We have witnessed a sweeping wave of consolidation across the energy sector this year, as major players have moved aggressively to shore up assets and position themselves strategically in a shifting global market. A handful of landmark acquisitions and mergers have redefined the energy industry landscape, with large players hoping to further leverage economies of scale to weather pressures like volatile energy prices and the rising cost of capital. But while these megadeals promise efficiency gains and economies of scale, they’ve had a chilling effect on one critical area: in-house legal hiring.
Because Texas remains the hub of the North American energy sector, the wave of energy sector mergers and acquisitions has had a particularly pronounced impact on the region’s in-house legal market. Consolidation has temporarily shifted priorities, leaving legal teams focused on deal execution, integration, compliance and cost-cutting – and resulting in fewer immediate hiring opportunities and a number of experienced lawyers receiving severance packages.
This year alone, the upstream exploration and production sector has seen ExxonMobil acquire Pioneer Natural Resources, Chesapeake merge with Southwestern, and Chevron and ConocoPhillips are close to completing acquisitions of Hess and Marathon Oil, respectively. In the oilfield services segment, large deals this year have included Noble Corporation acquiring Diamond Offshore Drilling, and deals for SLB to acquire ChampionX and Nabors to acquire Parker Wellbore are estimated to close in Q1 2025. The consolidation wave is not over yet, as recent rumors include a potential deal between Transocean and Seadrill.
In the wake of a major transaction, general counsel and their teams are tasked with navigating often unprecedented legal, regulatory and cultural challenges of integrating two distinct corporate structures, systems and personnel. In the immediate aftermath of a merger or acquisition, companies often focus on streamlining operations to eliminate redundancies. This consolidation period inevitably includes internal legal teams prioritizing integration over expansion.
For many legal departments, the months (and sometimes even years) following a merger are filled with painstaking work: assessing overlapping compliance frameworks, aligning disparate regulatory practices and addressing myriad employment, contractual and intellectual property considerations. During this period, companies often redirect resources away from expansion and toward integration. Legal work beyond the existing team’s capacity is typically delegated to outside counsel or sometimes covered by adding one or more contract lawyers. Even if increasing outside counsel spending or engaging interim staffing is not the most cost-effective solution, these solutions can be useful during a period of transition as companies assess what their permanent in-house needs will look like post-integration.
Hiring Reboot After Consolidation?
While large scale consolidation has temporarily dampened hiring, that near-term pause is likely to be followed by a reboot in hiring in the ensuing six to 18 months. Once companies substantially complete their integration processes and align their new legal frameworks, they will likely revisit hiring to support the now-larger business and future growth. Moreover, after the dust settles, companies often identify a number of new gaps in their legal departments, whether from changes in the business or because of turnover. After an acquisition, we often hear from a number of lawyers who moved with the acquired assets and later discovered that their new employer’s culture, reporting structure or compensation plan is undesirable. Or we hear from the acquiring company’s leadership that some of the acquired lawyers’ skills or focus areas are not ideal or not a long-term fit.
While 2024’s wave of megadeals has temporarily chilled in-house legal hiring, this is far from a lasting freeze. As Texas continues to lead the charge in both traditional energy and new or cleaner energy sources, the demand for specialized legal expertise in carbon markets, environmental standards, data privacy and environmental, social and governance compliance set to rise. Texas’s legal market, particularly in Houston and Dallas where many energy companies are headquartered, will need to adapt to these evolving demands. The resurgence of in-house legal hiring in the energy sector will likely coincide with an expanded demand for a legal workforce that is more agile, specialized and prepared to handle a rapidly evolving energy landscape.
For now, the hiring freeze may feel like a momentary setback. But in the long run it’s setting the stage for a new era in energy law, one that demands a nuanced and future-focused approach from legal departments across the industry.
Stacy Humphries is president of Pye Legal Group, an executive search firm that specializes in recruiting legal and compliance professionals in permanent and temporary positions with corporations. Before her recruiting career, she was a lawyer with Vinson & Elkins and the vice president of legal affairs for the Houston Rockets and Toyota Center.