Published 7:30 pm, Thursday, February 15, 2018
The Texas corporate legal market is experiencing extraordinary turmoil in 2018 – and the year is only six weeks old.
Three large and historic Texas-based corporate law firms – Andrews Kurth Kenyon, Gardere Wynne & Sewell and Strasburger & Price – with a combined 750 lawyers are in the final stages of merger negotiations with larger out-of-state law firms.
Five national law firms, including global mega-firms White & Case and Shearman & Sterling – have either opened or are opening new offices in Texas before the end of March, and a handful more are expected to do so later this year.
RELATED: Houston lawyer says goodbye to Baker Botts and hello to Hogan Lovells
Since Jan. 1, more than 100 business lawyers have quit the law firms in Austin, Dallas and Houston where they have worked for years or even decades to join competitors.
The Texas legal market, which has been a hotbed of activity since 2010, is in the midst of a frenzied transformation not witnessed in decades.
“This is the craziest that I’ve seen lateral movement in the legal market here in the 20 years that I’ve been in Texas,” says Randy Block, a Dallas legal recruiter who places lawyers at corporate firms.
Legal industry analysts say the fevered pace of change in the Texas corporate law community is not likely to slow down anytime soon.
Kent Zimmerman, a law firm consultant at Chicago-based Zeughauser Group, said his firm is releasing a survey later this month that shows that “a surprising large number” of Texas law firms between 25 lawyers and 200 lawyers are “seriously interested” in merging with other law firms.
“Texas law firms are in a fight for survival over talent with larger, much more deep-pocketed national law firms, such as White & Case, Kirkland & Ellis, Gibson Dunn and Latham,” Zimmerman says. “In order to steal away a good lawyer with a strong book of business, Kirkland can double or triple a lawyer’s salary without breaking a sweat and the Texas law firms cannot compete.
“An increasing number of Texas law firms are deciding that if they cannot beat the national law firms, they might as well join them,” he says.
Here are the latest developments that have occurred during the past few weeks:
· Dallas-based Gardere, a 210-lawyer firm founded in 1909, is involved in merger discussions with Milwaukee-based Foley & Lardner, which has more than 800 lawyers across the U.S.;
· Strasburger, a 180-lawyer Texas firm founded in 1938, is expected to announce in the next month that it is merging with Detroit-based Clark Hill;
· Two huge multinational corporate law firms – White & Case, which has 2,100 lawyers in 30 countries, and Shearman & Sterling, which has nearly 900 lawyers in 20 offices worldwide – announced they are opening in Houston and Austin this month.
· Three large regional law firms – Foley & Lardner, Katten Muchin and Clark Hill – have opened or are planning to open outposts in Texas within the next month.
· Three large law firms – DLA Piper, Winston & Strawn and Orrick – have significantly expanded their Texas offices by hiring away several partners from other Texas law firms.
But the biggest development is taking place at Andrews Kurth Kenyon, a Houston-based law firm that celebrated its 115th anniversary last year.
AKK, which boasted 400 lawyers in a dozen global offices only a year ago, is on the verge of being acquired by Virginia-based Hunton & Williams. In 2017, AKK lawyers represented 33 Texas businesses involved in mergers, acquisitions or divestitures with a combined value of $11 billion, according to Mergermarket.
Several law firms have tried to merge with Andrews Kurth in the past, including Winston & Strawn, DLA Piper and Orrick. When AKK rebuffed those inquiries, the national firms opened their own offices in Dallas and Houston. All three firms have since stolen a couple dozen key lawyers from AKK and other firms through lateral hiring.
“Texas has witnessed such a frenzied pace in the legal market because the national law firms that have moved into the state have seen great financial success,” Block says. “The national law firms don’t want to be left out.”
Texas Lawbook research shows that nine of the 35 highest revenue generating law firms in Texas in 2017 did not even have an office in the state before 2010.
“All of this is further evidence that law continues to be a follow-the-money profession,” Zimmerman says. “There’s a lot of money flowing into Texas and all that new business means additional demand for legal services.”
For a longer version of this article, please visit TexasLawbook.net.