Originally Published May 14, 2013
While there is currently debate over whether the rise of the natural gas industry in Pennsylvania has created as many jobs as some had originally projected, there is little disagreement among attorneys and legal recruiters that there is, at the moment, plenty of legal work flowing from the drilling industry and, as a consequence, steady demand for oil and gas lawyers.
It hasn’t always been that way, however, Pittsburgh legal recruiter Valerie Esposito told The Legal recently, characterizing the growth in the demand for oil and gas attorneys in Pennsylvania over the past few years as “a stutter-step.”
While the initial frenzy surrounding the Marcellus Shale play in Pennsylvania four or five years ago created an active hiring market for energy lawyers, it was quickly followed by what Esposito called “a big slump.”
Esposito said firms and oil and gas operators alike went through a period of uncertainty as to whether they had enough work to keep their existing staffs busy.
That uncertainty led to a sharp downturn in hiring, according to Esposito.
But now, Esposito said, demand for attorneys is on the rise again as firms and drillers have begun expanding operations into Ohio and West Virginia.
And, according to Esposito, while the initial demand in the hiring market was for attorneys to do pure title work, the focus has now shifted to include attorneys with experience in oil and gas transactional work.
Transactional energy lawyers are becoming “more and more in demand and more and more relevant,” Esposito said.
Anecdotal evidence seems to bear out Esposito’s assessment.
A number of out-of-state firms either set up shop or bulked up their existing offices in Pennsylvania when the Marcellus Shale play first began picking up momentum.
Since then, many of them have grown significantly, primarily through local hires.
Kristian E. White, who opened West Virginia-based energy law firm Steptoe & Johnson’s Southpointe office in late 2010, less than four months after the firm opened in Meadville, Pa., said his firm’s investment in Pennsylvania is paying dividends.
“It’s been better than we had anticipated, to be honest with you,” White said. “When we opened this office in December 2010, we had three attorneys and 6,000 square feet. In June 2012, we added an additional 6,000 square feet and we now have 17 attorneys practicing here.”
Although White relocated from Wheeling, W.Va., to head up the office and three other attorneys moved to Southpointe from Steptoe & Johnson’s Morgantown, W.Va., office, the rest of the location’s attorneys came from Pennsylvania, White said.
According to White, there is a significant amount of oil-and-gas-related legal work to go around in Pennsylvania, but some firms are more successful than others at attracting and keeping it.
White said Steptoe & Johnson is banking on its ability to continue doing both well into the future, having recently signed a lease that will give the firm another 12,000 square feet of space at Southpointe beginning in June 2014.
Meanwhile, Kenneth S. Komoroski, who left K&L Gates’ Pittsburgh office with five other energy lawyers in April 2011 to open a Southpointe office for Houston-based energy law firm Fulbright & Jaworski, said the group’s decision to move has been rewarded, but admitted it’s taken some time to grow the office, which now has nine lawyers.
“We’ve added attorneys here maybe not as fast as we originally envisioned, but it’s been a good ride so far,” Komoroski said.
Like White, Komoroski said there’s currently a steady flow of business coming in, even as oil and gas operators have also staffed up in order to handle more legal work in-house.
And, also like White, Komoroski said that flow of business is nearly “guaranteed to continue for the foreseeable future.”
While the oil and gas industry was forced to regroup in early 2012 when the value of “dry” gas — gas that is almost pure methane — plummeted to under $3 per 1,000 cubic feet, causing drillers to shift operations to regions containing more valuable “wet” gas — a combination of methane and other components such as propane, benzenes and ethane — Komoroski said dry gas prices recently rose back up to around $4 per 1,000 cubic feet and production has resumed at a “robust pace.”
And although the initial flurry of drilling activity in wet gas areas did cause its value to dip, it was not a significant-enough decrease to affect oil and gas operations, Komoroski said.
Pittsburgh legal recruiter Lori Carpenter had a similar take as Esposito, noting that firms are currently interested in hiring attorneys who can handle a variety of work stemming both directly and indirectly from the oil and gas industry.
And while, according to Carpenter, some Pittsburgh firms have looked to acquire experienced attorneys from states like Texas, where the oil and gas industry has long been an economic staple, she said there is still a higher demand for homegrown Pennsylvania attorneys.
“There are a lot of lawyers and partners in the city who have reinvented themselves [as oil and gas lawyers],” Carpenter said, but added the lawyers who began familiarizing themselves with the industry before it took off in Pennsylvania are the ones who are most in demand now.
Conversely, Carpenter said, those attorneys who simply bill themselves as “oil and gas” or “energy” lawyers without learning the nuances of the industry are often quickly exposed.
other signs of growth
Fulbright & Jaworski and Steptoe & Johnson are just two of the out-of-state energy firms that have recently put down roots in Pennsylvania and have since grown their ranks in the state.
Last July, Stoll Keenon Ogden, one of Kentucky’s largest firms, opened an office in the Southpointe business park in Washington County, Pa., with an eye toward real estate due diligence and title examinations for oil and gas, as well as coal, producers.
While the firm transferred three of its existing attorneys to Western Pennsylvania to open the office, it has since hired two associates from Pennsylvania-based firms Thomas, Thomas & Hafer and the May Law Group.
Before that, in December 2011, Houston-based energy law boutique The Sadler Law Firm opened in Southpointe.
While Sadler partner Jacob Lenington, who manages the firm’s Appalachian area, moved from Houston to Western Pennsylvania to manage the office, the firm’s managing partner, Randall K. Sadler, told The Legal at the time that the rest of the office’s 10 lawyers were new to the firm and included a mix of laterals and recent law school graduates from Western Pennsylvania, Ohio and West Virginia.
In 2010, Burleson LLP added nine attorneys to the Southpointe office it had opened the previous year, including Kevin Colosimo, who joined from Pittsburgh-based Thorp Reed & Armstrong to lead the office.
Soon after Colosimo joined, the firm added associates from Hogan Lovells, Meyer, Unkovic & Scott and Reed Smith.
Today, Burleson’s Southpointe office has more than 30attorneys.
Pennsylvania-based firms have also been inspired to open offices on the strength of the oil and gas industry.
Philadelphia-based Saul Ewing, for example, opened a Pittsburgh office a year ago and has already grown it to 13 lawyers.
While only one of those attorneys has a specific energy and environmental focus — John P. Englert, who joined the firm from K&L Gates in January — Saul Ewing managing partner David Antzis has said the Pittsburgh office was launched to capitalize on the economic growth in the region that is at least partly attributable to the natural gas industry.
For instance, when the firm brought aboard a pair of construction lawyers from Pittsburgh-based Leech Tishman Fuscaldo & Lampl in April, Antzis noted that the Pittsburgh market is currently experiencing a “construction boom,” as increased oil and gas activity has created a need for more hotels, housing developments and office buildings.