Winston Strawn’s Craig Vogelsang and J. Denmon Sigler (Jill Hunter)
More than a dozen firms in The Am Law 200 have opened Houston offices since Latham & Watkins arrived in 2010. And if imitation is the sincerest form of flattery, Latham has been paid quite a few compliments.
“Latham was a good example for us of how to do it,” says Sidley Austin partner J. Mark Metts. A former V&E partner and Enron executive, Metts left Jones Day’s Houston office for Sidley in February 2012. Rather than bringing in lawyers from outside the city, Latham “got Houston lawyers with very good reputations locally,” he says.
To get the market’s attention, Sid­ley brought on Metts and six other partners—each from different firms. The group included James Rice III, who headed Akin Gump’s energy and global transactions practice after Michael Dillard left for Latham. Rice says Sidley, which has grown to about 30 lawyers since opening, now most often competes for capital markets, oil and gas, and public M&A work against Latham, Vinson & Elkins and Baker Botts.
Michael Pollack, the global head of strategy at Reed Smith, also says his firm watched Latham’s moves closely. “In some respects we’ve modeled what we’ve done after what they did,” Pollack says. In particular, he points to pulling the initial hires from multiple firms rather than a big group from one. Reed Smith opened its Houston office in February 2013 with 17 lawyers, including 12 partners from seven different firms. “You just have a much broader root system when you bring people in from different firms in terms of contacts with clients, other lawyers and community organizations,” Pollack says.
Unlike Latham, though, energy transactions have not been the sole focus for Reed Smith. Pollack says the firm intends to grow steadily from its current 35 lawyers to a full-service presence of more than 100 lawyers, much like Reed Smith’s offices in Chicago, Washington, D.C., and New York.
To help integrate the new hires, Reed Smith transferred David Thompson, who had been managing partner of its San Francisco office, to serve as an integration partner. “I think of myself as a connector,” says Thompson, a transactional lawyer who focuses on alternative energy deals. Thompson came aboard himself when his prior firm, Crosby Heafey Roach & May, merged with Reed Smith in 2002. In his new post, he helps colleagues in Houston find specialists elsewhere in the firm.
Paul Hastings, likewise, entered the market by hiring individual partners from three separate firms in April 2013. Local office chair Gregory Nelson, a former Baker Botts tax practice chair, says he’s getting a lot of returned phone calls from lateral candidates in Houston. “I think there’s still a fair number of people that are evaluating their options,” he says. Paul Hastings’ office currently has 16 lawyers, seven of whom are partners, and the firm is looking to build on its strengths in M&A, capital markets and private equity.
But Latham’s model for entering the market, popular as it might be, is not the only approach firms are taking. McGuireWoods, Blank Rome, Baker, Donelson, Bearman, Caldwell & Berkowitz and Husch Blackwell all arrived in Houston via acquisitions of smaller firms. McGuireWoods entered the market via a merger with litigation boutique Nickens Keeton Lawless Farrell & Flack in January 2011. Blank Rome merged with five-partner litigation boutique Abrams Scott & Bickley the following July, and Baker Donelson merged with eight-lawyer Houston litigation boutique Spain Chambers that October. (Baker Donelson brought on another seven lawyers by merging with Drucker, Rutledge & Smith in The Woodlands, Texas, and moving them to the Houston office in February 2012.) Husch Blackwell acquired a Houston office through its June 2013 tie-up with 65-lawyer Austin-based Brown McCarroll, which had a Houston office.
Barry Abrams, a name partner in the firm that merged into Blank Rome, says that he and his partners appreciated Blank Rome’s Pennsylvania roots, particularly as business links between Pennsylvania and Texas have grown tighter with the development of natural gas in the Marcellus shale formation in western Pennsylvania. Practicing in a small Houston firm was becoming difficult as local clients grew more national in scope, he says. “What we discovered was that we have some very large clients that told us they valued our legal work, but because we were not a name-brand firm, they felt a need to rationalize or justify to management when they hired us,” says Abrams, declining to name any particular client. In August, Blank Rome expanded further in Houston, adding all eight lawyers from Houston maritime law firm Bell, Ryniker & Letourneau.
Other new market entrants went for a niche play. Mutual clients originally reached out to Vinson & Elkins lending partner Robert Rabalais to gauge his interest about opening up a Houston office for Simpson Thacher & Bartlett. Rabalais and Simpson shared private equity and financial services clients such as First Reserve Corp., JPMorgan Chase & Co, KKR & Co. L.P. and The Blackstone Group L.P, which had a growing thirst for energy deals.
