1. In a stockpot, cook bacon until crisp. Drain bacon on a paper towel, and set aside; discard all but 2 tablespoons bacon fat. Add celery and onions; saute, stirring occasionally with a wooden spoon, until translucent, about 7 minutes.

2. Sprinkle flour over onion mixture; cook, stirring with a wooden spoon, 2 to 3 minutes. Add clam juice, 1/2 cup water, potatoes, bay leaves, and 1/8 teaspoon of the pepper; cover; bring to a boil. Pick thyme leaves from stems; add both leaves and stems to pot. Reduce heat to medium low; simmer until potatoes are almost fork tender, about 12 minutes.

3. Add clams and reserved liquid, cover, and cook 4 minutes over medium heat. Add corn kernels, cover, and cook 4 to 6 minutes. Add milk and butter; cook until butter melts, about 5 minutes. Remove bay leaves and thyme stems; add remaining 1/8 teaspoon pepper and salt.

4. Drizzle with sherry, and garnish with bacon pieces. Serve immediately.