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It’s true that things are just bigger in Texas. Houston-based Enterprise Products Partners L.P. is one of the largest publicly traded energy partnerships in North America. Enterprise is a mid-stream energy limited partnership that provides a wide range of services to producers and consumers of natural gas and natural gas liquids. Natural gas liquids are used by the petrochemical and refining industries in the production of plastics, motor gasoline and other industrial and consumer products. They are also used as residential, agricultural and industrial fuels. Enterprise’s asset platform in the Gulf Coast region, combined with its recently acquired Mid-America and Seminole pipelines systems, created the only integrated natural gas and natural gas liquids transportation, fractionation, processing, storage and import/export network in North America, notes chief legal officer Richard H. (“Hank”) Bachmann. But this hasn’t happened overnight: strategic partnerships and complex acquisitions over the past several years have led the company to achieve an enterprise value of approximately $6.4 billion. Enterprise made headlines this summer when it concluded a $1.2 billion acquisition of two pipeline systems from affiliates of The Williams Cos. Inc., which enabled it to add more than 8,500 miles to its pipeline empire, including more than 7,200 miles in the Southwest, Rocky Mountain and Midwest areas of the United States and approximately 1,300 miles in Texas. In late September, the company completed the acquisition of the Toca-Western natural gas processing plant and natural gas liquids fractionator from Western Gas Resources Inc. for approximately $32.5 million in cash. In fact, since going public in July 1998, Enterprise has been involved in more than $3.1 billion in investments and acquisitions, more than $1.4 billion of which occurred just this year, notes its president and CEO, O.S. “Dub” Andras. Not surprisingly, attorney Bachmann has been incredibly busy — about the busiest he’s been since joining Enterprise in January 1999 as its executive vice president and chief legal officer. Bachmann and Andras recently described their in-house legal department and working relationship to Texas Lawyer reporter Erica Lehrer Goldman. What follows has been edited for length and style. Texas Lawyer: What did you look for when hiring a chief legal officer? What characteristics were most important? O.S. “Dub” Andras, president and CEO: There were three primary characteristics, … two objective and one subjective. First, we wanted someone who had knowledge of our business, which at the time was limited to the fractionation, storage, transportation and importing/exporting of natural gas liquids. This was not the type of business in which a lot of attorneys had a lot of experience. Second, we wanted someone who had business transaction experience. We had formed a publicly traded partnership just four months prior to the initiation of our search for a CLO. We believed that a large part of our partnership growth would come from acquisitions and joint ventures. We wanted someone who had experience in mergers and acquisitions, joint ventures and partnerships, securities and commercial law. Finally, we wanted someone in whose judgment we had confidence. We wanted someone who could understand the goals we were trying to achieve and could advise us on how to reach those goals in an expeditious and legally compliant manner. TL: What did you do prior to joining Enterprise? How was this experience helpful? Richard H. “Hank” Bachmann, executive vice president, CLO and secretary: For the 22 years prior to joining Enterprise, I was in private practice at various firms and specialized in transactional legal work. I started in 1977 at a mid-size firm, Childs, Fortenbach, Beck & Guyton and became a partner in 1982. In 1988, I, with most of the firm’s attorneys, joined Butler & Binion as a partner. In 1993, I and five other lawyers from Butler & Binion left to form a small firm, specializing in business transactions. In January 1999, I joined Enterprise as EVP, CLO and secretary. Enterprise had been a client of my various firms’ since 1984, mostly representing them in … business, loan and securities transactions. I believe that my private law experience has been helpful to my acting as CLO of Enterprise as I’ve had exposure to a number of different clients in transactional matters, each with their own personality and business objectives. This background has enabled me to … provide Enterprise with different perspectives on matters, in much the same way that an outside attorney would provide to a client. When answering a question on the route to take in negotiating acquisitions, for example, I’ve been able to utilize my prior experience in transactions with other clients in providing them with alternative negotiating strategies. TL: What were some of the key differences in being Enterprise’s in-house counsel after having served for years as its outside counsel? Bachmann: The biggest difference in becoming Enterprise’s CLO was being involved in business transactions at a much earlier stage. While in private practice, I became involved in business transactions only after the business deal had been negotiated and my primary function was documenting and negotiating the deal. Now, I am involved in a proposed transaction at the stage of determining whether it makes sense for Enterprise’s business. Second, while in private practice, I had much less authority in negotiations than I do now. In private practice, I had to defer to the client on most, if not all, decisions. Now, I am, to a large extent, the client, which brings with it a large amount of responsibility