Andrews Kurth, LLP

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Andrews Kurth, LLP

600 Travis, Suite 4200
Houston, Texas 77002
U.S.A.
Telephone: (713) 220-4200
Fax: (713) 220-4285
Web site: http://www.andrewskurth.com

Private Company
Incorporated: 1902 as Andrews & Ball
Employees: 900
Sales: $176 million (2003 est.)
NAIC: 541110 Offices of Lawyers

Andrews Kurth, LLP is one of the ten largest law firms in the state of Texas, with more than 400 lawyers. The firm offers services in a number of different areas, with specializations in corporate/securities work, litigation, bankruptcy, taxes, trusts and estates, and public law. The firm's clients have included energy companies El Paso Corp., Conoco, and Enron, as well as Goldman, Sachs & Co., Aetna, Howard Hughes, the government of Argentina, and various U.S. federal agencies. Andrews Kurth has offices in Houston, Dallas, Austin, and The Woodlands, Texas; Washington, D.C.; New York; Los Angeles; and London.

Beginnings

Andrews Kurth traces its roots to 1902, when Frank Andrews and U.S. Congressman Thomas Ball founded a law firm in Houston, Texas. Andrews & Ball's early years saw them perform work for railroad companies including Gulf Coast Lines, which they helped set up. In 1904 former Appellate Judge Sam Streetman joined the firm, after which it became known as Andrews, Ball & Streetman. Other early clients included local banks such as Bankers Trust Company and Union National Bank, both of which the firm helped found. In 1913 a new attorney, Melvin Kurth, joined the group.

In 1914 Andrews, Ball & Streetman assisted Howard Hughes, Sr., in the formation of the Hughes Tool Company, beginning an association that would last for seven decades. In 1915 Frank Andrews was appointed receiver of the bankrupt Gulf Coast Lines, which was reorganized in 1917 as the New Orleans, Texas, & Mexico Railroad with Andrews as chairman. By now the firm had grown to employ 13 lawyers.

During World War I Frank Andrews served as chairman of the Draft Board, and two of the three lawyers who left the firm to serve abroad were killed. The 1920s saw an expansion of the firm's railroad work with new clients Missouri Pacific Lines and International & Great Northern. In 1923 Andrews, Ball & Streetman won a $2 million judgment in a receivership case, one of the largest in Texas to that time. Much work continued to be performed for Hughes Tool Company, which was taken over in 1924 by Howard Hughes, Jr., after his father's death. In 1929 the firm's offices were moved to the 22nd floor of Texas' tallest skyscraper, the Gulf Building.

Leadership Changes During the Depression

The Great Depression saw the firm struggle with a decline in work as well as the deaths of four of its five senior partners in 1932 and 1933. Melvin Kurth and Robert Kelley took on leadership roles, with Kurth taking the firm's top position in 1936 after Frank Andrews's death. Much work came from New Deal agencies the Reconstruction Finance Corporation and the Federal National Mortgage Corporation, as well as General Crude Oil Company and Southland Paper Mills, Inc., which the firm helped organize in 1933 and 1938, respectively.

World War II had a major impact on the firm, which saw ten of its 23 lawyers enter the service while the workload of the rest increased due to the bustling wartime economy. In 1946 the firm lost its railroad business when a key partner left, and it reorganized as Andrews, Kurth, Campbell & Bradley and continued working for other clients including Hughes Tool.

During the 1940s the firm secured a $1.2 million tax refund for Hughes Tool, as well as representing Howard Hughes, Jr., before a Congressional committee that was investigating the construction of his massive wooden airplane, dubbed the "Spruce Goose" by pundits. In 1951 Andrews, Kurth, Campbell & Bradley won a record court settlement in Oklahoma for Hughes Tool in a patent infringement suit.

Highlights of the 1950s included a growing specialization in the complex legal issues related to the natural gas pipeline industry, with new clients including El Paso Natural Gas Co. and newly formed Pacific Northwest Pipeline Company. The firm also began working with Southwest Forest Industries, Inc. and helped charter Southern National Bank.

