From American Lawyer

The year is still young, but the Dallas legal market is rollicking like it never has before. Big firms are raiding established Texas firms to open new offices, and Dallas lawyers are surprising competitors by jumping to other firms.

The unusually liquid market is top of mind for managing partners of Dallas firms, and they posit many reasons why the Dallas market is changing rapidly. They say out-of-state firms, which focused interest on energy-centric Houston for the last several years, now see opportunity in Dallas because north Texas is home to many corporate headquarters and the city’s economy is strong. They also suggest that flat demand for legal services nationwide is pushing firms to expand into good markets like Dallas.

“I don’t think there’s another market in the country going through the change and turmoil as Texas right now,” said Mark Sloan, managing partner of Thompson & Knight.

Odette Mace, a Texas legal recruiter at Maverick Legal in Houston, said the stepped-up activity in Dallas is the “obvious next step” to what’s been going on in Houston for several years. “There’s plenty of top-tier talent in Dallas,” Mace said, noting that she expects more firms to move into Dallas this year.

Winston & Strawn made the biggest splash in Dallas so far this year by opening an office on Feb. 6 with 21 lateral partners from eight firms, following a model earlier used with success in Houston by Orrick, Herrington & Sutcliffe and Latham & Watkins. A month later, the office had grown to 37 lawyers in Dallas.

Around the same time, Dorsey & Whitney announced it would open an office in Dallas on March 1 with lawyers from Schiff Hardin, which in turn announced it would close its Dallas office.

Also in the early weeks of 2017, groups of lawyers in Dallas have been moving from firm to firm.

Transactional firm Condon Thornton Sladek, for example, hired Anderson Tobin name partner Aaron Tobin and six other litigators from that firm. Condon Thornton is now known as Condon Tobin Sladek Thornton.

The demise of the Fort Worth firm Shannon, Gracey, Ratliff & Miller at the end of 2016 led to some movement in early 2017, including two shareholders who joined Munsch Hardt Kopf & Harr in Dallas, while Strasburger & Price picked up six laterals in three Texas offices, including Dallas.

While not at the Dallas level, Houston has also experienced lateral activity in the early weeks of 2017. Jackson Walker added six intellectual property litigators who came from boutique Williams Morgan. King & Spalding hired six lateral partners, with four coming from Andrews Kurth Kenyon and two from Bracewell. Baker Botts picked up nine Norton Rose Fulbright energy partners. Reed Smith picked up four laterals from four firms.

California firm Gibson, Dunn & Crutcher, which has a Dallas office, announced in February it would open an office in Houston with eight oil and gas partners, but declined to identify them. Later, the firm confirmed that Michael Darden, who was chair of the oil and gas transactions group at Latham & Watkins in Houston, would join its new office, along with Justin Stolte, most recently in-house at Houston-based Apache Corp.

New Orleans firm Stone Pigman Walther Wittmann expanded its energy and international practice with an office in Houston and five lateral hires from Cogan & Partners, led by energy lawyer John Cogan Jr.

No Surprise

Leaders of big firms in Dallas aren’t surprised that out-of-state firms are moving into Dallas as part of an effort to gain a strong foothold in Texas. “They have focused, a lot of them, on Houston originally because of the glamour of the energy capital markets. But I think a lot of folks have figured out that Dallas is one of the great places in the country for business,” said Wade Cooper, managing partner of Jackson Walker, a Dallas-based firm with six other offices in Texas.

In fact, 39 of the companies on the Fortune 1,000 list in 2016 are based in the Dallas area.

Tim Powers, managing partner of Haynes and Boone, said firms that didn’t follow the march into Houston are now looking at the demographics of Dallas and its concentration of business headquarters. “They perceive it to be long-term a strong market, which we totally agree with,” Powers said.

The march into Dallas isn’t powered by energy, like it is in many cases in Houston. While there is energy work in Dallas, Powers suggests that firms moving into Dallas have practices that align more with busy practices in Dallas.

Indeed, when opening its Dallas office, Winston & Strawn cited several reasons why it saw opportunity in Dallas: Current clients have work in the region; Dallas has a large corporate base; and the firm hired a group of skilled partners.

Powers said firms such as Winston & Strawn made a “huge bet” on Dallas. “I think that’s an indication of how strong they think the market is and what they think the future is going to be,” he said.

Phil Appenzeller, chief executive officer of Munsch Hardt Kopf & Harr, said the concentration of energy work separates the Dallas and Houston legal markets. “Dallas is not betting on the energy markets anymore,” he said. Mace, the recruiter, agrees. While there is work for energy lawyers in Dallas, he said, the area is strong in practices such as banking and private equity.

Despite the influx of out-of-state firms, homegrown Dallas firms are not exactly quaking in their boots. Sloan, the Thompson & Knight managing partner, said national firms moving into the Dallas market have higher rate structures, so from a competitive standpoint, they are in a much better position.

He noted that Thompson & Knight is focused on making its existing market position as strong as possible, especially with competitors coming into Dallas.

“I’m not on a mission, not on an expansionist state as far as setting up new offices across the country,” he said.


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