OUT OF STATE
2018 saw more corporate law firms but fewer Texas lawyers.
The number of out-of-state law firms that opened new offices in Texas grew significantly in 2018, but the actual number of lawyers working at big corporate firms operating in the state declined last year.
Nearly half of all corporate attorneys practicing in Texas now work for a law firm headquartered outside of the state.
Citing a thriving economy and dozens of corporate relocations to Texas during the past five years, more than 15 national and regional law firms launched new offices in Dallas, Houston and Austin in 2018. A couple dozen others have opened outposts in Texas since 2012.
Exclusive new Texas Lawbook research shows, however, that out-of-state law firms have relocated only a miniscule number of lawyers from their other offices to their Texas operations and that the state’s corporate law community has witnessed almost no growth in its pool of legal talent since the Great Recession ended in 2009.
There were 6,750 full-time attorneys working at the 50 largest corporate law firms operating in Texas last year – down from 7,003 lawyers in 2017, according to Texas Lawbook research.
More than 44% of those 6,750 Texas business lawyers are now employed by law firms headquartered outside the state – triple the number from 2014, which was the first year that The Texas Lawbook started keeping track of such data.
The number would be 50%, except that The Texas Lawbook still credits Norton Rose Fulbright – a global firm that is the result of Fulbright & Jaworski’s 2013 merger with London-based Norton Rose – as having its U.S. headquarters in Houston.
“A seismic shift has taken place in the Texas legal market, and the entire law firm landscape has changed,” says Chicago-based legal industry consultant Kent Zimmermann. “But the pool of lawyers for the law firms to chose from seems stagnant and is certainly not growing at the pace that we would expect for such a thriving business economy as Texas.
“As a result, the same lawyers are just jumping firm to firm in a law firm version of musical chairs,” Zimmermann says.
There is no better evidence of the transformation that has taken place than the 2018 annual Texas Lawbook survey of the 50 largest corporate legal operations in Texas.
Only 22 of the 50 largest law firms by lawyer count operating in Texas are now headquartered in the state. In 2014, 38 of the 50 were based in Texas.
The numbers are partially skewed by three major law firm mergers that took place last year: Houston-based Andrews Kurth combined with Virginia-headquartered Hunton & Williams; Dallas-based Gardere merged with Milwaukee’s Foley Lardner; and Detroit-headquartered Clark Hill joined with Strasburger & Price of Dallas.
As a result, 664 corporate attorneys who worked for those three Texas firms in 2017 are now employed by out-of-state firms. All three of the newly merged firms – Hunton Andrews Kurth, Foley Gardere and Clark Hill Strasburger – are ranked in the top 15 in this year’s survey.
Twenty-six of the top 50 legal operations in Texas grew their lawyer head count in 2018, according to Texas Lawbook research. Twenty firms thinned out their ranks, while four have exactly the same number of attorneys as they did in 2017.
To be sure, the nine largest corporate law firms – Vinson & Elkins, Norton Rose Fulbright, Baker Botts, Jackson Walker, Haynes and Boone, Thompson & Knight, Winstead, Locke Lord and Bracewell – operating in the state are Texas legacy firms and remain a huge force in the business communities of Dallas, Houston and Austin.
Those nine Texas firms employ 2,973 lawyers, which is exactly six more attorneys than work at the 28 out-of-state firms combined.
For the second year in a row, Houston-based V&E remained the state’s largest corporate legal operation. V&E added 21 attorneys during 2018 to have 430 lawyers practicing in their Austin, Dallas and Houston offices.
Norton Rose Fulbright, which held the top spot for more than a decade, shed 15 lawyers last year and dropped to second with 393 attorneys practicing in the state.
Baker Botts, Jackson Walker and Haynes and Boone round out the top five.
Seven of the 10 largest law firms operating in Texas saw their lawyer headcount drop in 2018. Two firms – V&E and Thompson & Knight – added attorneys. Winstead had exactly the same number of lawyers in 2018 as they did in 2017.
The Texas Lawbook survey found that 25 of the top 50 corporate law firms grew in size in 2018 and that only seven of those 25 firms are Texas-based. The rest are headquartered outside the state.
Eight law firms – all of them based out of state – increased their number of lawyers in Texas significantly.
In pure numbers, Kirkland & Ellis added the most attorneys in 2018 – 81. The Chicago-founded law firm opened a Dallas office last year and jumped from being ranked 19th in lawyer count in 2017 to 11th in 2018.
Sidley and Winston & Strawn each added 20 lawyers and jumped into the top 20 for the first time. DLA Piper grew by 40 attorneys and leaped from 40th to 25th in the ranking.