Vinson & Elkins, one of the state’s oldest law firms, undergoes a leadership change at a pivotal time
Vinson & Elkins, one of the oldest, largest, and most profitable corporate law firms in Texas, is changing leadership for the first time in a decade.
Known for its deep roots in the oilfield, the 104-year-old Houston-based law firm has been headed by Chairman Mark Kelly for the past 10 years and is stepping down in late December. It’s been a decade since the company had record sales and profits.
Keith Fullenweider, who was recently elected by the partners of the 660-strong law firm, will take the helm as chairman. The firm also elected three vice chairpersons – one each from the Austin, Dallas and New York offices.
The leadership change at V&E comes at a time of incredible turmoil in the Texan legal market, which has seen an invasion of non-state competitors hiring hundreds of senior partners from the state’s largest corporate law firms, including V&E.
In the past decade, V&E has lost more than 150 attorneys to national law firms, according to The Texas Lawbook. In fact, the executive or executive partners of the Houston offices of Latham & Watkins, Sidley Austin, Simpson Thacher and Willkie Farr – all widely recognized as elite global corporate law firms – are all V&E alums.
Despite the loss of these attorneys – and the clients who took those attorneys away – Kelly continued to generate revenue and profits year after year.
In 2011, the company had total revenues of $ 550 million and earnings per partner of $ 1.3 million. Last year, V&E posted revenue of $ 782 million – 1.3 percent less than in 2019 – and earnings per partner of $ 2.94 million, up 5 percent.
“I love this law firm and I loved this job,” said Kelly. “The Texas legal market is incredibly competitive, and despite COVID-19 and the recession, we had a great year. Record profits. The company is well positioned for the future. “
Kelly and Fullenweider follow a long line of legal giants who led V&E, including legendary Houston attorney Harry Reasoner, who is now 80, is still an active V&E partner and is still considered one of the top litigation attorneys in Texas.
V&E is the largest corporate law firm in Texas by number of lawyers and was the largest by revenue until 2020 when Kirkland & Ellis, a Chicago law firm, became the first overseas law firm to make more money in Texas than any local firm.
Kelly hired Fullenweider, whose father is a legendary Houston family lawyer and mother an educator, in 1988 when he graduated from the University of Texas School of Law.
“The best career decision of my life,” said Fullenweider.
In a series of interviews, Fullenweider and Kelly said V&E is well positioned to face the competition and expand its reach beyond Texas and beyond oil and gas.
“Some of the most successful law firms in the world have crashed in Texas in recent years,” said Fullenweider, whose clients include private equity firms like TPG, Blackstone, KKR, Crestview and EnCap. “We have hundreds and hundreds of incredibly talented lawyers, and these outside law firms will obviously be looking to V&E for possible hires.”
According to Fullenweider and Kelly, V&E has three key factors in attracting and retaining talent in such a competitive market: a centuries-old team culture; demanding and demanding legal work; and deep relationships with executives and general counsel of his corporate clients.
“Our clients know the commitment and experience of our firm and our lawyers,” said Kelly. “Many of our clients are former V&E lawyers. We accompanied them across the boardroom table and they would accompany them when their children graduated from college or got married. “
Cultivate roots
Legal industry analysts said V&E was the model for embedding the firm’s attorneys into the Houston business community.
“I don’t know of any other law firm that has placed their attorneys better with their clients,” said Kent Zimmermann, advisor to the Chicago law firm. “These attorneys remain loyal to V&E, and that means business for V&E attorneys.”
Fullenweider said V&E plans to be “active and aggressive” in the career changer market, but said the company prefers to grow organically.
V&E has about 90 new attorneys who graduated from law school in September and October, Kelly said.
Last month, the company gave its employees large increases in salaries that were quickly offset by other companies operating in Texas. First year attorneys at V&E now receive $ 202,500 annually. Eighth year employees now earn approximately $ 500,000 with bonuses.
Legal industry analysts said V&E has benefited in some ways from the national firms moving to Texas. They point out that Texas lawyers’ hourly rates in 2012 were about 20 percent lower than their competitors in New York, Chicago, and Los Angeles.
Many Texan law firms chose to keep their rates lower in hopes of being a cheaper alternative to national elite practices, but V&E made “the competitive decision” to increase their hourly rates to replace the firm’s space to assert itself at the forefront of the market. according to Kelly.
As a result, almost all V&D partners and even a handful of employees are now charging their customers $ 1,000 an hour or more. A handful of partners have hourly billing rates close to $ 1,500.
Those high rates, coupled with difficult spending decisions – including the closure of lost revenue offices in Beijing and Hong Kong last year – resulted in significantly higher profits, which in turn have enabled V&E to compete in the side talent market.
“We want to grow beyond our current markets, but we have to be smart and strategic,” said Kelly.
Known in Houston for decades as “The Big Three,” V&E, Baker Botts, and Fulbright & Jaworski started 2000 with roughly the same number of lawyers and the same sales and profits. But the three firms have done well in the past decade took different paths.
Litigation-ridden Fulbright merged with London-based Norton Rose to create a global law firm with more than 3,600 attorneys. Baker Botts was heavily focused on intellectual property and technology law and grew dramatically outside of Texas, particularly in California.
V&E, who faced and survived the Enron scandal in the early 2000s, has doubled its focus on energy, especially as private equity invested billions of dollars in the Permian Basin. For the past decade, the company has represented some of the most iconic names in the oil field, including Pioneer Natural Resources, Shell Oil, Energy Transfer Partners, and TC Energy Corp.
The company also has several long-term institutional non-oil and gas customers, including Southwest Airlines and Dell Corp.
The Texas Lawbook’s Corporate Deal Tracker, which documents M&A and capital markets activity conducted by attorneys in Texas, shows that V&E has ranked first or second in number of deals for the past six years.
Remain independent
Legal industry insiders said the firm’s new executives may face increased pressure to merge with either a larger global law firm or a similarly sized U.S. firm as clients require their outside legal counsel for size. As V&E is increasing its profits per partner, it is well positioned to merge with either what is known as a Magic Circle law firm based in London or even with a law firm based in China looking to expand its energy practice.
“We are not in talks with any companies about a merger, nor are we planning any talks,” said Kelly. “We’re always open to offers, but I don’t see this happening anytime soon.”
Fullenweider believes V&E will reach new heights in the years to come.
“That’s because we believe in our story, we believe in the quality of our lawyers, and we believe that our ability to close is exceptional when we stand in front of people – and that often competes with some of the most successful law firms in the world World the country, ”he added.
A longer version of this article can be found at TexasLawbook.net.
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