More national law firms are looking to elbow their way into Texas
Big outfits are trying to hire away attorneys or merge with firms, and such large practices ‘are looking at Texas like a Field of Dreams’
More than 60 national law firms have flooded into Houston, Austin and Dallas during the past five years, and the invasion shows no sign of slowing.
As many as a dozen more corporate law firms from across the country are reportedly interested in moving into Texas by merging with an existing legal practice or opening a standalone office by hiring away attorneys from competitors.
In addition, a handful of law firms with offices in Houston are reportedly interested in expanding to Dallas, according to three dozen law firm leaders and legal industry analysts interviewed by The Texas Lawbook.
“The national law firms are looking at Texas like a Field of Dreams,” says Michael Newman, managing partner for Foley Gardere in Texas.
Texas has built a vibrant economy, so law firms continue to come, he said.
“It is amazing how many firms are still trying to come here,” Porter Hedges managing partner Rob Reedy of Houston says. “The last couple of years have seen an extraordinary use of cash to lure lawyers to open new offices. We’ve never witnessed anything like this, and I don’t think we’re done.”
In 2017, nearly 40 percent of the lawyers at the top 35 corporate law firms in Texas work for out-of-state based firms, which is up from only 10 percent six years ago.
The Texas offices of national law firms generated $2.57 billion in revenues in 2017 — a 38 percent increase from just two years earlier, according to Texas Lawbook research.
Texas law firm leaders identified nine out-of-state law firms, including Troutman Sanders of Atlanta, Faegre Baker Daniels of Minnesota, Kansas City-based Lathrop Gage and two Phoenix headquartered firms, Lewis Roca and Snell & Wilmer.
In addition, leaders of law firms say they have been contacted by legal headhunters saying they are recruiting attorneys for two huge New York corporate law firms, Davis Polk and Dechert.
“I know personally there’s at least four or five more firms looking to move here, and that’s because they’ve contacted me and my firm about merging,” says Phil Appenzeller, CEO of Munsch Hardt Kopf & Harr in Houston and Dallas. “I listen to their pitch, but the firm has no interest in losing our market identity.”
Other firms are being named because an entrepreneurial headhunter became a little too aggressive.
“There are quite a few firms that tell headhunters that they would be or might be interested in opening a Texas office if the headhunter could put together the right team of Texas lawyers,” says Kent Zimmermann, a Chicago law firm consultant who is advising corporate firms
in Texas. “So, the headhunter goes fishing.
“I can tell you for sure that some of the firms you mentioned would love to have an office in Texas if they could put together key lawyer groups.”
Two of the nine law firms issued statements denying that they have plans to expand to Texas.
“Please know that the information you have is not accurate, and we have no comment,” a Lewis Roca spokesperson wrote in an email.
Other law firms did not dispute the report.
“While Lathrop Gage is committed to strategic growth as a way to bring added value to our clients, at this time I do not have any information to share regarding potential growth in Texas,” a spokesperson for the Kansas City law firm wrote to The Lawbook. “If that changes, I will be happy to reach back out to you.”
Andy Baker, managing partner of Houston-based Baker Botts, says it is no surprise that out-of-state firms continue to have interest in Texas. He predicts there will be more firm mergers.
“Firms will keep coming as long as there are more opportunities here compared to other areas,” Baker says. “There will be more consolidation in the Texas market. Just as we are gaining market share in other jurisdiction, we are defending market share in our traditional markets.”
Even the largest and most financially successful law firms in Houston admit they still get inquiries from out-of-state firms about combinations.
“I get monthly calls from firms to seek our interest in a merger,” V&E chairman Mark Kelly says. “The mood of the partnership is, we like it where we are now. But we know the calls will keep coming.”