Scott Wulfe (left) and Mark Kelly (right) in the lobby of Texas Tower 845 Texas Avenue where the firm will move in early 2022
Mark Kelly and Scott Wulfe walked onto the stage in a large conference room at Omni Barton Creek Resort in April 2011 to a standing ovation from the 200-plus partners at Vinson & Elkins who had just voted the duo to be the co-leaders of the prominent corporate law firm.
Kelly relished the applause. He wanted to be V&E’s top guy, though he really didn’t want to share power with Wulfe or anyone else. By contrast, Wulfe didn’t necessarily want the job. Yet there he was.
Many V&E partners there that day had doubts that the duo would survive, let alone be successful. Looking back, even Kelly and Wulfe had doubts… or at least questions.
“I should have been more worried about this than I was,” Wulfe said, looking back at the event more than a decade ago. “There was a lot of skepticism of how we would work together.”
Perhaps sensing some skittishness that day in 2011, Kelly spoke out.
“Good news is, you can vote us out in two years if this doesn’t work out,” Kelly said into the microphone to laughs. He gave Wulfe a hug.
Wulfe, looking and feeling a bit uncomfortable, told the audience, “You can tell Mark is a hugger.”
At 11:59 p.m. Dec. 31, only hours from now, Kelly and Wulfe end their 10-year reign as co-heads of V&E, which is one of the oldest, largest, most influential and wealthiest law firms in Texas history. Kelly served as chair of the management committee and Wulfe as managing partner.
Together, they have faced existential threats to the firm’s existence and implemented monumental challenges.
They have witnessed dozens of elite corporate law firms from New York, Chicago and Los Angeles open shop in V&E’s home territory and watched as more than 130 of their own partners left to seed those firms. They have seen the price of talent – the paychecks of their fellow lawyers – skyrocket.
V&E’s core client base – the ranking service Chambers 20 years ago labeled V&E “the world’s leading oil and gas law firm” – experienced an incredibly turbulent decade: booms of the shale revolution and $110 a barrel oil to busts the likes never before seen, including the price of oil going negative in April 2020. For two days, oil was literally cheaper than dirt.
But V&E also has achieved once seemingly unfathomable success – record revenues, record revenues per lawyer and record profits. The firm has added clients and expanded relationships.
The Houston-headquartered firm, with more than 600 attorneys worldwide, reported profits per equity partner of $1.34 million in 2011. The Texas Lawbook 50, which calculates revenues and profits of firms operating in Texas, shows that V&E had $2.9 million in PPEP in 2020.
The Texas Lawbook estimates that V&E revenues for 2021 will easily exceed $800 million – about $550 million of that being generated by its Texas-based lawyers.
In an exclusive interview with The Lawbook, Kelly and Wulfe said that V&E’s profits per partner will surpass $3 million for 2021 when collections are final.
“This will be another record year for us,” Kelly said. “2021 was a great year for the firm.”
Kent Zimmermann, a law firm management consultant with Zeughauser group in Chicago, said that Kelly and Wulfe have done a remarkable job “increasing productivity and profits while trying to keep V&E’s traditional culture.”
“Mark and Scott seem to really complement each other,” Zimmermann said in an interview in October. “They have faced incredible competition and seem to be hitting the right levers.”
Even former colleagues-turned-competitors seem impressed.
“I had my doubts about the strategic thinking regarding growth and expansion about having the two leaders of the law firm being both corporate lawyers in the same office,” Gibson, Dunn & Crutcher partner Rob Walters told The Texas Lawbook in an interview in May 2021. “But they made some tough decisions to remain competitive. They found V&E’s sweet spot and the firm is doing well. They should be applauded.”
V&E is not alone in transitioning to new leadership. In April, Dallas corporate securities partner Yvette Ostolaza will take over as the global chair of Sidley. Last year, Taylor Wilson became the new managing partner at Haynes and Boone. Norton Rose Fulbright named Houston partner Shauna Clark as its new global chair. In 2019, Baker Botts installed John Martin as its new managing partner.
“By the metrics, Mark and Scott have been one of the most successful law firm leadership teams of the past decade,” said Fullenweider. “They brought out the best of the firm.”
But 11 years ago, in that ballroom in Austin, success was far from a sure thing.
Mark Kelly and Scott Wulfe are an odd couple.
Kelly is gregarious, always smiling and shakes every hand. He loves his job, loves V&E, loves Houston and loves oil and gas. A few friendly profanities fly around. He loves talking to clients, to recruits, to the news media, to anyone who will listen.
“Mark is friendly and happy,” Wulfe said. “It’s hard not to like Mark.”
Wulfe, by contrast, is quiet and circumspect. He likes being behind the scenes. He doesn’t curse – not that he’s against it, he just doesn’t do it. As far as him talking with the press, 13 days ago was the first time I met with or spoke to Wulfe in my life. And keep in mind, I worked at V&E for eight years before starting The Texas Lawbook in 2011.
After a nearly four-hour interview on the 25th floor of V&E’s offices in downtown Houston, I can honestly say that was my loss. I learned more in that afternoon about law firm management than any three-day conference.
“No one understands the economics of law firms more than Scott,” Kelly said. “Scott always is one of the smartest guys in the room.”
Born in Houston, Kelly’s family was in the oil business. He spent 15 years of his childhood in Alaska. His grandfather discovered oil in the Kenai Peninsula. He joined V&E in 1981 after earning his law degree from Southern Methodist University.
