The energy business is far and away the leading reason why a growing number of large Texas firms have opened offices halfway around the world in the booming market of China.

"The reason we decided to open an office in Asia is we regard ourselves as the pre-eminent law firm in the world representing energy clients," says Stuart Schaffer, a partner in Baker Botts, which opened an office in Hong Kong in 2005 and has asked the Beijing Municipal Justice Bureau for permission to open an office in Beijing.

"We open in key energy hubs," says Schaffer, head of the global projects group at the 717-lawyer Houston-based firm. "That's why we are in London and Moscow and Dubai [United Arab Emirates]. We felt the biggest hole in our network of foreign offices was Asia."

Baker Botts isn't the only large Texas firm established in Hong Kong, Beijing or Shanghai, or considering it. According to a report in November 2005 in The American Lawyer, a Texas Lawyer affiliate, 39 of the 250 largest U.S. firms have offices in at least one of those Chinese cities. Other Texas-based firms in China include Fulbright & Jaworski, Vinson & Elkins and Andrews Kurth. The management committee of Dallas-based Akin Gump Strauss Hauer & Feld is expected to vote today on opening an office in Beijing.

"It's ripe for a decision," says Akin Gump Chairman Bruce McLean of Washington, D.C.

"Many firms look at China the way firms looked at London a decade ago. If you represent significant international businesses and significant financial institutions ... [they] want to invest in China," McLean says.

"Certainly, to call yourself an international law firm you probably do need ... a China practice," says James "Jay" Cuclis, a partner in Vinson & Elkins in Houston who coordinates the firm's international practice.

Among Texas firms, 953-lawyer Fulbright is the gray-haired veteran in China; its Hong Kong office dates back to 1990. That contrasts with Andrews Kurth, which held the grand opening for its office in Beijing this month.

Energy is a big push for the big Texas firms.

"The opportunities are there, and that's the whole deal," says Thomas Bateman, a Houston partner in 413-lawyer Andrews Kurth who will spend some of his time in Beijing. "Economically, China is huge and, especially, from an energy, telecommunications perspective."

But other practices, besides energy, also prompt the Texas firms to look long term and invest in China. For Fulbright, it's structured finance, international arbitration and cross-border mergers and acquisitions, says Jeffrey Blount, the partner in charge of the firm's Hong Kong office.

Akin Gump is considering a Beijing office because, in addition to the energy business, the firm also sees opportunity in China in global projects and intellectual property work, McLean says.

Despite the rush to get into China, there is China-related work for Texas lawyers at firms lacking an outpost in Asia. Because of that, Tom Tong left Houston's Locke Liddell & Sapp in 2005 after six years as an associate to open a bilingual firm in Houston targeting the China practice.

"When I was at Locke Liddell, I was basically the one-man Chinese department," says Tong, a native of China who came to the United States to study business under a cultural exchange and stayed after the Tiananmen Square protests in 1989. He joined Locke Liddell after graduating from Vanderbilt University Law School in 1999.

But Tong says client conflicts at 384-lawyer Locke Liddell made it difficult to expand his practice. He wants to build the Tong Law Firm into a bilingual boutique concentrating on the China practice, with some of the firm's work coming from referrals from large Texas firms that don't have contacts or expertise in China.

"When [Chinese] clients come to Texas, they like a big firm to help them, but they also want somebody who knows the language and the culture," he says.

"I'm seeing opportunity. I'm trying to build a team," Tong says, noting he has hired two other Chinese lawyers since he opened his firm last September.

Tong says a China office was discussed at Locke Liddell, but it didn't happen.

"We have to be realistic. It's very expensive to run an operation in China, especially if you are not the Wall Street firms," Tong says.

Attempts to reach Locke Liddell partner Greg Burch, head of the firm's East Asia practice group, were unsuccessful.

PERSONAL RELATIONSHIPS

Blount, the Fulbright partner with 15 years of experience in Hong Kong -- he has lived and worked in Hong Kong for the past 12 years -- says the past 18 months to two years have been the busiest he has seen.

Prior to 2001, when China joined the World Trade Organization and it became easier for U.S. companies to do business with and in China, Blount says, most of the work in China was high-risk, speculative work that was much less predictable for firms. "Since China has been comfortably in the World Trade Organization for the past four or five years, there's been an increasing ease of doing business out here [in China]," Blount says. "Our clients, the Fortune 500-type clients who were shying away from China ... now take it very seriously."

According to the U.S.-China Business Council, the Chinese economy grew by more than 9 percent in 2004 and was expected to do about the same in 2005.

Fulbright's Chinese clients are primarily related to the energy industry, Blount says, and include the three national Chinese oil companies but also energy service providers and traders. On the other side of deals, the firm represents large multinational corporations and often picks up new clients making their first foray into China, he says.

For instance, Blount says, the firm represented online employment company Monster Worldwide Inc. of New York in its $50 million purchase of a 40 percent stake in ChinaHR.com Holdings Ltd., which owns ChinaHR.com.

Blount says it is important for Texas firms to look at China with a long view. "Probably every five years, you've got one difficult year out here because of SARS [Severe Acute Respiratory Syndrome] or some kind of economic upheaval," he says.