In the 1960s the firm, now known as Andrews, Kurth, Campbell & Jones, gained national recognition for its bankruptcy and corporate reorganization practice after it assisted in the reorganization of Westec. In 1963 the firm moved into new quarters in the Humble Building and formed a new management committee to lead it after Melvin Kurth's retirement that year.

Work during the decade included representing El Paso Natural Gas in a drawn-out antitrust case, and advising Howard Hughes on the $546 million sale of his majority stake in Trans World Airlines, as well as his subsequent move into Las Vegas real estate.

In the early 1970s the firm's work for Hughes included advising on the $150 million public offering of shares in the Oil Tool Division of Hughes Tool, and winning the reversal of a $145 million antitrust judgment which reached the U.S. Supreme Court. In 1974 Transcontinental Gas Pipeline Co. (Transco) retained the firm as its financing and regulatory counsel, and it began to take on lawsuits over so-called "take or pay" natural gas sales contracts to industrial customers.

Estate of Howard Hughes Brings Work in 1976

On April 5, 1976, reclusive billionaire Howard Hughes died. Because he had not left a will, the disposition of his business empire fell to the courts. Andrews, Kurth, Campbell & Jones was kept busy looking into claims of kinship, liquidating assets, dealing with tax issues (three states initially claimed Hughes as their legal resident), and resolving litigation. Though numerous purported wills soon appeared, naming heirs that ranged from Western movie actor Hopalong Cassidy to a Utah service-station operator who had supposedly once given Hughes a ride in the desert, none was ultimately deemed valid.

The 1980s saw the firm's bankruptcy work grow, and it handled the filings of such companies as Braniff, Continental Airways, Global Marine, Republic Bank, and Texas financiers the Hunt brothers. The Savings and Loan meltdown was the firm's biggest source of work during the decade, as it represented the Federal Savings and Loan Insurance Corporation (FSLIC) in closing and liquidating the assets of numerous bankrupt thrifts.

In 1984 the firm, now using the name Andrews & Kurth, opened a new office in Dallas through a merger with a five-lawyer litigation firm. It had earlier opened a one-person office in Washington, D.C., that primarily represented Transco.

The mid-1980s saw resolution of tax claims against the Hughes estate by the U.S. Internal Revenue Service and the states of California and Texas. By 1985 Andrews & Kurth employed 128 lawyers. Some 35 percent of its work consisted of litigation, 32 percent was corporate or securities law, 11 percent was tax work, 6 percent was trusts/estates, and 5 percent was labor law. In 1986 P. Dexter Peacock took over as head of the firm's managing committee. He was keen to see it grow in size and diversity, and over the next five years Andrews & Kurth would more than double its ranks of lawyers.

In the early 1980s the firm's tax lawyers had developed a new business entity called the master limited partnership (MLP), which was structured somewhat like a corporation and traded on stock exchanges, but was taxed as a partnership, thus avoiding corporate income tax. By mid-1987 nearly 100 MLPs were trading on major stock exchanges and officials of the Reagan administration were publicly decrying the threat the lost taxes posed to the federal budget. The firm's development of the concept had helped make it the national leader in setting up MLPs.

In 1988 an office was opened in Los Angeles, which was expanded the following year through the acquisition of the nine-lawyer oil and gas specialty firm Bright & Brown. By 1990 Andrews & Kurth employed 270 lawyers and was the seventh largest law firm in Texas. Major clients included Santa Fe Energy Co., Transco, El Paso Natural Gas, Aetna Life & Casualty, Amerada Hess, and Goldman Sachs & Co. Annual revenues were estimated at $67 million.

In 1990 the firm opened an office in New York with three lawyers, which soon grew to 24 through the acquisition of Ross & Korff. The following year saw Andrews & Kurth begin the lengthy process of settling the affairs of the bankrupt Bank of New England, and also begin helping Argentina privatize its state-owned oil and natural gas companies. The latter were sold at public offerings in 1992 and 1993 for a total of $7 billion. The firm's work for Argentina raised its profile in Latin America, and led to a steady stream of work south of the border.

