As the race among law firms for dominance of Houston’s energy markets heats up, the latest firm to make a high-level lateral hire in Houston is Sidley Austin.
Robert Stephens, who has practiced law at Cadwalader Wickersham & Taft, McDermott Will & Emery, and Bracewell & Giuliani, is now a partner in Sidley’s global finance and energy practices in Houston. Stephens advises banks and energy companies on many matters including securitizations, credit guarantees, credit sleeves, mergers and acquisitions, restructurings, and reorganizations.
In an exclusive interview with IFLR1000, Stephens shared his thoughts on a Houston market subject to increasing interest on the part of law firms, including some more closely identified in the public consciousness with Wall Street than with Houston's oil and gas markets. In Stephens's view, people have woken up to the sophistication and complexity that have characterized Houston’s finance and resource sectors for many years.
“I think what’s changed is the realization of what’s always been here. There’s an impression on the finance side that Houston was a home for borrowing base oil and gas loans and not a lot else. But Houston has been at the center of structured finance and project finance as it intersects with the energy industry for a long time, and there’s lot of talent here on the commercial side,” Stephens said.
“Correspondingly, there is also a lot of talent here on the legal side. What’s changed is that the rest of the world is really recognizing it now. You’re seeing national and international firms like Sidley, Latham & Watkins, and some New York-based firms like Simpson Thacher and Cadwalader coming down here. It is not because suddenly Houston has a need for this kind of service, rather it’s the recognition that Houston has been practicing at a fairly high level for a long time and these practices can fit into larger platforms,” he added.
While acknowledging that commodity price changes, including oil and natural gas prices, will have an impact on the industry and usher in restructurings, Stephens said that he expects many firms to manage the changes, at least over the short term, through careful financing engineering.
“As markets adapt, I think we’ll see a fair amount of restructurings. This is coming. It’s just almost unstoppable, if commodity prices stay this low, that there’s going to be some fallout,” he said.
Stephens expects to see an uptick in legal work aimed at helping companies manage this situation.
“It may not be a wave of bankruptcies, it may be strong players with bigger balance sheets taking advantage of lower commodity prices to buy assets at a price they think is great. There may be M&A components, and firms that didn’t have a lot of leverage before may take on more debt money to shore up their balance sheets and create liquid capital positions to get through a tough period, and pledge more of their assets to do it,” Stephens added.
Stephens earned his law degree at the University of Texas School of Law and his undergraduate degree at the University of Wisconsin – Madison.