Chicago legal war spills into Houston
For the better part of the last century, three law firms — Kirkland & Ellis, Sidley Austin and Winston & Strawn — waged a bitter war to dominate the Chicago corporate legal community.
For the past few years, those three Chicago law firms have been skirmishing on two new battlegrounds: Houston and Dallas.
Kirkland, Sidley and Winston have spent a lake full of money to aggressively recruit and hire some of the best lawyers in Dallas and Houston away from legacy Texas law firms. War chests were opened. Firm leaders were given nearly unlimited budgets. Multimillion-dollar, multiyear guarantees were offered, and bigname lawyers jumped.
The big investment in Texas seems to be paying off. The trio of firms are three of the fastest growing and most profitable law firms operating in the state.
Kirkland and Sidley now top the rankings of firms representing Texas companies involved in mergers and acquisitions. Winston has become a market leader in complex commercial litigation. The firms have top-of-themarket talent for private equity and corporate internal investigations.
Prior to March 2011, Kirkland and Winston had no offices in Texas at all, and Sidley had a small outpost in Dallas. Seven years later, the trio have more than 350 lawyers in the Lone Star State and generated an estimated $423 million in combined revenues — more than double what it was just two years ago.
“It is a definite understatement to say that there’s an intense competition between these three firms,” said Kent Zimmerman, a Chicago-based legal industry consultant at Zeughauser Group. “Now they are duking it out in Texas.
“The huge investment that the three firms have made in Texas is quite impressive.”
Even lawyers for the firms in Texas recognize the century-old battle.
“Oh yeah, it can feel personal
and fierce at times between the three firms,” said John Keville, managing partner of the Houston office of Winston & Strawn. “These are firms who view the competition as a push to success.”
The numbers for all three Chicago firms are impressive.
Winston entered the Houston market in 2011 and it opened a Dallas office in 2017. The firm’s attorney head count jumped from 42 in 2016 to 101 last year. The legal work and money followed. Revenues per lawyer spiked, too.
Winston’s revenue went from $34 million in 2016 to $116.5 million last year — a 216.6 percent increase.
“We were really busy in 2017 and the firm was helped with some contingency fee results,” Keville said. “The firm is focused on growth and we are actively seeking laterals who fit within our needs.”
Sidley has quadrupled its head count and revenues since 2012. The firm’s revenue from its Texas operations hit $120 million in 2017.
Sidley jumped from 14th in 2016 on The Texas Lawbook’s Corporate Deal Tracker, which tracks mergers and acquisitions involving Texas lawyers, to second in 2017. The firm’s Texas lawyers worked on 89 corporate transactions last year valued at a combined $26.7 billion.
Cliff Vrielink, managing partner of Sidley’s Houston operation, said the firm continues to aggressively expand its corporate M&A and capital markets practices.
“We feel that we have built an extraordinary, topof-the-market team that can handle even the most complex and largest transactions,” Vrielink said. “We are still actively looking to grow, but we will only grow where we think it makes sense for us, the lawyers and our clients.”
No law firm went from zero to 100 as fast as Kirkland in Houston.
Kirkland opened its Houston office in April 2014 by luring Andy Calder, an aggressive M&A partner at Simpson Thacher, to lead its efforts in Texas. Calder told The Texas Lawbook in 2017 that firm leaders gave him essentially unlimited resources to build a world-class legal operation in Houston.
Texas Lawbook research of firm revenues shows that Kirkland’s Houston lawyers went from $64 million in revenue in 2015, which was its first full year operating in Texas, to $141 million in 2016 and then $187 million in 2017, a 191.6 percent increase over the three years.
Kirkland has grown from 45 Texas lawyers in 2015 to 118 last year, a 162 percent jump. It reportedly has 140 lawyers now and is expected to add 27 firstyear associates this fall.
With revenue per lawyer approaching $1.6 million, The Texas Lawbook projects that Kirkland’s revenue from its Texasbased lawyers alone could reach $265 million in 2019, which would make it the fourth-largest law firm operating in Texas by revenue.
Calder, in an interview earlier this year with Texas Lawbook M&A writer Claire Poole, said Kirkland will continue to “opportunistically” hire the best talent during the year ahead.
“There’s no upper limit on how big we can get or requirement that we have to get to a certain size,” Calder said. “We have all the departments we want — M&A, capital markets, debt finance, environmental, litigation and tax. We want to continue to expand the scale and improve the quality.”
“We have more incoming calls than outgoing. If we see someone who is a great addition to our team, we’re not going to turn them away.”
Kirkland’s success is easily measured in the Mergermarket M&A rankings for 2017 and the first quarter of 2018. Kirkland represented 82 Texasbased companies in 2017 with a combined value of $83 billion. That is 20 percent more transactions than second place V&E. Mergermarket also ranked Kirkland No. 1 in representing Texas-based companies during the first three months of this year with 16 deals with a total price tag of $5.5 billion.
The three firms promise that the competition between them is only going to increase in Texas.
“Twenty-five years ago, Chicago-style pizza invaded Texas,” said Tom Melsheimer, who is the managing partner of the Dallas office of Winston & Strawn. “Now, it is Chicago-style law.”