Texas-based Firms Losing Lawyers to National Practices & Boutiques

© 2017 The Texas Lawbook.

By Mark Curriden
(May 2) – Large Texas-based corporate law firms employed eight percent fewer business lawyers in 2016 than they did the year before, while national firms increased the number of attorneys they employed in the state by 13 percent last year.
New data compiled by The Texas Lawbook shows that Big Tex law firms shed more than two percent of their lawyers in 2016 from the year before – the fourth consecutive year that the largest law firms headquartered in Texas have reduced their attorney headcount.
More than half of the attorneys who left large Texas-based firms took their law practices to national law firms operating in the state, while the remainder joined small law boutiques or went to work for corporate in-house legal departments.
“There are no new lawyers in town,” says Jonathan Newton, managing partner of the Houston office of the global law firm, Baker McKenzie. “They just move around from firm to firm. It’s like a merry-go-round.”

Twenty-six of the 50 largest law firms operating in Texas are headquartered outside of the state, according to statistics gathered by The Texas Lawbook. In 2010, only nine out-of-state firms cracked the top 50.
Data shows that 30 percent of the 6,528 corporate lawyers at the state’s 50 largest law firms work at national firms – up from 25 percent in 2015 and up from 11 percent in 2010.
Legal industry observers say it should surprise no one that national law firms are opening in Texas and expanding their operations in the state.
“Look at all the corporate relocations to North Texas,” says Scott Wallace, managing partner of the Dallas office of Holland & Knight. “Law firms follow clients.”

Kent Zimmerman, a legal industry consultant at Chicago-based Zeughauser Group, says the trend of national law firms growing in Texas is going to continue.
“It makes a great impression that Toyota and Boeing are making a big bet on Texas,” Zimmerman says. “Law is a follow-the-money profession.”
The Texas Lawbook study of law firm finances and growth found these results:

• 26 of the 50 largest law firms added lawyers in their Texas operations;
• Nine Texas-based firms saw their lawyer headcount shrink, while 11 increased the number of lawyers they employ in the state;
• 17 national law firms added lawyers to their Texas operations, while eight shrank their size;
• The eight fastest-growing law firms in Texas – Orrick, Kirkland & Ellis, Reed Smith, Polsinelli, Alston & Bird, Simpson Thacher, Mayer Brown and Holland & Knight – are national firms;
• The fastest-growing Texas-based firm is Munck Wilson Mandala, which grew its lawyer headcount by 11 percent in 2016 and is the only Texas firm to experience double-digit growth.

Still, the Big Tex law firms still dominate the top of the charts for lawyer headcount.

The 15 largest law firms in the top 50 are headquartered in Dallas or Houston. Those 15 firms employed 4,256 lawyers in Texas last year, which is 35 percent of the business attorneys working at top 50 firms – down from more than 50 percent just seven years ago, according to The Texas Lawbook data.
The biggest evolution, according to legal industry analysts, is the disappearance of medium-sized corporate law firms in Dallas and Houston employing 50 to 150 lawyers.
“There are not a lot of mid-sized full service law firms left,” says Munsch Hardt CEO Phil Appenzeller. “Most have either merged with larger law firms or just gone away.”
Coming Wednesday:
More than a dozen law firms in Texas scored record revenues and profits in 2016. The Texas Lawbook has all the data.

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