In an email sent to its restructuring professionals earlier this month, Deloitte asked for their "collective wisdom" to help decide the future of the business of advising companies on restructuring.

"The time has come to identify someone to lead the practice for the next few years," William Snyder, the joint head of the group said in the email that was obtained by Reuters.

Snyder said his role of integration of CRG Partners was "to some extent" complete, while Sheila Smith, the other joint leader, will retire in a year's time.

In his email, Snyder said candidates would be considered from other Deloitte practice areas and external candidates would be considered in "a very targeted manner."

Smith, in an interview with Reuters, confirmed that she must retire in 16 months under Deloitte policy and that the firm was looking for a new leader.

"We are out there recruiting," Smith said on Monday.

Deloitte's bet on CRG in 2012 came as a dry spell in turnaround advisory work became a full-blown drought. Record-low borrowing costs and an economic recovery meant fewer companies needed to restructure.

Under the deal, Deloitte took on 18 turnaround specialists from CRG as principals or directors and put the segment under the co-leadership of Snyder, who had led CRG, and Smith, who had led Deloitte's practice since 2005.

CRG specialised in ushering companies through financial distress, working on the bankruptcies of the Texas Rangers baseball team and Pilgrim's Pride Co. The latter was a stand-out success that landed Snyder and CRG a $1 million bonus on top of its $6 million fee.

Deloitte has advised the trustee overseeing the failed broker-dealer units of Lehman Brothers and MF Global.

The Deloitte deal has allowed CRG to expand its reach globally, and Smith said the restructuring advisory group recently landed two engagements in South America. "That would have been hard for the legacy CRG," she said.

She said she expects the Deloitte restructuring practice to expand through acquisitions and internal growth. "There are cycles. Fortuitously, we think we're well prepared for the next cycle."

Under Deloitte, CRG's partners have had to deal with conflicts due to the larger firm's extensive roster of clients.

For example, Ted Gavin of Gavin/Solmonese in Wilmington, Delaware, said he landed work with the unsecured creditors committee in the Prince Sports Inc bankruptcy in part because Deloitte was barred by a prior relationship.

Deloitte was the only Big Four accounting firm that did not pare back its restructuring advisory businesses early last decade in the wake of stricter regulatory oversight regarding conflicts of interest. PwC, Ernst & Young and KPMG left the segment, which benefited standalone consultancies such as FTI Consulting and Mesirow Financial.

As regulations have become clearer, the Big Four accounting firms have tried to return to the restructuring business over the last few years. PwC, for example, brought on board industry veteran Perry Mandarino in 2009.

But corporate bankruptcy filings are at the lowest level since before the 2008 financial crisis and the handful of cases provide only lightning-fast engagements managing asset sales, industry experts say.

FTI Consulting said in its most recent quarterly results that margins were flat and underlying revenues fell 13 percent. It blamed the "continued underutilization in the segment's North America bankruptcy and restructuring practices."

Restructuring advisors haven't been the only ones scratching for work. The law firm of Weil, Gotshal & Manges, a leader in the plum work of taking companies such as Lehman Brothers through Chapter 11, laid off 7 percent of its associates in June.

(Editing by Andrew Hay) nL2N0KY1QQ

By Tom Hals