Oil & Gas Deals Are Tanking. The World’s Top M&A Law Firm Has Been Here Before

Kirkland & Ellis, the top legal adviser for US oil and gas deals, has seen a significant downturn in its energy and infrastructure business as deal volume in the US oil patch has decreased by over 40% this year, according to Bloomberg data. This decline is attributed to the impact of the U.S. president's global trade war on crude oil prices, which has stifled transactions. Kirkland has also become one of the firms caught up in the US government’s attacks on big law.

Analysis

Kirkland & Ellis, a leading legal adviser for US oil and gas transactions with a substantial energy and infrastructure business developed over the past decade, is currently navigating a challenging market. Bloomberg-compiled data indicates a significant contraction in US oil patch deal volume, which has fallen by over 40% this year. This downturn is primarily attributed to the adverse impact of the US president's global trade war on crude oil prices, which has consequently suppressed M&A activity in the sector. Compounding these market-driven challenges, Kirkland & Ellis, along with other major law firms, is reportedly facing increased scrutiny as part of a broader US government focus on "big law." The prevailing sentiment surrounding these developments is strongly negative, reflecting the difficult operating environment for M&A in the energy sector and the added pressures from governmental oversight.

Key Decisions for Investors

• Investors exposed to the oil and gas sector should closely monitor the ongoing impact of trade policies on crude prices and M&A volumes, as a sustained downturn could further pressure valuations and capital investment plans.
• Consider the broader implications for service providers to the energy M&A market, as reduced deal flow may impact revenues and profitability for legal, financial advisory, and due diligence firms specializing in this area.
• Observe developments related to US government scrutiny of large law firms, as this could signal potential regulatory shifts or increased operational complexities for firms in the legal sector, potentially impacting their cost structures or business models.