V&E of Houston and Kirkland & Ellis battle for supremacy in Texas

One is a historic Houston-based company with deep oil industry ties and a powerhouse in law, energy and politics for more than a century. The other was founded in Chicago and came to Texas eight years ago with deep pockets, big profits and an aggressive plan for growth.

Vinson & Elkins and Kirkland & Ellis are fiercely competing for talent, clients and revenue like there aren’t two law firms in Texas history, according to legal industry insiders.

Both achieved record success in 2021, and analysts say both companies are on course for bigger profits this year. Although their competition was fierce, it was also mutually beneficial.

Lawyers for the two corporate law giants often sit around the table on some of the biggest mergers and acquisitions involving energy companies and private equity firms. Both law firms now have eighth-grade associates charging hourly rates of $1,050 and some associate rates exceeding $1,600 per hour.

Together, Kirkland and V&E earned more than $1.3 billion from their Texas operations in 2021, according to the Texas Lawbook, which documents the earnings of law firms operating in the state.

“There’s a reason V&E and Kirkland are at the top of the list,” said Kent Zimmermann, a law firm consultant at Zeughhauser in Los Angeles. “V&E benefits from its historical position in the market. Kirkland used its size, deep pockets and brand to create market advantage. »

Vinson & Elkins was founded in 1917 by retired Houston judge James Elkins and banking lawyer William Vinson, riding through both the ups and downs of the oil industry to become one of the world’s leading companies. energy sector. Past partners include the late Texas Governor John B. Connally Jr., the late U.S. Senator Howard Baker, former United Airlines CEO Jeff Smisek and Rep. Lizzie Fletcher, a Democrat from Houston.

Kirkland & Ellis was founded in Chicago in 1909 and has alumni such as United States Supreme Court Associate Justice Brett Kavanaugh, former United States Attorney General Bill Barr and former Whitewater District Attorney Ken Starr. Kirkland, who was BP’s lead counsel during the 2010 Deepwater Horizon oil spill, began aggressively expanding into Texas eight years ago to grab a bigger share of cases involving energy companies and private equity firms.

According to a Houston Chronicle survey, it has 204 attorneys in its Houston office, a local workforce second only to Vinson & Elkins’ 275.

Legal industry experts say corporate law firms have benefited enormously from rising energy prices, low interest rates and trillions of dollars pouring into the economy.

Here are the raw numbers:

Texas’ 454 V&E attorneys generated $601.3 million in 2021, a 17.4% jump from the prior year. The company reported earnings per partner of over $3.5 million.

“2021 has been a great year for the company, an incredible year for growth,” said V&E Chairman Keith Fullenweider. “Our practice of conventional energy has come back with a vengeance. Private equity players are very interested in the energy transition.

texas first

Despite the phenomenal year for V&E, attorneys in Kirkland, Texas did even better.

Kirkland increased its attorney headcount in the state to 371 last year from 290 in 2020 — a 28% increase — making it the fourth-largest law firm by number of attorneys operating in Texas.

But income matters most. Kirkland is the first out-of-state company to be No. 1 in revenue in Texas, according to financial data collected by the Texas Lawbook.

Last year, lawyers in Kirkland, Texas increased their revenue by 37.4%, from $527.8 million in 2020 to $725 million in 2021. To put the year in perspective, the only increase of $197 million would make it the 14th largest law firm in Texas.

V&E generated an additional $311 million in revenue from its offices in Dubai, London, Los Angeles, New York, Riyadh, San Francisco, Tokyo and Washington, DC, bringing its total revenue to $912 million.

“We fired on all cylinders last year,” said Kirkland partner Andrew Calder.

Legal industry analysts describe V&E’s 2021 fiscal year as one of the best in the country in terms of revenue and profit.

But it’s hard to compete on numbers with Kirkland, which topped $6 billion in revenue across its global operations. The company’s earnings per partner exceeded $7.38 million.

“V&E has done a good job of maintaining its status as a leading energy law firm, which is its calling card, and has opened other doors for its lawyers,” said Rob Walters, partner of Gibson Dunn, former partner of V&E. “Kirkland’s success in Texas is unprecedented.”

Zimmermann said the secret to the success of Kirkland, V&E and other law firms is simple.

“The wealthiest law firms can buy the most talented lawyers,” he said. “The most talented lawyers can charge the highest fees and are hired by the biggest clients and bring in the most money for their law firms. And it allows these law firms to continue to hire top talent.

Since opening its first office in Houston, Kirkland has hired a few dozen V&E attorneys. At the same time, Kirkland’s higher hourly rates allowed V&E to raise prices.

Battle for talent

The battle for talent was fierce.

Kirkland’s Texas operations hired 19 partners and 78 partners from other Texas law firms last year. It also added 38 first-year associates for its offices in Austin, Dallas and Houston.

V&E hired fewer Texas attorneys from other firms — 28 partners and one partner — in 2021, but it hired 53 first-year associates, by far the largest rookie class of any firm in Texas.

Legal industry insiders say Kirkland’s success in recruiting in Texas is the result of six-figure signing bonuses structured as forgivable loans if associates stay for a minimum period and meet specific billing requirements . Kirkland officials decline to discuss the company’s compensation system.

“Kirkland is a disruptive force in the market because of its compensation levels,” said Jeff Cody, US managing partner of Norton Rose Fulbright. “But Kirkland isn’t the only company paying big bucks in signing bonuses.”

Continued success

Legal industry headhunters report that more than a dozen law firms in Texas have offered bonuses ranging from $25,000 to more than $300,000.

But Kirkland and V&E continue to see success.

The Texas Lawbook’s Corporate Deal Tracker shows Kirkland’s Texas lawyers handled the most mergers and acquisitions in the first six months of 2022 — 76 deals valued at $48 billion. V&E ranked third, processing 62 deals with a combined value of $41 billion.

To read a longer version of this article, go to texaslawbook.net

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