In 1995, Houston was still very much an energy town and suffering from weak commodity prices, with oil trading around $17 per barrel and natural gas below $2 per thousand cubic feet. But jobs, building permits and home sales were increasing, and business leaders were optimistic about the future.
“Over the past year, Houston’s economy has slowly picked up steam, and local growth favorably compares with that of the rest of Texas for the first time since the end of the Persian Gulf War,” Bill Gilmer, an analyst at the Federal Reserve Bank of Dallas in Houston, said at the time.
In walked King & Spalding, a 100-year-old Atlanta-based firm that had become one of the most preeminent in the southeast. It boasted such well-known clients as Coca-Cola and Delta Air Lines and such renowned lawyers as former U.S. Attorney General Griffin Bell and former PepsiCo general counsel and former U.S. Deputy Attorney General Larry Thompson.
Steve Turner, Texaco’s then-general counsel, had asked King & Spalding to open a Houston office to assist the oil company with its litigation needs in Texas and the Southwest. The firm agreed.
“But for that request, I am not certain that we would have considered a Houston office at that time,” Reggie Smith, a King & Spalding partner who helped open the outpost, said in an interview in 2006. “Nevertheless, we scrutinized the Houston legal market and concluded that we could be competitive in Houston and, with Texaco as a platform, grow the practice.”
Indeed, it has. The office has expanded from three litigators to 84 lawyers, including a successful international practice involving mergers and acquisitions and project work. Since 2017, the firm has added 26 lawyers, including five partners.
There’s more growth to come. According to Houston managing partner Tracie Renfroe, who was appointed to the post in 2016, the firm aims to have up to 125 lawyers in the Bayou City.
“Maybe that’s ambitious,” she said in an interview with The Texas Lawbook. “But it’s really driven by our client needs, and our clients need more. We’ve got the space.”
In 2008, King & Spalding also opened an Austin office, which now numbers around 40 attorneys and is led by Mike Stenglein, a litigation and arbitration specialist who joined from Dewey Ballantine in 2008. The firm is thought to be eyeing Dallas, which has been targeted by several national and regional firms over the last year or so.
“We certainly have looked at Dallas, and we haven’t decided that we have to be there,” Renfroe said. “Frankly, we really like what we have here and in Austin and want to continue growing in those markets.”
King & Spalding was one of the first national or regional firms to move into Houston, well before the successful launches of Latham & Watkins in 2010 and Kirkland & Ellis in 2014. And while those two names may get more headlines, particularly on the deal front, this sleeper firm has been able to attract lucrative work through transactions as well as project-related activity.
“We’ve been key advisors and lawyers for energy and health care, two really big heartbeats of the Texas economy,” Renfroe said. “But we’ve also served as a gateway for the firm’s international practices. We have clients in this office who have needs elsewhere in the world.”
According to Texas Lawbook statistics, the firm has 114 full-time equivalent lawyers in Texas, making it the state’s 22nd largest law firm by headcount.
But on total revenues generated of $133 million, King & Spalding is the 15th largest corporate law firm operating in Texas. And its revenue per lawyer is $1.167 million, which ranks it 11th in Texas, just after Vinson & Elkins but ahead of Sidley Austin, Winston & Strawn and Shearman & Sterling.
Some of its most important recent deals include representing Brookfield Infrastructure – a new client – on its $1.1 billion purchase of AT&T’s internet data center colocation operations (led by partner Jeff Malonson); and counseling the Carlyle Group on the acquisition – and financing – of a 612 megawatt wind portfolio in New York from Noble Environmental for undisclosed terms. That deal was led by partners David Runnels, who joined King & Spalding from Andrews Kurth in 2017, and Roxanne Almaraz, who came to the firm from Bracewell along with Stuart Zisman, also in 2017.
King & Spalding also advised Sierra Oil & Gas on its sale to Germany’s DEA Deutsche Erdoel for a reported $500 million (including Houston partners Vera De Brito de Gyarfas and Peter Hays); longtime client UT Health Science Center on its joint venture with Ardent Health Services to acquire the assets of East Texas Medical System (led by partners Gary Eiland and Adam Robison); and NextDecade’s capital raise to develop LNG export terminals in Texas (led by Malonson and longtime Houston partner Ken Culotta).
On the project side, partner Scott Greer – who was initially trained as an engineer – worked with Houston-based NextDecade on drafting and negotiating front-end engineering design and engineering, procurement and construction, or EPC, agreements for its Rio Grande LNG liquefactation facility in Texas.
