Houston - A Beacon Of Light For Those Seeking Opportunity

Thursday, September 1, 2011 - 01:00

The Editor interviews Robert E. (Bobby) Meadows, Managing Partner of King & Spalding LLP's Houston office.

Editor: According to the U.S. Chamber Institute for Legal Reform, 38 percent of all jobs created in the U.S. in 2010 were created in Texas. To what do you attribute this remarkable feat?

Meadows: Texas is a great place to do business. It is the second largest economy in the United States, second only to California and ahead of New York. It is home to six of the top 50 Fortune 500 companies, and it has 51 of the top Fortune 500 companies, placing it third in the nation behind New York and California. It has an extremely favorable business climate in terms of taxes, labor pool, a very diverse economy and a growing population. It has benefited not only from rising oil and gas prices but also from a stable housing market.

Texas has certainly felt the downturn, but it went into the recession last, and my understanding is it came out first. We have our challenges, but we have the advantage of a very favorable business climate that generates a lot of private opportunity.

Editor: Houston is an area that not only boasts oil and gas production as a strong pillar of its economy, but it has a very diversified economy, having a state-of-the-art medical center and a major seaport. What other major areas have brought wealth to the state?

Meadows: Houston, Dallas and Austin are cities that have attracted substantial foreign investment, with all three among the top 10 in the United States for direct foreign investment. Houston does enjoy the distinction of having the world's largest medical center, and it has also been host to a very active NASA, although that is going to change and create challenges for the city. Our significant oil and gas sector is not just about the production of oil and gas but also about manufacturing the products needed for oil and gas production. This sector and demand for these products have weathered the recession well. In addition, we are seeing increasing activity around the hydraulic fracking industry in parts of the state, and that has been a boost to our economy. In another expansive area, we have the manufacture of high-tech products and an inflow of businesses in the high-tech software sector. Texas Instruments and Dell are proud examples of this. Finally, in terms of points of economic energy in the downturn, I would mention the large military installations that we have in Texas and a young population, which is a high-consumption group as compared with one that is more mature.

Editor: King & Spalding is noted for its expertise in healthcare. With Houston as a major healthcare center, tell us about the firm's work with the major healthcare institutions and providers.

Meadows: We have lawyers working at every level of healthcare delivery in Texas and around the country. Dealing with the most difficult issues and problems facing governmental entities, not-for-profit institutions and proprietary organizations, you will find King & Spalding at the table and in the courtroom for clients like the University of Texas, Emory University, Detroit Medical Center, St. Joseph Health System and HCA.

Editor: Texas officials at first refused to adhere to the new Affordable Health Care Act. Has there been further litigation since the initial filings last year?

Meadows: Texas joined 26 other states in a lawsuit that was brought in Florida to challenge the federal Affordable Health Care Act on grounds that the individual mandate provision requiring the purchase of health insurance is unconstitutional. The district court ruled in favor of the states, declared the mandate unconstitutional and struck down the Act in its entirety. On appeal, it was determined that while the individual requirement for insurance is unconstitutional, it does not invalidate the Act as a whole. Another court of appeals in another challenge to the legislation has ruled that the individual mandate is not unconstitutional, so we should expect the question to reach the United States Supreme Court.

Editor: How much has tort reform contributed to the good business climate that Texas takes pride in? What effect will the enactment of H.B. 274 following the English rule of "loser pays" have in limiting awards for damages?

Meadows: Tort reform in Texas has had a definite impact on litigation in our state, and it has become a showpiece that Texas appreciates how a litigation environment affects business activity and growth. In the medical field, for example, so many doctors have moved to Texas in the last three years, the state has had a difficult time keeping up with the requests for licenses. However, in terms of this recent legislation, H.B. 274, I don't know that it will have a major effect on tort litigation. It does introduce the opportunity for a defendant to have a lawsuit dismissed early if it can be established that the claim has no basis in fact or law, but this is a very high standard that will be difficult to meet; and if the effort fails, the side asking for the dismissal must pay legal expenses of the prevailing party. So, I don't see this feature bringing on a major change. And similarly, the cost-shifting provisions that will now come into play when a settlement offer is made and refused also carry a risk that many will not want to take; so, I don't see the new law greatly changing how cases are settled.

In my view, the most interesting and important feature of H.B. 274 is the provision that calls for new procedures to expedite cases in which the amount in dispute is $100,000 or less. For many, it has become prohibitively expensive and time-consuming to use our courts to resolve a dispute, and with this new legislation we have an opportunity to set up a more efficient process that will bring resolution of smaller claims back into our state courthouses. We do not know how this will work exactly, because it will be up to the Texas Supreme Court to write the procedural rules for the practice. In exercising its rulemaking responsibility, the Texas Supreme Court is advised by a standing advisory committee. The Supreme Court Advisory Committee has been in service for more than 60 years and is made up of lawyers, judges and law professors around the state. I am fortunate to be a member of this committee and am looking forward to our first meeting to take up the question of how to draft the rules that are called for by H.B. 274.

Editor: We have interviewed the mayor of Houston, Annise Parker. She is very proud of the civic accomplishments under her mayoralty.

Meadows: I think Mayor Parker should be proud of what she has accomplished, and I certainly applaud her for the way she is managing the city's finances in a very difficult time. It seems to me that she has done a good job of reducing the city's budget deficit while maintaing the most important programs and services.

Editor: How will Houston be affected by the downturn in federal funding, especially the removal of the NASA space center?

Meadows: I don't think it will have a significant impact on Houston. Even with a wind-down at NASA, any loss of jobs there should be slow-moving. Most of the people who hold those positions are well-educated and highly skilled and will transition into the private sector easily. While it will present challenges for our city, I think that just given the timing over which this will occur and the people that will be most affected, I don't expect it to have a significant adverse impact on our economy.

Editor: Please review for our readers the firm's major strengths in international arbitration. How do you operate with your offices around the world? Please describe some of your recent cases involving arbitration.

Meadows: International arbitration is an area of practice for us that is world-class. King & Spalding has been recognized as one of the Big Four of international arbitration. From Houston, New York, London, Singapore and Paris, we have represented clients in disputes ranging from $1 million to $27 billion; and in representing Chevron in an ongoing dispute with Ecuador, the firm obtained the largest-ever award granted by an investment arbitration tribunal.

Editor: We interviewed your new office in Russia for this issue. I would assume that the firm will have quite a bit of arbitration in that venue.

Meadows: You can be sure that that is going to be an area of activity for us as well.

Editor: Do you expect Texas to continue its accelerated economic and population growth at the same rate it has experienced it over the past few years?

Meadows: I would say without a doubt, I think Texas will continue to grow. We have many newcomers to Texas mostly looking for work, and many are leaving states that are doing as well as Texas. As perhaps never before, people are looking to Texas as a place of opportunity.

Please email the interviewee at rmeadows@kslaw with questions about this interview.