Partners at Andrews Kurth Kenyon and Hunton & Williams have agreed to merge their firms and operate as Hunton Andrews Kurth, a 1,000-lawyer firm with offices in 15 U.S. cities and another five located outside the United States.
Hunton Andrews Kurth, which will officially launch on April 2, will have about 300 lawyers in Texas, divided among offices in Houston, Dallas, Austin and The Woodlands—a planned community about 30 miles north of Houston that is popular with many U.S. corporations—as well as more than 200 lawyers in Richmond, Virginia, and more than 150 lawyers each in New York City and in Washington, D.C.
The combined firm’s revenue is expected to exceed $750 million for the first year—a figure that could catapult the merged firm to the Am Law 50. The deal combines strength in both arms of the energy practice, linking Andrews Kurth’s oil and gas practice with Hunton & Williams’ power industry practice. Firm leaders said the combined firm will be one of a few firms that can provide high-caliber services to both arms of the energy sector.
Wally Martinez, managing partner of Hunton & Williams, said Hunton & Williams’ partners voted unanimously on Feb. 16 in favor of the merger. Robert Jewell, managing partner of Andrews Kurth, said the vote, which was completed at his firm on Feb. 15, was “overwhelmingly favorable” and included more than 95 percent of the firm’s partners.
The merger is another sign that firms outside of the Am Law 50 are feeling increasing market pressure to remain competitive and looking to achieve this by growing larger. Other large Texas firms are also in merger talks, including Foley & Lardner and Gardere Wynne Sewell and Strasburger & Price and Clark Hill.
“The competitive nature of our profession these days demands that we are able to provide high-quality services across a spectrum of legal specialties,” Jewell said.
In the weeks leading up to the agreement, Andrews Kurth lost many lawyers to other firms in Texas, but Martinez said that bleeding did not affect Hunton & Williams’ interest in the merger.
“In all honesty, from the Hunton & Williams perspective, we are getting exactly what we wanted,” Martinez said. “Would there have been room, and do I think some of those other practices could have prospered here? Sure. But from a strategic standpoint, I could not be happier. I know I speak for my partners.”
Firms that have lured Andrews Kurth lawyers in Texas over the last few weeks include Orrick, Herrington & Sutcliffe, which hired a public finance group, Haynes and Boone, which picked up a capital markets partner, White & Case, which opened an office in Houston this month, Katten Muchin Rosenman, which opened an office in Dallas, and DLA Piper, which expanded in Dallas with Andrews Kurth laterals.
This is the second major deal for Andrews Kurth in 18 months. In 2016, Andrews Kurth absorbed 55 lawyers from New York Intellectual property firm Kenyon & Kenyon, and as a result, brought a large IP practice to the combined firm. Jewell said the Kenyon deal “further opened our eyes” to the opportunity of broadening the firm’s practices. However, with the merger, “Kenyon” will be dropped from the firm’s name.
In 2016, Andrews Kurth posted gross revenue of $289 million with 327 lawyers, while gross revenue at Hunton & Williams was $541 million with 661 lawyers. But revenue per lawyer and profits per partner at the two firms were very close. RPL was $883,000 at Andrews Kurth in 2016 compared with $820,000 at Hunton & Williams. PPP was $1,259,000 at Andrews Kurth, compared with $1,100,000 at Hunton & Williams.
Jewell said the firms started talking in June 2017, and Martinez added that his first sit-down with Jewell was at a Tex-Mex restaurant in Houston.
Jewell said that during strategic planning, Andrews Kurth partners considered what they would want if combining with another firm. He said Hunton & Williams meets those markers, including cultural compatibility, a reputation for excellence, a high-quality practice, geographic reach and a shared vision for the future. He said the firm has also been interested in strengthening its East Coast practice. Andrews Kurth has offices in New York and Washington, D.C., but adding Hunton & Williams expands its geographic reach.
Martinez said a key component of Hunton & Williams’ strategic plan calls for substantial growth in Texas because “we think it’s a phenomenal legal market.” The firm has had an office in Dallas since 2002, in Houston since 2005 and in Austin since 2007.
Jewell said the merger is more complementary than duplicative. For instance, in the capital markets practice, Andrews Kurth lawyers do a lot of work in the master limited partnership space, and their counterparts at Hunton & Williams have an extensive practice in REITs. “Those are two specialty corporate finance practices that require substantial tax expertise and in many ways, they complement each other as well as overlap,” Jewell said.
Martinez said the synergy goes beyond capital markets, with Andrews Kurth focused on oil and gas work, and Hunton & Williams focused on consumer products companies. “When you see a firm touching all of these industries—wow—that is a firm that is becoming a major player in the capital markets space,” he said.
Jewell acknowledged that Andrews Kurth took on some debt in connection with the 2016 Kenyon & Kenyon deal, but Martinez said “the combined firm will have negative net debt at closing.” He said Hunton & Williams has long maintained a “conservative balance sheet.”
Martinez, who is based in New York and Washington, D.C. , will become managing partner of the combined firm, and Jewell, a partner in Houston, will become managing partner emeritus. George Howell III, a partner in New York and Richmond, will remain chairman of the combined firm’s executive committee, which will be comprised of five Andrews Kurth members and nine Hunton & Williams partners.
Martinez said Hunton Andrews Kurth will not designate one city as its headquarters.
Firm leaders said Hunton Andrews Kurth will combine offices in the cities where they both currently have offices, including New York, Washington, D.C., and Dallas. But Martinez said he does not have layoffs in mind.
“Like any other business, you continue to look at staffing,” he noted, adding that there is “no plan” for post-April 2 staff reductions.
When asked whether there had been any layoffs at Andrews Kurth or any involuntary exits before the merger, Jewell said he wouldn’t comment on any personnel matters.