Editor: Texas seems to be doing much better than many other states.
Conner: We are fortunate to have some very strong industry segments, especially energy, technology, telecommunications and transportation. Unlike the old days, our economy is more diverse. Also, as the leading exporter in the country, Texas continues to benefit from global expansion. Texas has not gone through the boom and bust in real estate values that many other national markets experienced. We certainly are not immune from the global recession, but we have been insulated to some extent.
Bezozo: Texas's boom and bust in the mid-'80s and early '90s caused it to react and focus strongly on attracting greater diversity in industry during the past 20 years. Texas also is relatively low-cost in terms of doing business, and its taxes are substantially less than most other states. This makes it a friendly business environment that will continue to attract and retain Fortune 500 companies.
Editor: The regulatory structure in Texas seems to have been made increasingly business-friendly. Has your firm been involved in that on behalf of your clients?
Conner: Yes, especially with respect to tax, banking, labor/employment and educational issues, which are so important to our clients.
Editor: Your firm has 12 offices. When did you open in New York?
Bezozo: We arrived in New York in early 2004, by having two partners move from our Texas offices. We have grown over the past five years to 31 attorneys, primarily through hiring lateral partners and associates by "ones and twos." A couple of other Haynes and Boone attorneys also have migrated to New York from Texas for business and personal reasons.
Editor: Growing a presence in New York has flummoxed some firms. It appears your idea of adding by the ones and twos gives you a better chance to maintain your own culture. Tell us about the Haynes and Boone culture.
Conner: Culture is central to Haynes and Boone, to who we are and how we work. The main tenets of our culture are a total client focus, and a collaborative, teamwork environment. A lot of firms will say this but I don't know that many firms who really live it. We do everything we can, from how we recruit laterals, to how we manage client relationships, to how we compensate our partners, to minimize internal competition. In addition, we have a long-term view of firm progress, which helps us make investments that we think will pay off in the long run.
Editor: Given the exodus of so many Fortune 500 company headquarters from the New York metropolitan area to Texas over the last several decades, do you find that having a New York office provides the ability to serve those corporations that are now in Texas as a sort of reverse flow in terms of the legal work?
Bezozo: Absolutely. When a business moves from New York to Texas, it typically maintains a smaller office in New York, and it still has customers, suppliers and other relationships in New York, such as financial relationships. As a result we have an opportunity to export our client relationship to our attorneys in Texas and at the same time continue to service the client through our New York office.
Conner: Texas is home to more Fortune 500 and 1000 companies than any other state. Often you will see a large corporate or financial institution client that is headquartered in Texas but has a significant regional and financial presence in New York, and vice versa... So the connection between Texas and New York is very significant, and there is quite a bit of synergy between the two states and offices.
Editor: Is there a growing opportunity for new and creative financial services in the Texas market that is expanding nationally and internationally?
Conner: Starting with Texas proper, we have a very good group of strong and well capitalized regional banks. Even through this downturn they have fared very well. Additionally, Texas is home to a number of alternative, non-traditional lenders, including hedge funds, so we expect some of the financing needs of business will be served by non-traditional sources. One of the largest hedge fund concentrations in the country is in Texas, and Haynes and Boone has one of the largest hedge fund practices in the country. The large national/ multinational lenders will continue to have a very significant role and presence in Texas, and we are comfortable that this market will be well served by these institutions.
Bezozo: I think New York is and will continue to be a major player in the world economy particularly in the area of finance. When foreign countries and companies begin doing business in the United States, they usually start in New York, but once established, they look beyond New York to other markets, especially Texas and California. That is the reason we have offices in all three states.
Editor: What is your California strategy?
Conner: It certainly starts with our emphasis on the technology industry. We have one of the largest intellectual property practices in the country, including patent work, intellectual property litigation and transactional work. We have technology clients who have significant interests in both Texas and California, so we need great intellectual property talent in California. That is what really drew us to join forces with the MacPherson Kwok law firm.
The California business and legal market is immense, and beyond IP we see opportunities there to expand our corporate, venture capital, employment, and litigation practices. Some firms tend to prefer corporate over litigation or vice versa. We emphasize both, as California is an awfully important jurisdiction for business and for high-end litigation.
Editor: With the rumored increase in federal regulation and intervention, do you find a Washington office is increasingly important? To what extent is your practice focused on regulatory matters?
Conner: Absolutely. Although the shape of statutory and regulatory changes is still in flux, there will be very significant changes that affect our corporate clients. For example, we anticipate a focus on securities regulation and enforcement and energy and alternative energy regulation in D.C. We already have a strong antitrust practice and expect antitrust enforcement to be ramped up in the coming years. We also think that D.C. expertise will be important in our financial institution and healthcare practices. All of these are on our target list in terms of expansion in the D.C. office.
Editor: Let us switch focus to the international scene. You've got offices in Moscow and Mexico City. Mexico City is in your neighborhood as far as Texas is concerned, can you tell us a bit more about your practice in Mexico City.
Conner: We went into Mexico City in 1994, about the time that NAFTA was being enacted. We view Mexico as part of our Southwest region. Mexico is Texas's largest trading partner and many of our clients have interests in Mexico. So there is a very strong natural connection between the two regions. Now we have the second largest office of a U.S. law firm in Mexico City. We view it as a good market for expansion. Despite the difficulties surrounding the drug cartels, the economic and political stability in Mexico is very good. I should also add that although we are very focused on the Mexican market, our Latin American practice includes emphasis on Central and South America as well.
Editor: Again drawn by the energy practice or is this export driven?
Conner: It is really a combination of the two. In South America it will be cross-border acquisitions, project finance and investment by U.S. companies. There is a tremendous need for infrastructure development which will be served by companies and financial institutions from all over the world.
Editor: Speaking of Latin America, are there any plans to look at the Miami market?
Conner: Good question. Latin America's connection to Miami is significant, so Miami would be of interest to us. However, currently we are not planning to expand into Miami. We are interested in expanding into South America and will be exploring a good and efficient way to establish a presence in Brazil.
Editor: Looking at the legal horizon, what other areas attract you? Are you thinking about the EU?
Conner: We are driven by core competencies and client needs. We have a real interest in London and English law capabilities. Cross-border practices generally, but specifically, project finance and M&A transactions, often will have an English law component. In addition we expect an increasing amount of international arbitration that will be English law and venue-based.
In addition we have a good practice that includes cross-border transactions and litigation involving Asian clients and U.S. clients doing business in Asia. At this point we work through affiliate law firms, but having a stronger presence in the Asian markets would also be helpful.
Editor: Final observations?
Conner: Is the large law firm model broken, as a result of the downturn and client focus on cost containment? Our view is that the large law firm model is not broken, and the billable hour is not dead; however, the downturn has put tremendous financial pressure on many clients and we always have to remember that we are here for our clients and must respond to their needs. Law firms will have to evolve in terms of how they price their services, and how they staff their projects. We do have a long-term view of how things should work. We have a low cost structure, a significant capital base, no debt and a teamwork culture, which allows us to pull in a direction that we think will positively benefit our clients.
Bezozo: Haynes and Boone has enjoyed continuous steady growth over 37 years. The main reason attorneys join and stay at Haynes and Boone is that the firm has a supportive, teamwork, institution first environment; it is not a "me-first" place. That coupled with a "no-jerk" policy makes it a great place to practice law at a very high level in an excellent setting.