After years of trying to find a merger partner to help it launch in Houston, Pittsburgh-based Reed Smith has instead decided to open an office from scratch.
"Our approach is always to see if we can find a really good merger and do it," global managing partner Gregory B. Jordan said. "That's the way we've expanded."
But Reed Smith talked to several key firms in Texas and, because of conflicts or just a differing view of where the market was headed, Mr. Jordan said those talks didn't work out.
The firm's discussions with Thompson & Knight, for example, were made public in late 2010 but ended in early 2011. Mr. Jordan said Reed Smith liked the firm, but couldn't get the deal done.
So nearly two years later, Reed Smith began building out its own office space in downtown Houston a few months ago.
"We were really driven to come to this market because of the opportunities we have for our clients," said Michael Pollack, global head of strategy. "We didn't want to wait any longer to take advantage of those opportunities."
While Mr. Pollack acknowledged the Houston market has become increasingly competitive over the last five to six years as a number of outside firms have looked to capitalize on the energy work in the region, he said the firm wasn't concerned the market would soon be void of available talent.
"I don't know that a market is ever really closed," Mr. Pollack said. "[There was] not a fear that, 'If we don't do it now there won't be anyone else to talk to.'"
Litigation department chairman Alexander Y. "Sandy" Thomas has been working with Mr. Pollack on the firm's launch in Houston.
Mr. Pollack said the Houston market is very competitive as the legacy firms are trying to hold onto their best people and there are a number of new firms moving into the city. But he said that has also created fluidity in the lateral market that can benefit a firm looking to expand.
Stephen Mims, a recruiter with Prescott Legal Search in Houston, said the number of firms coming to town in recent years has made energy lawyers, particularly those focused on finance and transactions, "golden."
"There's not an unlimited number of partners with $3 million books of business," he said, and because of that, some firms coming from out of town have been offering guarantees to lure partners away from local firms. Mr. Mims added, so far, there's been enough energy work to go around, but in the next few years firms will have to find ways to differentiate themselves and expand into other practice areas.
Mr. Jordan likened what is happening in Houston to what the Pittsburgh legal community has seen with the Marcellus Shale, though he said the Texas market is much further along. In Pittsburgh, other practice areas, such as real estate and litigation, have grown because of the increased business related to the oil and natural gas industry's presence.legalnews
Gina Passarella: email@example.com or 215-557-2494. Sara Randazzo is a reporter for The American Lawyer, a Legal affiliate based in New York.