son Jason, who also practices at the firm, was not surprised to hear she had kept it quiet.

“She quietly does big things and then moves on and acts like it’s no big deal.”

A Second Career

Sarah graduated from Duke’s nursing school in 1967 and earned a master’s from UNC in 1973, where she studied on a full scholarship as a Johnston Scholar. She worked at Chapel Hill Memorial Hospital and then the VA in Durham, and taught nursing part-time while her children were small. Fifteen years in, she went looking for full-time work and did not find anything in nursing she thought would carry her to 80.

She was serving as president of a domestic violence board of directors at the time, working closely with lawyers.

“I saw what they were doing, and I thought, boy, I’d really like to do that.”

She asked her husband Donnie, a commercial real estate and business lawyer, whether he thought she would be any good at it. He said yes. So, she sat cross-legged on her bed studying for the LSAT, called Chapel Hill to ask if they thought she could get in, and started law school in 1982 with children who were six and nine. She commuted for three years.

Her approach to the whole thing was not a five-year plan.

“I took it one day at a time. I said, well, if it works out today, I’ll do it tomorrow.”

Jason was in elementary school through the law school years.

“I just thought that was the way it was,” he says. “I thought when I was a kid that all moms were going to law school.”

Looking back, he is far more direct about it now.

“She set a really good example for me.”

Learning A Brand New Code

Sarah found her calling in a first-year paper on a bankruptcy real estate. Donnie, knowing her well, told her his take was that the field was structured to suit how she thought. He was right.

Her timing was unusual. The Bankruptcy Code had been enacted in 1978 and she started clerking in 1985, which meant she entered the field while the bar and the bench were still working out what the new statute actually meant in practice. Chapter 11 was becoming the vehicle for business reorganization. Chapter 13 was giving individuals a way to reorganize under a plan instead of liquidating. 

And North Carolina’s furniture and textile industries were in real distress, which meant there was no shortage of work to learn on.

She clerked for Judge Rufus W. Reynolds, who took the teaching part of the job seriously and made a point throughout his career of establishing young female lawyers in bankruptcy law. Nearly all of his clerks were women. She then clerked for Judge Jerry G. Tart before going into practice herself.

Sarah is direct about what that world was like, and it is not the story people expect. The insolvency bar was collegial. It ran on compromise. There were a good number of women in it. It was, in her words, very accepting of women at that time, unlike many other practice areas in the 1980s and 1990s.

From there, Sarah joined Brooks Pierce, doing Chapter 11 and collections, before a brief pivot to Winston-Salem, working for bankruptcy trustee Joe Burns at Burns and Price. Then, she moved to Patton Boggs in Greensboro in 1992, where a construction firm needed someone who could handle the bankruptcy issues construction work throws off, and where a client airline wanted to reorganize. She became a partner there in 1997. As the only bankruptcy lawyer in a 200-person firm, she took cases wherever they went, including Texas, Delaware and Washington.

When Patton Boggs closed its Greensboro office in 1999, several attorneys moved together to Tuggle Duggins. David Meschan was handling most of the firm’s bankruptcy work at that time and, as Sarah tells it, was generous about making room for someone new.

What The Work Was Actually About

Most of Sarah’s practice at Tuggle Duggins was creditor-side: representing vendors, lenders and landlords trying to protect their position, and defending them when trustees came after payments as preferences or fraudulent transfers. She and Meschan also handled debtor-side Chapter 11 work. For two years she served as a Chapter 7 trustee. From 1996 she held board certification in both consumer and business bankruptcy law, a truly rare combination almost no one carries.

Ask her what people misunderstand and she goes straight to a problem she watched clients walk into over and over.

“If you have money, you can spend your money sort of the way you want. But if you are not able to pay people, then suddenly your fiduciary duty to your creditors comes into play.”

You do not get to pay your friends and relatives first. Almost nobody knows this until they have already done it. A large part of the job, as she describes it, was catching people before they went down the wrong path, and explaining directly what their choices actually were.

“Nothing is more stressful than not having money.”

Sarah talks about the Code as something built to give people a second chance, and about the satisfaction of knowing the law well enough to apply it to a real person’s circumstances and take some of the pressure off. She recently helped clients resolve a complex legal problem and save their home when the contract counterparty filed bankruptcy and their legal rights became disputed.

That is what four decades of knowing a statute cold is actually for.

After all this time, she still describes the Code as fascinating, and says she simply remembered it, the way some people remember music.

What Changed In Forty Years

The single biggest shift, in her view, was venue. When she started in 1985, business reorganizations were local, because the venue followed the business location. Then the law changed to make the place of incorporation a proper venue, and major Chapter 11 filings moved to Delaware and the Southern District of New York. Business consolidation accelerated the same trend. Texas is now competing for the same cases.

Electronic filing was the other one, though bankruptcy as a practice was far ahead of the curve with adopting e-filing. Being able to see pleadings on a screen made it practical to advise clients on cases anywhere in the country without being in the courtroom.

Her Advice, Which Is Not What You Would Expect

Asked what she would tell a young lawyer who loves and understands bankruptcy the way she does, Sarah does not necessarily tell her to go for it.

Bankruptcy is cyclical, she says, and has been since the founding of the country. Right now there is a great deal of money in the system and credit is easy, which means there is less work. She was fortunate to be at firms with the volume to support a full-time bankruptcy practice, and there are fewer of those now outside consumer work.

Her advice is to have a second area you care about. A plan B. She is clear-eyed that if she had been starting out at the point when she went Senior Counsel, she would have needed one.

August 31

Sarah’s retirement has been a careful and deliberate wind-down. She moved to Senior Counsel in 2014 and has been closing things out ever since, staying long enough on one matter because she was fairly sure a preference claim was coming and wanted to be the one to handle it. Bankruptcy cases can last a long time.

Today is her last day. Donnie retired from Tuggle Duggins one year ago today and Jason still practices at the firm.

She will spend it playing golf, in a captain’s choice at Friends Homes. She says she just enjoys participating and is not too focused on trying to drastically improve, which after forty years of getting extremely good at so much else seems entirely fair.

Thank you, Sarah, for your contributions to Tuggle Duggins P.A.  and to the field of bankruptcy law across the world. 

You were extraordinary at it all.