Star corporate transactional lawyer Sean Wheeler’s move to Chicago-based Kirkland & Ellis last week shocked the Texas legal world. Since January 2017, Wheeler had been involved in 29 M&A and capital markets deals worth at least $14.3 billion while working at the Houston office of Latham & Watkins, which he helped found eight years ago.
Wheeler’s jump is just the latest example of how lateral movement by corporate transactional lawyers with substantial books of business at stake is changing legal dealmaking in the state.
Their new employers – most of them out-of-state law firms that are investing hundreds of millions of dollars opening and expanding their offices in Texas – are banking that these lawyers will bring their clients and the deal work with them.
An analysis by The Texas Lawbook found that at least 84 prominent dealmaking lawyers, as ranked by the Corporate Deal Tracker, have jumped to new law firms over the past 18 months.
Together, these attorneys have worked on 404 deals – 316 M&A and 88 capital markets transactions – with a combined value of at least $190.8 billion since the beginning of last year, according to the Corporate Deal Tracker.
To be clear, those figures undervalue the financial impact since many of those transactions involve deals reported with confidential values.
Kent Zimmermann, a legal consultant at the Zeughauser Group in Chicago, said the out-of-state firms are expanding in and moving into the state because it has one of the stronger state economies in the U.S., a friendly business and tax environment and a deep talent pool.
“There are a lot of different sectors driving the economy, not just oil and gas but health care, retail, real estate, technology, banking and private equity,” he said. “You have to follow the money and demand originates where the money is.”
The major criteria for national and international law firms in picking up these attorneys is the quality of the lawyering as well as the ability to attract less rate-sensitive work. Laterals are also expected to bring in return engagements and be able to serve clients with other practices in other offices, not in silos, Zimmermann said. “The ability to do those things will make the firm more profitable,” he said.
Zimmermann credits the “the Kirkland effect” for bringing other out-of-state law firms to Texas, having been successful poaching talent from other firms in Houston and now doing the same in Dallas.
Many of the indigenous Texas firms that are left – including Vinson & Elkins, Baker Botts, Hunton Andrews Kurth, Haynes and Boone, Locke Lord, Thompson & Knight and Bracewell – want to continue to attract and retain high-quality lawyers, so they’re revisiting their strategic plans to make sure they’re comfortable with the direction in which they’re rowing, Zimmermann said.
“It’s leading some Texas firms to come to the conclusion that they should have all options on table, including the possibility of combining with a larger firm,” he said.
Randy Block, a former Winstead lawyer and founder of Performance Legal Placement in Dallas, said he’s in the early stages of brokering a potential merger between an out-of-state firm and a Texas firm (he wouldn’t divulge the names of the parties involved).
“The national firms aren’t opening new offices in Miami, Atlanta, Phoenix, Philadelphia, Ohio and Michigan,” he said. “They’re coming to Dallas because it is one of the strongest economies and legal markets in the country, if not the strongest. And they’re taking rainmakers away from their previous firms.”
Kristin Johnston, a managing director at legal placement agency Newhouse+Noblin in Dallas, said out-of-state firms have energized the Texas lateral market. “We are seeing many partners, who would never entertain a move before, becoming intrigued with exploring the market,” she said.
Even though it’s still early to gauge the impact on their previous firms, some of these relocating lawyers are already bringing over their previous clients.
Hillary Holmes, for example, was the sixth-ranked dealmaking lawyer in Texas last year, according to The Texas Lawbook’s Corporate Deal Tracker. In the past 18 months, according to CDT data, Holmes has been the top grossing lateral, working on 25 M&A and capital markets transactions worth $29.3 billion.
Since leaving Baker Botts in April of last year to join the new Houston office of Gibson Dunn & Crutcher, she has worked on several capital markets transactions that have included NuStar Energy, Energy XXI Gulf Coast, Concho Resources, EQT Midstream, Gran Tierra Energy, American Midstream and Waste Management.
But Holmes’ biggest deal yet was advising Concho Resources on its $9.5 billion purchase of RSP Permian in March along with oil and gas partner Michael Darden, who joined the firm from Latham & Watkins last year.