Since Rabalais came aboard in 2011 and the firm moved young corporate partner Andrew Calder over from New York, the office has been one of the firm’s busiest. “I think Simpson viewed its Houston office as a defensive move in a worst-case scenario,” Rabalais says. “Where there was some skepticism going in, now a Houston office was everybody’s idea.” In 2013 alone the firm’s Houston office took the lead on about 40 financings, totaling about $24 billion in value. New York partner David Lieberman, chair of Simpson’s energy and infrastructure practice, says the firm promoted a partner in the office this year and is poised to double in size—from 17 lawyers now—in the next two years. “I think there’s still some more opportunity for the firms who have come to town in the past few years,” he says.
Katten Muchin Rosenman likewise focused on a market niche as it expanded to Houston, bringing in a group of four Houston lawyers led by Mark Farley, a partner at Pillsbury Winthrop Shaw Pittman, who specializes in representing companies involved in large-scale industrial accidents. “What we’re doing now is identifying energy litigators who fit in with our current practice,” says Farley, who has since helped the office to expand to two partners and five associates, along with an additional five partners and three associates in Austin. “We have no interest in being full-service. For us [the plan is to] target an industry that knows us well and trusts us,” Farley says.
Still other firms were opportunistic about getting into Houston. Winston & Strawn acquired 40 lawyers in the Houston office of Howrey in 2011, after considering bringing in an even larger group of partners from the collapsing litigation firm. Many of the Houston group’s partners practiced together at Houston-based intellectual property firm Arnold, White & Durkee before it merged with Howrey in 2000.
Office managing partner John Keville, a Howrey and Arnold White alum, says Winston leaders previously had looked at some potential single partner hires or small groups to establish a beachhead in Texas, but jumped at the chance to bring in the whole office as Howrey dissolved. Knowing that many of the partners had been together “gives us a different feel for some of the people we recruit,” he says.
Keville says the firm hopes to grow to more than 100 lawyers in the next two years. It now has more than 50 lawyers after a string of lateral partner hires in 2013. In February 2013 Winston brought on Christopher Ferazzi and Richard Wynne, the former heads of the corporate practice at Porter Hedges, to build a transactional presence in the market. In May the firm hired complex commercial litigator Paula Hinton from V&E, and in October added four-person bankruptcy and litigation group from Weil, Gotshal & Manges—John Strasburger, Melanie Gray, Lydia Protopapas and Jason Billeck.
Late in the year, Winston launched an oil and gas practice by bringing on two young partners from Big Three firms: J. Denmon Sigler from Baker Botts and Craig Vogelsang from Norton Rose Fulbright. Sigler and Vogelsang both say they liked that Winston had an ongoing private equity practice and existing alternative energy clients. Keville says that although Winston sees a strategic fit in the hires, both in terms of filling a geographic hole and expanding the firm’s existing energy practice, he doesn’t think there’s unlimited demand for new firms in Houston. “I don’t think you can assume because it’s a booming area that it will support as many law firms as will open an office,” he says.
Timeline: A Chronological Look at The Am Law 200′s Houston Invasion
• McGuireWoods merges with Houston litigation boutique Nickens Keeton.
• Cadwalader picks up energy transactions and project finance lawyer Robert Stephens as part of a nine-partner group from McDermott Will & Emery’s energy and commodities practice.
• Winston & Strawn acquires more than 40 lawyers from Howrey.
• Simpson Thacher announces its hire of banking and credit partner Robert Rabalais from Vinson & Elkins.
• Blank Rome merges with Houston litigation boutique Abrams Scott & Bickley.
• Baker Donelson merges with Houston firm Spain Chambers.
• Sidley Austin opens a Houston office with seven partners recruited from seven firms—Akin Gump, Baker Botts, Jones Day, Locke Lord, Mayer Brown, McDermott, and V&E.
• Paul Hastings hires tax partner Gregory Nelson from Baker Botts, finance partner Paris Theofanidis from Vinson & Elkins, and private equity and M&A partner Steven Tredennick from Bracewell. The firm also moves partner Kevin Fisher from San Francisco to help establish its office in Houston.
• Reed Smith opens an office in Houston with 12 partners from seven firms—Fulbright, Sutherland Asbill, Jackson Walker, Haynes and Boone, Baker Botts, Seyfarth Shaw, and Pillsbury.
• K&L Gates hires Charles Strauss, who had been the head of Fulbright & Jaworski’s securities practice.
• Katten Muchin Rosenman brings on a group headed by workplace safety and environmental lawyer Mark Farley from Pillsbury.
• Husch Blackwell acquires a Houston office via a merger with Austin-based Brown McCarroll.
• Dentons moves nine lawyers from its Dallas and Washington, D.C., offices to Houston.