Fracking seems to be the gift that keeps on giving to Texans of all pay grades. Not only are roughnecks and engineers in big demand, so are lawyers who specialize in oil & gas. At the biggest firms, young lawyers can start at $160,000 a year. For top partners, their time can be billed at a rate of up $1,000 an hour according to the American Bar Association.
“The different clients that I have, fortunately enough, were all driven by fracking because without that technology that market would never have opened,” said James Collura.
Collura is an oil & gas attorney with the Houston firm of Coats Rose. It’s not one of those “big” firms and says it prides itself on keeping costs low.
Nonetheless, Collura said his firm is paying higher starting salaries despite what has been happening in other states where hiring is down dramatically.
Texas Law Firms Defy Downturn
At the University of Texas School of Law, David Montoya, Assistant Dean for Career Service, said Texas law firms have fared better than those in other states because of the surge in the oil & gas business.
“From the downturn beginning in ’08 to ’11 there was about a 44 percent national decrease in large firm hiring,” Montoya told StateImpact. “The strength of the energy industry here, though, has helped buoy some of the large firm hiring over that same period of time.”
In Houston, law firms with energy specialties are expanding with some big, national firms opening new offices here.
“I think one of the things is attracting other firms is they’ve seen the success that Latham has had here,” said Michael Darden, head of the oil & gas transactions practice at Latham & Watkins. It’s a global firm but until a few years ago, it had no offices in Texas.
After luring eight top lawyers from Houston’s most established and successful energy law firms, Latham opened an office in 2010.
“We’re now up to basically 70 transactional lawyers here in the Houston office,” Darden told StateImpact. “Historically, non Houston-based firms have had a very hard go of it coming into Houston and trying to take business from the big firms here: Baker Botts, Vinson & Elkins, Fulbright & Jaworski and a litany of other very good firms.”
Megabucks from M&As
Those firms have reaped millions in fees handling recent mergers and acquisitions like the one involving Kinder Morgan and El Paso, two huge pipeline companies. Total sale price: $23 billion.
As ranked by industry publisher Mergermarket, Vinson & Elkins was tops in the nation for 134 energy deals valued at $178 billion. But a close second was Latham & Watkins with 98 deals valued at $168 billion.
One of Latham & Watkins transactions involved Plains Exploration and Production’s acquisition of over $5 billion in equipment used in the Gulf of Mexico by BP.
“It involved teams that at any given time might (have included) a dozen lawyers working on each side of that,” said Darden.
No Trickle-Down to State Regulators
But the big money has not spread to another sector of oil & gas: regulation. While lawyers say the top private firms are paying $160,000 to young lawyers just out of school, state drilling regulators like the Railroad Commission of Texas offer far less. The commission pays a range from $55,000 to $85,521 for its lawyers.
“The Commission does not generally have the means to compete with the oil and gas industry or law firms for attorneys,” emailed the Railroad Commission’s spokesperson, Ramona Nye. “Nevertheless, there is typically no lack of qualified applicants when the Commission seeks to fill attorney positions.”
James Collura, the oil & gas attorney mentioned earlier, said he handles a lot of regulation-related issues for his clients and does not feel that the competition for good lawyers leaves the state at a disadvantage.
“Governmental attorneys are excellent at what they do. A lot of times people are motivated and do their jobs beyond a monetary standpoint,” said Collura.