Other top-ranked transactional lawyers followed by the Corporate Deal Tracker have made the jump to other firms.
Sarah McLean moved from Thompson & Knight to the new Houston office of Shearman & Sterling in May. Since January 2017, she is credited with 18 deals worth at least $7.9 billion. Jeremy Kennedy, who left Baker Botts for Shearman also in May, has booked four deals worth $264 million. But those numbers don’t tell the story; sources say he has worked on many more deals that have not yet been reported by Baker Botts and Shearman.
McLean is expected to bring her prolific work for EnCap Flatrock Midstream to Shearman, along with other private equity clients such as EnCap Investments and Post Oak Energy Capital. And Kennedy, while at Baker Botts, advised Carrizo Oil & Gas, Perdure Petroleum, the Carlyle Group, EQT and Jones Energy.
Other highly productive transactional attorneys who hired on with Shearman include Austin-based Carmelo Gordian and Matt Lyons, who came from Hunton Andrews Kurth’s emerging growth practice, as well as Omar Samji, who moved from Jones Day.
Gordian wasted no time. In May he advised Group 42 on its purchase of privately held San Antonio company Texas Oilfield Fabrication & Pipeline for undisclosed terms – a past client when he was at Andrews Kurth.
David Buck, who left what was still Andrews Kurth for Sidley this past fall, is another a top dealmaker, having worked on 10 transactions worth $2.8 billion since January 2017.
This week Securities and Exchange Commission documents revealed that he advised Independence Contract Drilling on its acquisition of Avista Capital-backed Sidewinder Drilling for almost $200 million, including stock and assumed debt. Buck had previously counseled Independence when he was at Andrews Kurth.
Kirkland’s recent talent raid for its Dallas office include some top sales generators. Thomas Laughlin, who joined from V&E, has represented Apollo Global Management, Oaktree Capital Management, Clearlake Capital Partners and trucking company Daseke on deals. And Michael Considine, who came from Jones Day, has counseled Procter & Gamble on several cross-border transactions as well as private equity firms on deals.
Baker Botts is fighting back, attracting some high performers from other firms. They include partner Efren Acosta, who joined the firm from Norton Rose Fulbright early last year. Since the beginning of 2017, he’s worked on at least five transactions worth $905 million, including advising longtime client Intervale on its purchase of a majority stake in drilling and completion bits maker PDC Logic for an undisclosed sum.
Justin Hoffman, a Houston attorney who specializes in capital markets, also joined Baker Botts in June of last year, having previously practiced at Kirkland and Simpson Thacher & Barlett.
Katten Muchin Rosenman’s move into Dallas earlier this year snared some high flyers. They include former Andrews Kurth partner Vic Zanetti, whose longtime client is the billionaire Hunt family’s private equity firm Trinity Hunt Partners. Also joining were Mark Solomon and Peter Bogdanow who represent several high-profile clients, including Highlander Partners.
Locke Lord has received a boost from the work of Michael Blankenship, who joined from V&E last year. The corporate finance partner has worked on eight deals worth $13 billion since the beginning of 2017, ranking him fourth in deal value in the period after Gibson Dunn’s Holmes and Darden and Heather Palmer, an environmental specialist who joined Sidley from Bracewell in January.
Another high-producer since the beginning of 2017, with 16 deals worth $12.8 billion was Brooks Antweil, who joined Kirkland’s Houston office from Andrews Kurth in June.
A relatively new hire by Sidley, former Hunton Andrews Kurth partner Jon Daly, worked on 12 transactions worth $7.58 billion since January 2017. And Christopher Richardson, who joined White & Case from Hunton Andrews earlier this year, worked on four transactions worth $5.4 billion over the period. He’s also the one-time general counsel for Mubadala Petroleum, a company owned by the Abu Dhabi government.
Meanwhile, firm management in Texas will continue to cast an anxious eye toward Kirkland.
Said Zimmermann: “No one is free from their aggression.”