Greer also aided LNG Canada on its EPC contract for an LNG project in British Columbia, which Canadian Prime Minister Justin Trudeau hailed as the single largest private sector investment in the country’s history.
“The Houston-based construction team has been very important to the office’s success, with both transactional as well as dispute elements to it,” Renfroe said. “It’s an example of how integrated the practices are, with the ability to handle big projects, whether it’s transactions, disputes or government investigations, which for many projects, there often are.”
In terms of disputes, the firm successfully represented Chevron and its unit Texaco Petroleum Co. in an international arbitration against the Republic of Ecuador, which the Global Arbitration Review named as one of the international matters of the year. Houston partner Doak Bishop and attorneys in the firm’s New York office handled that case.
And in trial work, Houston partner Bruce Hurley recently won a favorable jury verdict for Johnson & Johnson in a lawsuit alleging that asbestos contamination in its talcum powder products – including Johnson’s Baby Powder and Shower to Shower – caused the plaintiff Robert Blinkinsop’s mesothelioma.
The case’s venue was in Long Beach, California, before Judge Peter J. Mirich. After a four-week trial, the jury returned a unanimous defense verdict in favor of J&J, finding the company hadn’t acted negligently and its products didn’t contain any manufacturing, design or warning defects.
The victory was significant for J&J, which has been vigorously defending dozens of lawsuits across the country alleging cancer from its talcum powder products.
Like other law firms operating in Texas, lawyers have come and gone from King & Spalding. Its most recent big loss was project finance attorney David Strickland, who went to White & Case in June of last year.
Partner Dan Rogers – who worked on Transocean’s $2.7 billion purchase of Ocean Rig UDW with Hays – also left last year to start a private equity fund focused on the LNG sector. Ryan Hopkins departed in 2013 to work in-house at Air Liquide, then moved to Linde Engineering and then joined White & Case with Strickland. And in 2016, 17-year K&S partner Philip Weems – who worked in Houston as well as Dubai and Singapore – retired.
“We were disappointed to lose him [Strickland] and wish him the best,” Renfroe said. “But for the most part, we haven’t lost a lot of critical people, we haven’t lost big groups of people. It tells us we’re doing something really right.”
Renfroe chalks it up to the firm’s collaborative and dynamic culture. “We’re a high-performing organization and client service comes first, which is what’s been driving our economic success,” she said. “We are doing more to let our lawyers see the value proposition of being at this firm.”
King & Spalding also has had some lawyers return to the firm, most notably LNG specialist David Lang. Lang began his legal career at King & Spalding in 2003 and then spent 12 years at Vinson & Elkins and almost two years at Baker McKenzie before coming back this past January.
De Gyarfas – who handles Latin American deals for K&S (she was born in Portugal but grew up in Venezuela) – was brought in to King & Spalding in 2011 by Culotta, who she had worked with on the $4 billion Hamaca heavy crude oil venture in Venezuela (he represented Arco and she Phillips Petroleum). She also had done LNG work in Venezuela and represented Anadarko Petroleum in Mozambique.
“King & Spalding fit very well with my practice,” she said in an interview. “And K&S offers something that other firms don’t, and that’s its knowledge of the energy business.”
While De Gyarfas has seen a pickup in deals since Mexico’s energy reform, Greer – who joined K&S in 1998 and moved to the Houston office in 2006 – has been engaged with energy projects, thanks to the petrochemical and LNG facilities popping up along the U.S. Gulf Coast and elsewhere given the abundant supply of low-cost natural gas. “I’ve never been busier in my life,” Greer said in an interview.
Indeed, K&S claims to have handled more mega construction projects along the Gulf than any other law firm, including the top five largest construction starts in Texas and Louisiana in 2016 and four of the six LNG projects now under construction.
“Lots of our clients like to retain us so we can help on the front end to deliver a lower cost project and then we can help them finance it,” Greer said. “Two-thirds of our lawyers are engineers, so we can help make sure the scope of the work is clear and robust so there are no disputes and that the performance guarantees are also clear.”
Most recently, Greer and partner Rob Garner advised NextDecade on two major contracts with Bechtel Oil, Gas and Chemicals for the EPC for its Rio Grande LNG project in Brownsville. The contracts are for the first phase of the project, including three liquefaction trains, two 180,000 cubic meter storage tanks and two marine berths totaling $9.565 billion.
Renfroe, who said she spends 10% to 20% of her time working on office matters, mostly on the weekends (she has a busy trial and disputes practice, including energy-related environmental work), said there’s a lot going on at the firm. “It’s very dynamic,” she said. “We’re very excited about where we are.”