Lawyers battle for work on mergers
Law firms in Texas are in a fierce battle to represent businesses, private equity funds and banks involved in mergers, acquisitions and joint ventures, and the fight may get even more heated - and more expensive - this year.
A handful of Texas-based law firms - Vinson & Elkins, Baker Botts, Locke Lord and Akin Gump - are desperately competing against a group of deep-pocketed national legal practices - Kirkland & Ellis, Latham & Watkins, Sidley Austin and Gibson Dunn - to represent buyers and sellers in mega-M&A deals that result in more than $1 billion in revenues for lawyers in Texas.
New data from two separate services that track M&A activity in Texas shows that lawyers at Chicago-based Kirkland and Houston-headquartered V&E far and away led the most deals and the biggest deals involving Texas companies in 2018.
In fact, Kirkland and V&E were involved in about one in every six M&A deals in Texas last year - many times across the negotiating table from each other.
Kirkland represented exactly 100 businesses or private equity firms involved in Texas dealmaking last year, while V&E advised 73 such entities, according to Mergermarket research provided exclusively to The Texas Lawbook.
V&E’s M&A transactions, however, were considerably larger in dollars than any other law firm, Mergermarket reports. V&E’s 73 transactions had a combined value of $133.7 billion - compared to a total deal value of $42 billion for Kirkland’s clients.
“The bottom line is that two law firms - V&E and Kirkland - continue to fight for the top of the M&A leaderboard and the rest of the law firms are a good distance behind,” says Chad Watt, an M&A analyst and senior writer for Mergermarket in Texas. “Kirkland has been ranked No. 1 for three years in a row for deal count and V&E has been a solid second.
“When it comes to doing the biggest deals, V&E remains No. 1,” he says.
The Texas Lawbook reported recently that M&A activity - both in deal count and deal volume - set record highs in 2018.
In addition, The Texas Lawbook’s Corporate Deal Tracker will report this week that lawyers at six corporate firms in Texas - V&E, Kirkland, Sidley Austin, Baker Botts, Akin Gump and Gibson Dunn - worked on a combined 308 M&A deals valued at $411 billion in 2018.
One-third of those transactions - although handled by Texas lawyers - involved businesses based outside of the state, according to the Corporate Deal Tracker.
V&E worked on 27 M&A deals in 2018 that each had a value of $500 million or more. Sidley handled 17, Kirkland advised on 15, Latham and Baker Botts each led 12 and Gibson Dunn represented 11 companies involved in transactions in which the sale price was $500 million or more, according to the Corporate Deal Tracker.
With 430 business lawyers in Houston, Dallas and Austin, V&E is the largest corporate law firm in Texas and has long been viewed as having one of the leading energy legal practices in the world, according to Watt.
Legal industry analysts say that V&E, which is 101 years old, has an historical advantage in Texas because the firm has placed scores of its former partners as general counsel at dozens of energy companies. Those V&E alumni tend to hire their old law firm for some of their legal work.
For example, V&E represented Energy Transfer Equity in its $60 billion restructuring and simplification and RSP Permian in its $9.5 billion sale to Concho Resources in 2018. The general counsel at ETE and RSP Permian are former lawyers at V&E.
Kirkland’s surge in the Texas legal market has been nothing short of extraordinary. The firm opened its first Texas office in Houston in April 2014. It now has more than 200 lawyers in the state - most of them stolen from V&E and other Texas competitors.
Watt and others point out that Kirkland has its own strategic advantage: The firm has more than 2,300 lawyers worldwide and revenues topping $3.7 billion. More than half of Texas M&A transactions handled by Kirkland in 2018 were led by lawyers for the firm based outside of Texas.
To be sure, the other Texas corporate law firms are not suffering. Dallas-based Locke Lord ranked third in the Mergermarket report with 46 Texas deals valued at $11.7 billion. Baker Botts, Gibson Dunn, Latham & Watkins, DLA Piper and Jones Day each acted as the lead legal advisors in more than 40 transactions involving Texas companies.
Twenty-two of the top 30 corporate law firms increased the number of Texas deals they handled during 2018.
Latham saw it’s M&A deal count decline from 55 transactions in 2017 to 40 last year, but the size of the deals Latham handled jumped 62 percent - to $101.8 billion.
Twenty-three of the top 30 law firms in the Texas M&A rankings are headquartered in New York, Los Angeles, Chicago, Cleveland and other cities outside the state. Eighteen of those 23 non-Texas based firms , however, now have offices in Dallas, Houston or Austin.
Two national law firms that stood out in 2018, according to legal industry analysts, were Sidley and Gibson Dunn. Despite having significantly fewer lawyers in Texas than their counterparts at V&E and Kirkland, Sidley ranked second with 17 deals over $500 million and Gibson Dunn was sixth with 11 such transactions, according to the Corporate Deal Tracker.
For more coverage of Texas corporate law firms, please visit TexasLawbook.net.