Texas: big state, bigger potential

The importance of the Lone Star state is neatly summarized by Doreen Lilienfeld, co-managing U.S. partner, who says: “We see Texas playing a crucial role in our expansion and strategic aim of offering a global service to our clients.”

Texas is many things to many people, from its association in popular culture with Western movies and music and oil tycoons to its role in human spaceflight. It is the second largest state in terms of both area and population. But with a GDP of USD2.4 trillion, compared with USD1.5tn in 2014, Texas has an economy second only to California among U.S. states and bigger than those of Canada, Russia or Brazil, according to IMF 2024 statistics. Furthermore, it continued to grow at an annualized rate of 5.8% in the five years to 2024, attracting both domestic companies and foreign investors.

There has never been a better time to be active in Texas. A&O Shearman strategists see tremendous growth potential in Texas in the key areas of energy, natural resources and infrastructure (ENRI), technology, M&A, private equity, funds, and finance, based on market trends and the firm’s track record of market leadership in these areas.

Life sciences is another important field, with more than 5,200 manufacturing and research businesses operating there.

The firm's global platform is a key differentiator in the competitive market for Texas-based multinational companies and international clients doing business in Texas, who are attracted by the business-friendly environment and regulatory certainty. 

Historically, Texas has been a difficult market for legal services to break into. Emily Westridge Black, managing partner of the Austin office, says one reason was the state’s tightly knit communities. Many firms that arrived in the 1980s with lawyers from outside of the state are no longer there.

Local flavor

Though more open now, it remains essential to have people with “local expertise and local flavor” serving those communities’ legal needs. That understanding underpinned Shearman & Sterling’s thinking in 2018 when it became one of the few market entrants to commit to three full-service offices—Austin, Dallas, and Houston—when it established itself in the state. Today, about 60 lawyers, of whom 18 are partners, are based across the three sites. Though small to midsized in terms of numbers, the offices punch above their weight.

Texas mirrors the corporate world, says Emily. It has every kind of industry found worldwide, making it “a microcosm of the global market.”

“We have foreign clients coming in and we have clients here who are doing things on a global scale. Our footprint matches theirs—either the one they have or the one they want to have.

“I think one of the best ways to service your client is to try and be proactive by identifying where opportunities will come for them, not just in geography, but in practice areas. We work with many market leaders. Quite apart from our geographic footprint, the combined firm has a strong presence in most key markets.”

Not their first rodeo

Bill Nelson, managing partner of the Houston office and the Texas region, says the expanded network of lawyers means “if you’re looking for particular expertise, you can find it—and they’ve probably done what you need several times.”

“Few, if any, firms of our size have so many prominent practitioners at the top of their practice areas: 90% or more of our partners are Chambers-ranked. We have consistently been in the top ten in volume and deal value.”

The combined firm’s Texas offering demonstrates the synergy achieved through the merger: strength from A&O Shearman’s global capabilities and standard of excellence, supported by deep local roots, relationships, experience, and knowledge. The team operates as a single unit with a multijurisdictional and multidisciplinary outlook as it advises on some of the state’s most complex transactions.

In Texas, as around the world, the firm benefits from strong M&A practice teams. Another growth area is disputes, where a highly regarded team handles a full portfolio of litigation, white collar/government investigations, products liability, environmental/mass tort, patent infringement, false advertising, and complex commercial matters.

Endless opportunity

In ENRI, A&O Shearman teams across the U.S., including Texas, handle everything from early development arrangements to consenting and planning matters, financing, construction, operation and maintenance, and ultimately the refinancing, acquisition, and sale of energy assets. Specialized lawyers bring extensive expertise to energy-related litigation and arbitration, particularly in relation to the international Energy Charter Treaty (ECT), and gas price and construction disputes.

The firm is focused on industry and clients in all markets, says Emily. 

“Texas is a crucial part of the firm’s global strategy. Business is moving; over the next several decades we’ll see more and more of the weight and influence of the U.S. in Texas, from a business perspective.

“Over time we’ll develop a vibrant financial services industry that will rival somewhere like New York. We have technology: see what’s going on in Austin with [global brands] headquartered there.

“Look at Houston, the Gulf Coast and the Permian Basin whose energy resources rival those of the Middle East or Venezuela. That, along with the associated industry, ties into what the firm is doing on a global basis in energy, projects and infrastructure.”

Emily describes the opportunities—both inbound and outbound—presented by the merger as “endless.”

Texas state of mind

The number of companies that are redomiciling in the state—165 companies moved their U.S. headquarters to Texas—makes it “a huge place of opportunity,” she says, citing high-end M&A, private equity, capital markets, capital raising and other finance work. “We’re planning to expand those areas in Texas,” she adds. 

Alain Dermarkar, an M&A/private equity partner based in Dallas, says there has been “a lot of excitement and optimism,” particularly about the possibilities presented by the new firm’s “unparalleled geographic reach and global scale, with depth and quality of experience in all key global markets.”