In 1983, he recruited a young Scott Wulfe, then a law student at the University of Texas at Austin, to join V&E’s corporate transactional practice. The group had 13 partners and 11 associates then. Today, more than 200 lawyers work in the corporate practice.
Despite being in the same practice group and working on the same floors at First City Tower, the pair really didn’t work together much and never socialized.
Both lawyers have led scores of M&A transactions and securities offerings.
Kelly represented Energy XXI in its $2.3 billion acquisition of EPL Oil and Gas and Nuevo Midstream in its $1.5 billion sale to Western Gas Partners.
Wulfe, who was born and raised in San Antonio, advised Oil States International in its $2.6 billion spin-off of Civeo Corporation and Spinnaker Exploration in its $2.5 billion sale to Norsk Hydro.
Both men served on V&E’s management committee, which is its governing body, and both have held various leadership positions, such as leading the firm’s diversity efforts and serving on the committees that decide partner promotions and compensation.
They both came of age as partners while legendary trial lawyer Harry Reasoner, who is 80 and still a senior partner at the firm, sat in the managing partner’s chair at V&E.
And they followed the tenure of Joe Dilg, who spent the first half of his 10 years as managing partner surviving the Enron Corp. scandal, as V&E was the energy company’s lead outside law firm.
By late 2010, as Dilg’s term entered its final year, V&E leaders needed to make a choice on the firm’s future leadership.
“I had no interest in being a co-leader – I still don’t. I’ve just had to live with it,” Kelly said, poking at Wulfe. “We are different. My attitude is, ‘I want to win.’ Scott’s attitude is, he doesn’t want to lose.”
Wulfe’s take on power sharing was the opposite.
“I would never have done this job on my own,” Wulfe said. “I saw what Joe had been through, and it looked like it was a terribly lonely job.”
The two took charge on Jan. 1, 2012.
“The thought was that I would lead the firm and the management committee and Scott would lead lawyer compensation. A lot of the innerworkings of the firm fell to Scott,” Kelly said. “Joe focused 100% on administration, and I had no interest in that. I wanted to continue to practice.
“Scott and I quickly became very close,” Kelly said. “We would talk for a couple hours every night about 10 p.m. I think Scott was testing me to see if I was up and working.”
Wulfe said the late-night calls with Kelly were “an opportunity to catch up and to see what was happening and who was doing what.”
“It is good to step back and see what is important and focus on the long-term,” Wulfe said.
Latham & Watkins, Sidley, Winston & Strawn, Willkie Farr and several other elite national law firms were opening offices in Houston as Kelly and Wulfe started their leadership posts. All of those firms stole key partners from V&E as part of their launch.
Wulfe said he and Kelly agreed on the steps they had to take.
“We knew we needed to step up our game,” Wulfe said. “In order to grow the firm, we had to substantially improve our profitability without hurting our culture. We needed to be more entrepreneurial while eliminating silos and walls across offices.
“We had to rethink our compensation structure,” he said. “We were not quite lockstep, but it was close. Part of it was educating our partners about profitability. There’s a tendency to focus on the bottom line and think if we are billing more time then we make more money.”
When Wulfe and Kelly started at V&E in the early 1980s, their hourly rate was about $125. When they took charge, no lawyers at the firm charged more than $900 an hour. Today, Kelly and other top partners at V&E have hourly rates hitting $1,500 or more, according to federal bankruptcy records.
But Kelly and Wulfe realized that some partners at V&E were in practices – public finance, products liability defense and healthcare, to name a few – where the clients simply could not or would not pay the higher rates. Keeping those lawyers, however, depressed V&E’s revenue-per-lawyer and profits-per-partner numbers. Lower RPL and PPP hurt the firm’s recruiting efforts.
“Hard choices had to be made,” Kelly said.
As a result, a few dozen partners and a couple practice groups were politely shown the door.
V&E, they said, decided to strength certain practice groups, such as antitrust, real estate and infrastructure. And, of course, energy.
“We want to be all-in on energy for the next 100 years,” Wulfe said. “More money is going to be spent on the energy transition over the next few years than has been invested in the entire shale play.”
The lateral market in Texas only intensified in 2014 when Kirkland & Ellis, the world’s most profitable law firm, opened its first office in Houston. Once again, V&E lawyers were ripe for the picking.
“We realized we needed to move up the compensation of young partners much faster,” Wulfe said. “And our lawyers needed to better understand the goals and the business of our clients to remain competitive.”
Kelly said they recognize that they will lose some lawyers to Kirkland and other firms that offer six-digit signing bonuses.
“We had to decide, are we going to run from the competition or run with the competition,” Wulfe said. “You don’t hear about all the lawyers who are recruited but decide to stay.”
They acknowledged that litigation powerhouse Quinn Emanuel nearly stole two of V&E’s top litigation partners – John Wander and Michael Holmes – but that V&E persuaded the pair to stay put. Holmes is now a member of the four-partner leadership team that will replace Kelly and Wulfe.
Kelly said V&E has no plans to seek a merger with another law firm. He brushed off questions about merger discussions a few years back with London Magic Circle firm Allen & Overy.
“We’ve never taken a serious look at it,” he said. “Our partners like being who we are.”
With only hours left in their tenure as chair and managing partner, Kelly and Wulfe said they have no last-minute surprises or maneuvering. There will be no coup attempts or efforts to invalidate the vote.
Wulfe said he plans to practice law for one year more and then retire.
Not so for Kelly.
“I’m not the retiring type,” Kelly said. “I’m going to go back to doing what I like – working with clients and working with young lawyers.
“I really love this place,” he said. “Why would I leave?”