Blount says the three national oil companies in China -- China National Petroleum Corp. (CNPC), China National Offshore Oil Corp. (CNOOC) and China Petroleum and Petrochemical Corp. (Sinopec Corp.) -- use many outside firms.

"They spread the work around, and there's a lot of it," he says, suggesting that Fulbright's major Houston rivals, Vinson & Elkins and Baker Botts, have moved into China because of the volume of energy work.

"The more the merrier," he says. "Between V&E, Baker Botts and us [with] some high-quality lawyers in this industry, it's increasing the awareness of consumers out here to differentiate us from firms that don't specialize in the oil patch."

Even Tong, the Chinese lawyer who has a small firm in Houston, says he gets work from all three of the major Chinese national oil companies.

Vinson & Elkins opened its Beijing office in 1997 and received approval in 2003 to open another office in Shanghai. The initial objective, Cuclis says, was to represent Western companies with investments in China.

"The last four or five years, our client base has shifted. We are doing more business for Chinese companies who are investing internationally," Cuclis says.

"I wish I could say we had foreseen this in the mid-'90s. ... We were sort of in the right place at the right time," he says.

Vinson & Elkins has a total of 13 lawyers in the Beijing and Shanghai offices, including three partners and a mix of Western and People's Republic of China (PRC) associates, Cuclis says. PRC lawyer Xiao Yong is the partner in charge of the firm's China practice.

Cuclis says Vinson & Elkins clients in China include Sinopec, CNPC and Capital Iron and Steel Group (Shougang Group).

Once the firm obtained the government licenses for the two offices, Cuclis says Vinson & Elkins didn't run into any particular problems in setting up offices in China. Just like at any overseas office, the firm needed to hire multilingual staff and find office space in a good building in a good area. He says locating office space in Beijing back in 1997 was challenging, but there is much more space available today.

Cuclis and Blount say that, because personal relationships are important in China, their firms' tenure in the Chinese market is helpful in attracting and keeping business.

That's a reason why Andrews Kurth opened an office in Beijing, Bateman says.

"They [the Chinese] put a great deal of emphasis on personal relationships. Telephone calls don't do it," he says.

THE RIGHT TIME?

In 2005, Akin Gump represented CNOOC in an unsuccessful attempt to acquire California-based Unocal Corp. But it wasn't that work that put Akin Gump on the verge of opening an office in Beijing. McLean says the firm has been considering an office in China for the past five years.

The firm looks cautiously at China, despite the opportunity, McLean says. Akin Gump doesn't open a new office unless the market is important to the firm's core businesses. In the case of China, there's opportunity in three core areas: energy, global projects and IP, McLean says. But there's also the expense of opening a new office and the time and attention management will need to devote to the new outpost, he says.

"I think the time is right for us to be in China, but it does mean you are going to forego other opportunities," he says, noting that he sees China as a long-term investment but also one that can't fail because failure can be harmful to a firm's prestige.

"We aren't like a restaurant chain opening an outlet somewhere, and if it doesn't do well, we close it. In the law-firm business, there's a lot more wrapped up in it," he says.

Some other large Texas firms with robust energy practices are looking at the China market, but they are not ready to open an office in Asia.

About 18 months ago, Dallas-based Thompson & Knight began a relationship with a small firm in China and is thinking about an Asian office, but plans are "moving slow," says managing partner Peter Riley.

"We should be there, but it hasn't matured," Riley says about the China market.

Riley says the firm does work for PNPC and Sinopec, but in Brazil.

Robert E. Wilson, managing partner of Haynes and Boone, says his Dallas-based firm is considering a China office, but any decision is three to five years into the future.

"From what we have heard from those who have done it, it is an extremely difficult proposition, much more difficult than London or Moscow," Wilson says. "There is more than a language barrier."

He says an office in China is a much longer-term investment for a firm than offices in Russia or London or South America.

Notes Wilson, "We have a huge Japanese practice. We have a Taiwan practice, so we are pretty heavily into the Far East, but taking that next step ... we're still testing the waters."

Dallas lawyer Michael Shore has been doing work for Chinese and Taiwanese clients since 1999, but says his nine-lawyer firm, Shore Chan Bragalone, has no plans for an office in China.

Shore, who mostly does intellectual property licensing work for Chinese clients, says that in every instance, his clients also hire a Chinese firm for the project. Most of his clients have ties to government agencies or educational institutions, he says.

"If we opened an office in China, some of the people [Chinese lawyers] over there would view that as an attempt to compete with them," Shore says.

To be successful in China, Shore says, Texas firms need to think beyond the "quick buck."

"You've got to be culturally sensitive. You've got to be very sensitive to the government position. They still have an evolving law system," he says. "You could go over there, and you could take advantage of the fact it is an adolescent, developing system, but the Chinese are very smart. ... They are very loyal, very appreciative of those who actually went there to help."

He adds, "If you don't understand that balance and all you do is go over there as a typical ruthless Western lawyer, you will have very short-term success and suddenly wake up and have no clients and no support from the government any more, and you will be going home."