A Can-Do State

Monday, August 30, 2010 - 01:00

Editor: Please tell our readers about your practice as co-head of the firm's 160-lawyer Complex Commercial Litigation practice. While you are located in the firm's Dallas office, your practice takes you well beyond the borders of Texas.

Ostolaza: The 160 lawyers in the Complex Commercial Litigation practice are located in seven offices across the U.S., from New York to California, and also in the Central U.S. in Dallas and Houston. Our practice truly has a national footprint. We handle complex litigation for many of the country's leading businesses across a wide variety of industries. In addition, we have litigators abroad in the UK, France, Poland and other parts of the world, giving us global capabilities to handle matters, no matter where issues arise.

Editor: How much of your practice time is spent in arbitrations? Have you experienced the use of eDiscovery in arbitration?

Ostolaza: Usually 20 to 30 percent of my practice relates to arbitration. The types of arbitration cases I am handling currently involve purchase price adjustments. In the private equity world, it can be common for acquiring companies to have some type of post-purchase price adjustment sometime following closing. There is an arbitration provision in the documents with some type of limit to discovery to keep it focused on particular issues like the balance sheet of the company after adjustment. I have seen discovery, including e-discovery, allowed, although the arbitrators usually want the process to move along quickly and efficiently in terms of what is done to conclude the matter without a great deal of discovery.

Editor: Your practice also extends to managing Latin American litigation and arbitration. What in your background qualifies you unusually well to practice in this area?

Ostolaza: As a child of parents who emigrated from Cuba to the United States, I am fluent in Spanish. In a previous career, I worked for the airline industry in marketing, where part of my territory was Latin America. Knowledge of Spanish has been very useful in servicing clients who are based in Spanish-speaking countries, including clients located in Mexico. While most of my Latin American clients are fluent in English, my Spanish fluency helps me better understand the cultural differences that subtly affect how people perceive litigation and business.

Editor: Texas seems to have weathered the economic slowdown better than most other regions of the U.S. with an unemployment rate of 8.2 percent as compared with the national average of 9.5 percent. To what factors do you attribute this good fortune?

Ostolaza: Texas has fared well for a variety of reasons. We are one of the fastest-growing areas in the country in large part because we have a favorable economic, regulatory, and legal climate, and because we do not have a state income tax. We also have an abundance of real estate and mild winter weather. All these advantages make it relatively inexpensive to build a home or operate a business here and contribute to a strong quality of life, enabling Texas to attract many talented professionals to the state. As simple as it sounds, our geographic location in the center of the United States also helps, enabling Texas to become a logistics and transportation hub for the domestic and international movement of people and goods. As a result of all these factors, we have been able to attract the headquarters of many major companies to the area, with 24 Fortune 500 companies now headquartered in the DFW area, and 57 Fortune 500 companies headquartered across the state. That is an impressive track record of success, and I expect it to continue.

Editor: In what ways has the state stimulated growth?

Ostolaza: The state has been aggressive, but also strategic, about using subsidies and other financial inducements to businesses to move to the state. Due to the factors discussed above, which make Texas a very attractive place to do business, Iam told that we have not had to be quite as aggressive about subsidies as other parts of the country may have to be. The state has purposefully maintained a favorable tax, regulatory, and legal climate to ensure that businesses and their employees want to relocate to Texas and remain here for the long haul. Education is also a critical component of any region's success. Recognizing this, Texas recently passed legislation seeking to support the development of new Tier One research universities in the state, which will contribute further to the state's leadership in talent development and support of business innovation. The most important thing that Texas does to stimulate growth, however, is to stay out of the way - letting its citizens take some risks and build thriving businesses.

Editor: How would you assess the legal climate in Texas now that tort reform has been effected?

Ostolaza: In Texas, tort reform has impacted primarily the medical malpractice area. I have not seen a big change in our group's practice area as a result of tort reform, but that is not surprising considering the type of matters that we handle.

Editor: Do you consider the courts to be business friendly? How do you regard the present system for selecting judges?

Ostolaza: Texas generally is very friendly to business. For example, the state is reviewing how to improve the corporate code so that it keeps up with the times and, more broadly, to adapt the code to the reality of how businesses, employees, and consumers are currently relating to one another and interacting.

With respect to judges specifically, I think the system is great, even though there are those who decry election of judges. I moved from a state where we did not have elected judges, but at the end of the day, I don't think that there are any significant differences between a judicial appointment practice, as a practical matter. I practice quite a bit in front of the state courts, and I'm very proud of the way the system works. When there is an underperforming judiciary, the electorate takes care of it.

Editor: Do you anticipate that there will be an effort to override the "right-to-work" rule in Texas in view of much of the administration's program to further erode this policy in promoting unionization?

Ostolaza: Texans are very independent minded. Both on the employee and the employer side, people will want the continued freedom to contract as they wish. While I can't speak on behalf of union issues, I believe part of the economic climate that has allowed growth in our state has been the existence of a lot of leverage on both sides - leverage favoring both the employer and the employee. Iam told that there have also been studies validating this point and pointing to the flexibility of the Texas labor market as one of the key factors driving the state's continued success.

Editor: What elements do you believe will provide Texas the ability to lead the nation into a full-scale, more robust recovery?

Ostolaza: San Antonio, Houston, and Dallas are three of the largest cities in the United States, all ranked in the top ten in terms of population. They're also among the fastest-growing metropolitan regions in the entire country. That continued growth fuels a lot of Texas's capacity for economic leadership. Not only does Texas have a lot of people, but perhaps even more importantly, we have a lot of people who are entrepreneurial risk-takers or who are willing to invest capital in innovative ideas. You need that in order to foster growth and sustain any sort of economic recovery. While parts of Texas have strong, historic ties to the oil and gas industry, the state's economy today is a lot more diversified than it has been in the past. That diversification makes Texas resilient, and positions us to recover quickly from economic downturns. A favorable economic climate where there is low taxation of individuals and that allows people to start businesses easily has also been a very positive force. It is hard to isolate any one of these factors alone and say it is the one most critical factor. But these factors in combination certainly have made a big difference for Texas and will continue to positively impact the ability of Texas to generate more opportunities.

Editor: You mention housing; my understanding is that Texas never had a housing bubble like some parts of the country.

Ostolaza: Texas has not been impacted as other states, particularly California and Florida. Although there are regional variations across the state, for the most part, Texans' equity in housing has grown over the years. While there was some growth in housing prices, the ample availability of land and reasonable construction costs helped keep prices somewhat down in Texas. Additionally, we have not had the phenomenon of second-home or speculative home development as in California and Florida with their beach communities. Since we have not seen that kind of speculating, we have not sustained a huge drop in prices.

Editor: In conclusion, are there remarks you would like to make about your practice in Texas and why you find it to be a very favorable environment?

Ostolaza: One of the things I've learned about moving to Texas as a transplant 19 years ago is that it's a very "can-do" place - more open to outsiders than I ever would have thought. When you look around even at our Weil office, many of our associates and partners have come from other parts of the country, making Texas their permanent home. I think it will continue to be the case that we will continue to attract people from different parts of the country because of many reasons, including the mild climate, the absence of income taxes, and the relative affordability of first homes for young professionals. Those factors have allowed the firm to grow our Houston and Dallas offices. Texas has been a great place for the growth of our diversified practice in complex litigation, bankruptcy, private equity, M&A, and tax. They are all robust practices, even with the economic downturn.

Please email the interviewee at yvette.ostolaza@weil.com with questions about this interview.