Dispute resolution is another area holding great potential, particularly after Texas introduced new business courts in September 2024. Although it’s expected to be at least a year before they can be considered a reliable venue for business litigation, lawyers are optimistic. “The business community would like to see more continuity and predictability in our law,” says Texas litigation partner, Thad Behrens. 

A predictable legal system similar to that of Delaware could attract businesses. Emily says: “I think even more people will be wanting to resolve their disputes in Texas, so we need Texas litigators.”

As elsewhere in the global network, matching the demographic profile of the clients and communities served is the focus of recruitment, with energy, private equity, projects and capital markets top priority. Emily says: “We’re very proud of the diversity we’ve achieved in terms of gender, race, ethnicity, and sexual orientation. I think it makes us stronger and it improves our culture.” 

She believes the global platform of A&O Shearman adds to diversity and cites her own experience helping a global client with an issue. “I was on the phone with partners in the U.S., the EU and the U.K., I was able to pull together all these experts with different perspectives and we got to the right spot. Without our global footprint and our diversity, we wouldn’t be able to do that.”

Leaders in their field

One of the strengths of the Texas offices is the consistently high ranking of their lawyers in the industry’s top legal guides, including Chambers USA and Legal 500 U.S. Both rank 17 Texas-based A&O Shearman lawyers as leaders in their field and recognize 17 practice areas. 

The firm leads the industry in debt capital markets, loans (manager) and projects, and is third in equity capital markets, based on Bloomberg and Refinitiv data from mid-2023. It is in the state’s top ten in M&A based on data from the Texas Lawbook’s corporate deal tracker.

Other highlights

• Legal 500 2024 ranks A&O Shearman in Tier 1 for renewables.
• Chambers ranks A&O Shearman in Band 1 for Texas securities litigation; more than 90% of the firm's litigation partners in Texas are Chambers-ranked.
• Chambers USA 2024 ranks A&O Shearman in Band 2 for power and renewables; transactional and energy transition; and for technology. 
• In the past four years, Shearman & Sterling has been ranked in the top ten for M&A deal activity by Texas lawyers in both deal value and volume.
• Bloomberg NEF ranked Allen & Overy second in its Clean Energy M&A, VC and PE league tables in 2H 2023. 
• Allen & Overy ranked second for global project finance and third for infrastructure on IJGlobal's 2023 global legal advisors league table by deal value and third in both categories by deal count.

Recent significant matters

A team led by partner Saul Perloff (litigation, Austin) represented Human Power of N Company (HumanN), a consumer health product company, in a putative consumer class action brought in the Southern District of Texas. The firm obtained dismissal, with prejudice, of the action.

The firm represented Pattern Energy, a renewable energy company, in connection with shareholder litigation arising out of a 2020 acquisition by CPPIB. Partner Mallory Tosch Brennan (litigation, Houston) led the case. 

Partner David Whittlesey (litigation, Austin) led a team representing YETI Coolers LLC in a trademark infringement litigation in the Western District of Texas.

The firm represented Microvast Holdings Inc, a battery technology company, in matters including its USD3 billion business combination with Tuscan Holdings Corp, which included an oversubscribed USD540 million PIPE and resulted in Microvast becoming a Nasdaq-listed public company, a recent secured convertible debt facility. The firm provides ongoing support to Microvast’s executive team. Partner Alain Dermarkar (M&A and private equity, Dallas) leads.

The firm represented a syndicate of underwriters in connection with a USD1.25bn debt offering by energy infrastructure company Kinder Morgan Inc. Partners Taylor Landry and Bill Nelson (both capital markets, Houston) led on the matter.

Partner Robert Cardone (M&A and private equity, Dallas) led a team representing Texas Instruments in its acquisition of a Utah semiconductor manufacturing facility from Micron Technology, and the sale of its semiconductor manufacturing facility in Greenock, Scotland, to Diodes Inc. 

Partner Michelle Kwan (emerging growth, Austin) led a team representing Chevron Technology Ventures in its strategic investments in emerging growth companies including GR3N, TAE Technologies, Hydrogenious LOHC Technologies, and Mobilus Labs.

Partner Carmelo Gordian (emerging growth, Austin) led a team advising cybersecurity startup HiddenLayer in a USD50m funding round to finance expansion. The firm earlier advised HiddenLayer on its seed funding.

The firm represented Dow in numerous lawsuits stemming from alleged contamination of groundwater, surface water, and soils, including State of Maine v. 3M et al., and nearly 20 other cases that are consolidated in a multi-district litigation in South Carolina. Partner Emily Westridge Black (litigation, Austin) led. 

Partner Ryan Bray (tax, Dallas) led a team representing Celanese Corp, a global chemicals and specialty materials company, in structuring M&A transactions and joint ventures, drafting transaction documents, and assisting with internal restructurings of the company’s global operations. 

Partners Thad Behrens and Dan Gold (both litigation, Dallas) led a team representing the officers and directors of digital asset lender BlockFi, which filed for bankruptcy in 2020, in federal securities litigation pending in New Jersey. Our mandate also includes representing its co-founder and CEO, Zac Prince, in connection with investigations and threatened litigation in the BlockFi bankruptcy.

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