Latham & Watkins’ Energy Practice: Driving Growth and Innovation
A Revenue Powerhouse Fueled by Strategic Reorganization
The energy and infrastructure division at Latham & Watkins has grown to become one of the firm’s most critical revenue engines, generating over a third of its total income. Under the leadership of global chair Justin Stolte, who joined in 2020, the practice now brings in over $2 billion annually. This transformation reflects a calculated shift toward embracing both traditional and emerging energy markets, with a keen focus on integrating artificial intelligence (AI) into its operational and strategic framework.
“AI is not just a technology story; it’s fundamentally a power story,” Stolte remarked, emphasizing the intertwined relationship between technological advancements and energy demands.
The Firm’s Decade-Long Financial Ascent
Ranked as the second-largest law firm globally by revenue, Latham & Watkins reported $5.5 billion in earnings for 2023, more than doubling its revenue from a decade earlier. Much of this growth stems from advising on high-profile transactions in capital markets and private equity. However, the energy practice, with its 300% revenue increase under Stolte, has quietly emerged as a vital contributor to the firm’s success.
By 2023, the energy practice generated revenues comparable to those of an entire AmLaw 25 firm, marking its importance within the industry. This growth reflects a balanced focus on traditional sectors like oil and gas and emerging renewable energy projects.
Expanding Expertise Through Strategic Recruitment
In response to the rising demand for specialized energy and infrastructure expertise, Latham has onboarded over 30 partners to its energy practice in the last four years. This aggressive recruitment strategy has bolstered its team to include more than 675 lawyers globally, establishing a presence in key markets such as Houston, New York, and London.
“In a competitive market, retaining top talent is critical,” Stolte explained.
Latham’s energy lawyers navigate a diverse portfolio, seamlessly transitioning between conventional projects and renewable energy deals. Recent highlights include advising Woodside Energy Group Ltd. on a $2.35 billion clean ammonia project acquisition in Texas and assisting ExxonMobil in a hydrogen and ammonia facility transaction. Additionally, Stolte led the team representing Kayne Anderson’s $2 billion purchase of oil and gas assets in Utah’s Uinta Basin.
Houston’s Competitive Legal Landscape
Houston, often regarded as the epicenter of energy law, has become increasingly competitive. Over 60 prominent law firms have established offices in the city since 2010, drawn by its thriving energy sector. Among these, Clifford Chance’s recent foray into Houston with an initial 10 partners, expanding to 15 within a year, exemplifies the city’s allure.
Despite stiff competition, Latham remains a dominant force. Stolte himself was courted by leading firms like Paul Weiss for their Houston expansions, underscoring his stature in the field.
AI: A New Frontier in Energy Demand
The rise of generative AI is fundamentally reshaping global energy needs. Data centers housing AI processors are projected to see their electricity consumption multiply by four to ten times by 2030, according to Bloomberg Intelligence. This escalating demand presents significant opportunities for Latham’s energy practice.
In October, Latham advised the Canada Pension Plan Investment Board on a $15 billion joint venture with Equinix Inc. to expand hyperscale data centers. The firm’s energy expertise extends globally, with projects in Europe, Latin America, and Southeast Asia.
“Natural gas will be indispensable in meeting AI’s growing energy requirements,” Stolte noted, advocating for a balanced approach combining renewable and carbon-based energy sources.
Navigating Political and Regulatory Challenges
While the Inflation Reduction Act has propelled green energy projects through substantial tax incentives, shifting political winds could pose challenges. President-Elect Donald Trump’s vocal criticism of the act as a “green new scam” may threaten its future impact.
Yet, the intersection of AI and energy continues to draw robust investments, particularly from alternative asset managers—a cornerstone client base for Latham. “This wave of work is just beginning,” Stolte observed, signaling a bright future for the practice.
A Vision for the Future
Latham & Watkins’ energy practice stands as a testament to strategic foresight and adaptability. By embracing both traditional energy sectors and the demands of emerging technologies like AI, the firm has positioned itself at the forefront of a rapidly evolving industry. With its innovative approach, Latham is poised to lead the legal landscape in addressing the world’s complex energy challenges.
