When Dentons said on September 24 that it plans to open a Houston office this month, the announcement came with a twist: Unlike the bevy of other Am Law 200 firms that have opened outposts in the heart of Texas’s booming energy market in recent years, the megafirm created via the March combination of SNR Denton, Salans, and Fraser Milner Casgrain is doing so without making a single locally based lateral hire—at least to start.
Instead, Dentons plans to staff the new location— an addition already on firm leaders’ minds when the the three-way tie-up took effect earlier this year—with a dozen of its own attorneys, including nine partners now based in either Dallas or Washington, D.C. Dentons attorneys who already advise Houston-based clients out of London, Canada, or any of the 79-office firm’s other locations are also expected to spend time in Houston.
Dentons U.S. managing partner Mike McNamara declined at the time of the announcement to identify which of the firm’s lawyers would be staffing the office because several were still in the process of telling their families about the move, but he said it makes sense for the firm to deploy its own people to Houston before recruiting locally—as most of its rivals have done.
“Other firms have hired laterally and gained clients, we’re doing the inverse,” McNamara said. “We already have Houston clients, we have been representing Houston clients for decades.” (Without providing specifics, he estimates that the firm has roughly 400 clients based in the area.)
While the new office will initially focus on energy sector work, McNamara said he expects to soon have Houston-based litigation, corporate, intellectual property, and regulatory practices. And, he added, the lateral hires to build out those groups will come: “We have quietly initiated a very active recruiting campaign.”
Dentons—whose Houston announcement was quickly eclipsed by the news that it is in advanced merger talks with McKenna Long & Aldridge—is the fourth Am Law 200 firm to enter the booming market this year and at least the 13th to do so since 2010. With few exceptions, its predecessors have indeed relied heavily on attorneys with strong local ties.
K&L Gates, for instance, snagged Fulbright & Jaworski securities practice group head Charles Strauss as founding partner of its Houston branch in February. At around the same time, Reed Smith opened in Houston by plucking a combined total of 12 partners from Fulbright, Sutherland Asbill & Brennan, Jackson Walker, Haynes and Boone, and other firms. Another Am Law 200 firm that moved into the city earlier this year, Katten Muchin Rosenman, did so by bringing on former Pillsbury Winthrop Shaw Pittman partner Mark Farley as its Houston managing partner and Tom Kiehnhoff, a former assistant U.S. attorney in the Eastern District of Texas.
Without commenting specifically on the Houston strategy being employed by Dentons, Farley says he was motivated to switch firms based largely on what he called Katten’s strong commitment to tap into the local talent pool as a means of being successful.
“What attracted me to Katten was that it had a clear plan and a vision of how to do it,” he says. “Without that, a lot of firms that come to Texas will not succeed. Our strategy is to focus on Texas-based lawyers with well-established reputations.”
Katten’s goal, Farley says, is to first develop strong core practice groups specializing in environmental litigation and related matters and in workplace safety issues before branching out into other areas. He says he believes his practice appealed to Katten because his focus on workplace safety and industrial accident response have helped him forge strong ties across the broader energy industry.
When Sidley Austin opened its Houston office in February 2012, it did so by recruiting seven partners from seven different firms—a group that included Kenneth Anderson from Locke Lord, Mark Glasser from Baker Botts, and J. Mark Metts from Jones Day. Sidley executive committee chair Carter Phillips says the firm made the lateral hires because most of the Washington, D.C.–based energy-focused lawyers it already had specialize in regulatory matters. “For oil and gas, and for energy litigation, we did not have people,” Phillips says.
Michael Dillard—the managing partner of Latham & Watkins’s Houston office and one of three lateral hires the firm made to launch the location in 2010—says Latham had a single-minded focus in making its local hires.
“Houston is a one-industry town, and energy is that industry,” says Dillard, who previously served as head of Akin Gump Strauss Hauer & Feld’s transactional energy group and joined Latham along with fellow former Akin Gump partner J. Michael Chambers and Sean Wheeler, a partner who defected from Baker Botts. “We wanted practitioners well known in the market when we launched the office. While the energy industry is large worldwide, the legal community in Houston is very small and we wanted attorneys who were known to our current and potential future clients.”
Dillard stresses that the local hires weren’t necessary just to bring in business. Like Dentons, he says, Latham had plenty of Houston-based clients before opening its office there: “The firm had already represented every large major oil company in the area in one respect or another, whether it was litigation, project finance or another area.”
James “Jimmy” Vallee—a Houston-based Paul Hastings corporate partner who came over from Jones Day in July—says that Dentons will find that the city’s legal hiring market fiercely competitive. Recruiting in Houston, Vallee says, “has reached a point where the people who were easy to move have moved. The people at indigenous Texas law firms, or a law firm they have been at for awhile, need a good incentive. Everyone has the same handful of partners they want to recruit. These days partners get twenty to thirty headhunter calls a year about moving to the latest and greatest firm to come to town.”
Vallee believes Dentons is stocking the new office with its own lawyers because it wanted to be in Houston, but may have had trouble wooing attorneys from other firms. “Houston really is a city where people want to walk down the street and talk to their lawyer about a matter,” he says. “They want to talk to lawyers whose kids go to their kids’ schools, or who go to church with their banker’s kids. They want to work with people they know.” (McNamara says Dentons has received considerable interest in its arrival in Houston from local lawyers.)
Lee Allbritton, a legal recruiter with Amicus Search Group who is not aiding Dentons in its Houston hiring efforts, echoes Vallee’s view of the market the firm is plunging into. Allbritton says that despite its strong brand name, Dentons faces challenges when it comes to making lateral hires. “Many lawyers in Houston have already been wooed by other firms,” he says. “It is becoming hard to come in like Latham and pick off lawyers.”
Nonetheless, Allbritton adds, the city continues to be white hot for hiring—and for good reason: “Houston has the second highest number of Fortune 500 companies, land is cheap, regulation and taxes are low, and there is room to grow.”
Indeed, even setting aside the new office openings, the churn in the local legal market remains steady. Last month, for example, Haynes and Boone hired former Perkins Coie attorney Robert Thibault for an of counsel in its Houston energy practice group. In August, Bracewell & Giuliani added environmental strategies partner Heather Corken to its Houston office from Norton Rose Fulbright, just a few weeks after Norton Rose Fulbright added partner George “Ned” Crady to its energy transactions group from King & Spalding. Sidley, meanwhile, continued to beef up in Houston over the summer, wooing former Baker Botts partner Herschel Hamner III for its Houston-based global finance practice.
The market has actually gotten so active, that some observers are becoming skeptical about all the movement.
“A lot of firms these days are chasing talent that will not provide return on initial investment,” says Katten’s Farley, without commenting on any specific hires. “And a lot of people are moving just to move because they can get higher compensation.”