Company Perspectives:

Straight talk is how we communicate—with clients, colleagues, courts and adversaries. It's our promise to give you advice instead of just options, the bottom line instead of lawyer-speak, and the truth about where you stand and what we think. Though our individual styles may vary, our constant goal is to cut through confusion and help you succeed.

Straight talk is what countless law firm clients across the country have asked for—and what we think you deserve.

These are the straight talk rules we live by: don't hide behind legalese; choose a direction; adopt the client's perspective; tackle problems head-on; find simple solutions; meet deadlines; stay in touch; tell clients what they need to know, not just what they want to hear; know what comes next; respect our client's time; bridge the gap.

Restructuring in 1992

Andrews & Kurth was run as a democratic organization, with partners voting on everything from critical issues to the type of flooring used in the firm's elevators. Though staff numbers had been rising steadily since the mid-1980s, profits per partner were declining, and the lack of strong central leadership saw the firm reach a state of crisis by late 1991, as it reportedly edged close to dissolution. To improve matters, the new head of the firm's managing committee, Alfred H. Ebert, Jr., chose Washington, D.C. partner Rush Moody to head a restructuring committee. After two months it submitted a report that urged the firm be run more like a corporation, with a CEO and a board of directors making most decisions, and only major issues requiring a vote of all of the firm's partners.

Though Moody was recommended for the role of managing partner/CEO by his own committee, he initially turned down the job, finally signing on in April 1992, while Ebert took the title of board chairman. Moody worked swiftly to right the ship, taking such measures as reducing the firm's support staff from 377 to 311, downsizing the underperforming Dallas office from 33 lawyers to nine, and paring the management committee, which was reduced from 11 members to 7. The firm's timekeeping and billing methods were also examined and found to be highly inconsistent, and Moody streamlined them and set new billing deadlines.

Successes of the year included finalizing the spinoff of El Paso Natural Gas from Burlington Resources, and assisting in the return of medieval artwork stolen from Quedlinburg, Germany, by a Texas soldier during World War II. The year 1992 also saw Andrews & Kurth lose a lucrative contract working for the Federal Deposit Insurance Corporation (FDIC), to which it had billed some $6.7 million since 1988. The firm's 1991 charges were audited, and the FDIC declared $855,000 in fees unacceptable, the highest amount among several firms that were examined. Though Andrews & Kurth admitted to some errors, it also complained that the audit was arbitrary and unfair.

The firm got back on track in the early 1990s, opening a new office in the Houston suburb of The Woodlands and adding staff to its Dallas office. By 1995 Andrews & Kurth's annual revenues stood at $96 million, with per-partner profit payouts of $435,000. The firm was now deriving 30 percent of its revenue from corporate/securities work, 28 percent from litigation, and 14 percent from real estate.

The mid-1990s also saw much mergers and acquisitions work, including assisting with the 1996 purchase of Tenneco by El Paso Energy for $4.2 billion, as well as helping set up a number of public stock offerings. The firm also added a one-person office in London, England, during this period.

In the spring of 1996 Andrews & Kurth began preparing for Rush Moody's retirement as managing partner, as it began to grapple with deciding on whether to pursue becoming a national practice, or remaining a regional one. The partners ultimately voted to strive for a national practice while retaining full-service offices in Houston and Dallas. They also made new changes to the management structure, shortening terms on the managing committee from three years to one, and chose a new managing partner, Howard Ayers, who would take control the following year.

In the first half of 1997 Andrews & Kurth lost more than 25 lawyers, including ten who left to form their own litigation practice in Houston, leaving a total of 230. After Ayers took control the firm's energies were refocused, and partnership share payments began increasing faster than revenues as a whole.

The last details of the Howard Hughes estate were finally worked out in 1999 when his Las Vegas properties were merged to create Rouse Company, for which the estate's beneficiaries were issued ownership shares. A total of more than 100 people ended up sharing the estate, with legal fees estimated to have amounted to more than any single person's share. By now Andrews & Kurth had 243 lawyers, and its annual revenues had reached $114 million.

