Orrick move signals major bond counsel shift in Texas
DALLAS – As many as 25 public finance lawyers from the Houston firm of Andrews Kurth Kenyon are expected to move to Orrick Herrington & Sutcliffe, sources said, giving Texas Orrick’s second-largest public finance team, behind California.
Orrick’s hires come amid an exodus from Andrews Kurth as the Houston-based firm negotiates a merger with Virginia-based Hunton & Williams. More than 60 of Andrews Kurth’s 220 Houston-based attorneys have left the 115-year-old firm so far, according to various reports.
Neither Orrick nor Andrews Kurth officials would comment on the matter. Public finance attorneys from both firms are scheduled to address The Bond Buyer’s Texas Public Finance Conference in Austin next week.
“Texas has been a particularly hot market,” said one person familiar with the deal. “For major law firms nationally, it’s a flat market. It’s a market that’s starting to feel the effects of innovation, and firms are competing on talent.”
In 2017, Andrews Kurth ranked third in Texas among bond counsel with deals valued at $5.6 billion, according to Thomson Reuters data. Perennial leader McCall, Parkhurst & Horton ranked first with $13.15 billion, followed by Norton Rose Fulbright with $7.01 billion. Orrick, the leading national bond counsel, did not make the Texas top five.
Nationally, Andrews Kurth ranked ninth among bond counsel, with 104 deals valued at more than $11.42 billion.
On Dec. 5, Andrews Kurth named eight new partners, including Barbara Jane League, who works on tax-exempt financing transactions for state and local governments. League, a former attorney with the chief counsel of the Internal Revenue Service, is scheduled to discuss the implications of recent federal tax reform on the municipal bond market at the Texas Public Finance Conference.
Bond volume from municipal bond issuers in Texas was down nearly 20% in 2017 to $42.2 billion after setting records in the two previous years, according to data from Thomson Reuters. A 38% surge in the fourth quarter of 2017 came after three down quarters as issuers rushed to market to get ahead of federal tax reform legislation.
Firms working on bond transactions did not learn until nearly Christmas that tax-exempt private activity bonds would be spared in the tax bill. The new law did eliminate advance refunding of outstanding bonds.
The value of transactions in 2017 for the top five bond counsel firms in Texas were down more than 19% to $32.67 billion, according to Thomson Reuters.
The Texas trend tracks with the national statistics, according to Dee Wisor, attorney with the Denver law firm of Butler Snow and president-elect of the National Association of Bond Lawyers.
“We had deals that we planned to do in 2018 pushed into 2017 because of the tax law, so the new year started out slow,” he said, noting that the new law banning advance tax-exempt refundings will also have an impact.
“Some people think advance refundings made up maybe 20 to 25% of volume,” he said. “But we’ll see.”
Orrick has promoted seven lawyers to partner in its public finance practice over the past five years and has more than 80 lawyers in the group, the firm said. The law firm was ranked first as bond counsel in its home state of California with par amount of $32.2 million in 2017, according to Thomson Reuters.
Nationally, top-ranked Orrick accounted for $48.03 billion in 442 deals or 11.8% market share among legal counsel in 2017, up from $40.44 billion in 454 deals or 9.6% market share.
Tracing its roots to the Gold Rush era in San Francisco, Orrick specializes in the technology, energy, infrastructure and financial sectors globally. With more than 1,000 lawyers in 25 offices worldwide, the firm’s largest offices are in San Francisco and New York.
Orrick opened its Houston office in January 2016 with 20 partners, including five specializing in public finance. The Houston office has grown to 44 lawyers since the opening. Other specialties include energy and infrastructure, Latin America, mergers and acquisitions, private equity and litigation.
Todd Brewer is Orrick's vice chair for public finance in Texas. Others joining the public finance team were Hoang Vu, Marcus Deitz, Kathryn Garner and J. Kent Friedman.
“Our Houston team is an integral part of our nationally dominant Public Finance team,” Orrick said in a statement. “In addition to offering deep expertise in Texas public finance, the Houston team provides access for Texas market participants to our bond counsel and related tax practices, consistently top-ranked by Thomson Reuters and The Bond Buyer.”
Orrick’s 2016 hires in Houston included the public finance team from the firm McGuire Woods and two other bond attorneys from Haynes & Boone.
J. Kent "Kenny" Friedman and Kathryn Garner moved to Orrick from Haynes & Boone.
Friedman is chairman of the Harris County-Houston Sports Authority, which built and financed Houston's major professional sports stadiums and arenas. Friedman managed the authority's legal battle with its insurance provider National Public Finance Guarantee. After reaching a settlement with National in 2015, the authority was able to refinance $558 million of its outstanding debt after years of being locked out of the bond market by junk bond ratings. After the resolution, the authority's debt rating rose to investment grade from Standard & Poor's, Moody's Investors Service and Fitch Ratings.
In addition to its downtown Houston office, Andrews Kurth has Texas offices in The Woodlands, Austin and Dallas. It also has offices in New York, California, and North Carolina. Outside the U.S., it has offices in Beijing, Dubai, and London.
On Jan. 26, 2017, Andrews Kurth was named as co-counsel to the Clark County Stadium Authority in Nevada in the development of a $1.9 billion, 65,000-seat domed stadium to serve as the future Las Vegas home of the NFL's Oakland Raiders. Houston-based Andrews Kurth partner Mark B. Arnold heads the authority's legal team with co-lead counsel Angela Otto from the Las Vegas office of Brownstein Hyatt Farber Schreck.
In Texas, Andrews Kurth has represented governmental entities in 12 stadium transactions, including the Harris County-Houston Sports Authority in the financing of the Houston Texans’ NRG Stadium, host of last year’s Super Bowl. The firm also advised on the Houston Astros’ Minute Maid Park and the Toyota Center home of the National Basketball Association’s Houston Rockets.
The firm was instrumental in developing tax-exempt and taxable bond financings for the projects, advising the Sports Authority on the issuance of bonds secured by hotel occupancy taxes, car rental taxes, rent payments, onsite sales tax rebate revenues and parking and admissions taxes.
As Orrick grabs members of Andrews Kurth’s public finance team, other firms are going after other legal specialists.
Six Andrews Kurth corporate lawyers in The Woodlands office, including partner Bill McDonald, are moving their corporate practices to Haynes and Boone, according to Law.com.
About 17 Andrews Kurth lawyers in Austin, including office managing partner J. Matthew Lyons, are expected to open the first Texas office of Shearman & Sterling at the end of February.
DLA Piper announced Thursday that three Andrews Kurth lawyers, including labor and employment partners Marc Katz and Isabel Crosby and litigation partner Rob Hoffman, have joined the firm’s Dallas office. Another seven Andrews Kurth lawyers are expected to join DLA in the next week.
The firm of Katten Muchin announced Monday that it was hiring seven attorneys from Andrews Kurth in Dallas, including prominent mergers and acquisitions partner Mark Solomon. J. David Washburn will serve as head of the corporate practice in Katten’s Dallas office. Victor B. Zanetti, Joseph A. Hoffman, Peter Bogdanow and William L. Rivers are the other corporate partners. William J. Moore, a litigator, rounds out the new group of partners in Dallas, most of whom have practiced together for more than 20 years.