to ensure that the deal makes sense for Enterprise from a legal and risk perspective and that it gets done in a timely manner. TL: What in particular made moving in-house an attractive choice for you? Bachmann: Throughout my legal career, I had flirted with the idea of moving in-house but had always resisted the temptation for a variety of reasons. I had enjoyed my work and liked the autonomy of working for various clients but was tiring of continually trying to satisfy the often conflicting demands of various clients. Also, as with most private attorneys, I was always attempting to have a fair balance of family life and professional life, usually failing on the family side. I had worked with executive management of Enterprise for 15 years and personally liked them; many of them had become my close personal friends. In addition, I had come to respect their business abilities and judgment very much. So when the position at Enterprise was offered to me, I jumped at the chance. TL: What role does the CLO play in key business decisions? Andras: As a member of our executive management team, he’s involved in all of our significant business decisions from inception. We rely heavily on him to advise us on structuring our business transactions to help us achieve our anticipated goals. Furthermore, all of our executives are expected to consult with him on a regular basis on material business matters to ensure that we are or will be in compliance with all regulatory and other legal rules and regulations. TL: How large a legal staff does the company have? Andras: Currently, our legal department consists of four attorneys, all of whom work in our Houston office. Historically, we have found it more cost efficient to have our legal department attorneys be responsible for most of the day-to-day legal matters of Enterprise, with outside counsel being used to handle, under the management of our legal department, our acquisition and joint venture transactions and litigation matters. TL: What is your weekly interaction with the legal department, on average? Andras: Since the CLO’s office is next to mine, I talk to him at least once a day concerning various matters affecting or relating to Enterprise’s business. From time to time, I also discuss matters with other members of the legal department, although not as often as with the CLO. Most of the day-to-day interaction with the other members of the legal department is handled by the CLO, who will then report to me on any matters that may need my attention. We also have weekly executive management meetings that our CLO attends and participates in. Since our CLO is also the secretary and a member of the board … of our public partnership’s general partner, he prepares the agenda for, and attends and moderates, all of our board meetings. Furthermore, our CLO attends, with certain other members of our executive team, all of the meetings of the audit committee of Enterprise. TL: What has been the company’s greatest legal challenge in the past three years? Andras: Since we formed our public partnership in 1998, we have made more than $3.1 billion in investments and acquisitions, more than $1.4 billion of which has occurred so far in 2002. While these acquisitions and other investments have benefited Enterprise and its partners, the challenges in integrating the acquisitions and investments, both from a business and legal perspective, have been daunting. Enterprise has relied and continues to rely on the expertise of its legal department in ensuring that the company continues in compliance with the myriad statutes, rules and regulations which govern and regulate the company and its acquired businesses. TL: What kinds of issues have you had to handle? Bachmann: Since we are a fairly small legal department, each of Enterprise’s attorneys has had to handle a wide range of legal issues, from employee matters to regulatory matters to significant acquisitions, joint ventures and securities issuances. However, that is one of the best things about being in-house counsel — the variety of matters an attorney deals with. In the post-Enron era, however, the most significant issue we have been faced with is corporate governance, and the various federal statutes and Securities and Exchange Commission and New York Stock Exchange rules and regulations which have been proposed, adopted or enacted in that area in the last few months. TL: What are your short-term and long-term goals with regard to Enterprise’s legal department? Bachmann: Our most pressing short-term goal is to ensure that our company is in compliance with all of the corporate governance legislation, rules and regulations enacted, proposed or adopted over the last couple of months. Another short-term goal is to put in place procedures with respect to the use of outside counsel — primarily to limit the number of firms that Enterprise uses, to revise our outside counsel policies and guidelines, to cost justify the use of outside counsel — all with a goal of reducing the cost of outside legal services. Finally, I want to set up a better procedure of fairly allocating work among the members of the legal department. A long-term goal of the department is the preparation of “form” agreements for use by our business management in their daily business operations. I also want to ensure that internal communication and cooperation among the department members continues so that legal services can be delivered by the legal department to the other departments of Enterprise in the most timely and cost-effective manner. Finally, I want to ensure that the work we are performing for Enterprise continues to be as interesting and personally satisfying as it has been.

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