In February 2000 the firm announced that it would raise associate lawyer base salaries by 20 percent, to $104,000 from $86,000. The move was made to remain competitive with other large law firms, which had also begun raising their associates' pay dramatically.

2001 Merger Bringing Over 100 New Lawyers

Having lost ten partners in 2000, Andrews & Kurth rebounded in October 2001 when it merged with the 107-lawyer Mayor, Day, Caldwell & Keeton, after absorbing that firm's public law group earlier in the year. The year 2001 was a boom year for bankruptcy and energy work for the firm, as the depressed economy took its toll on corporations and gas prices soared. Energy clients now included Enron Corp., El Paso Corp., NRG Energy, and Conoco. The firm also opened a new office in the state capital of Austin during the year.

By the end of 2001 Andrews & Kurth had more than 350 attorneys, including four recently added in a merger with Austin-based Cavazos, Lanagenkamp, Morin & Ferraro, and 22 newly hired associates. The growth put the firm into the top 100 U.S. law firms for the first time, and made it one of the ten largest in Texas. Revenues now stood at $164 million.

In December 2001 Enron filed for bankruptcy protection, the largest such filing in U.S. history. Andrews & Kurth, which had been paid $13 million by the energy company over the preceding 12 months, would act as one of several special counsels in the case, though it did not take a lead role.

Key Dates:

1902:: Frank Andrews and Thomas Ball form a law firm in Houston, Texas.
1914:: Firm helps Howard Hughes, Sr., form Hughes Tool Company.
1936:: Melvin Kurth takes over leadership of firm.
1946:: Firm becomes known as Andrews, Kurth, Campbell & Bradley.
1950s:: Gas pipeline law becomes a specialty.
1976:: Death of Howard Hughes brings firm work sorting out his estate.
1980s:: Firm's lawyers develop master limited partnership corporate structure; company more than doubles in size to 270 lawyers by end of decade.
1992:: Firm restructures; Rush Moody is named managing partner.
1996:: Partners vote to seek national practice, name Howard Ayers managing partner.
2001:: Merger with Mayor, Day, Caldwell & Keeton brings over 100 new lawyers; firm begins work on Enron bankruptcy.
2003:: Name is shortened to Andrews Kurth.

The firm celebrated its centennial in 2002, and grew to employ 400 lawyers during the year. More were added in 2003 when groups were absorbed from the Austin office of Brobeck, Phleger & Harrison (specializing in technology), the Dallas office of Arter & Hadden, and from Dorsey & Whitney, a Washington, D.C.-based group of Internet law specialists. The firm also began work on a branding campaign in 2003, which led to a decision to streamline its name to Andrews Kurth.

The Enron bankruptcy examiner's final report, issued in November 2003, concluded that outside counsel from Andrews Kurth and Vinson & Elkins had likely aided and abetted Enron executives' breaches of fiduciary duty, though it noted that they were probably not legally culpable. Several Enron creditors asked the bankruptcy judge for permission to sue the two firms for their roles in helping set up the numerous "off-the-books" partnerships that appeared to have been used to artificially boost the corporation's profits. Andrews Kurth declared it had done nothing wrong, and vowed to defend itself.

Despite such controversy, in 2004 the firm reached the top rankings nationally for its work in several areas, including corporate law, equities, and municipal bonds. In January 2005 Andrews Kurth represented El Paso Corporation in a $179 million production company acquisition, and several months later the firm won a $458 million judgment for Paragon Trade Brands against Weyerhaeuser Company.

More than a century after it began, Andrews Kurth LLP had grown into one of the ten largest law firms in Texas, with specialties in corporate and securities law, litigation, estates, taxes, and other matters. It was now nationally ranked in a number of specialty areas, and its growth was continuing through mergers and the hiring of new lawyers.

Principal Competitors

Akin Gump Strauss Hauer & Feld, L.L.P.; Vinson & Elkins L.L.P.; Fulbright & Jaworski L.L.P.; Baker and Botts L.L.P.; Locke Liddell & Sapp LLP; Bracewell & Patterson L.L.P.; McCall, Parkhurst & Horton.