US law firms that have been investing in Texas for years now find themselves with a leg up on rivals in winning business at a major hub of the AI boom.
AI infrastructure company Crusoe Energy Systems turned to Norton Rose Fulbright, a global law firm with deep roots in the state, to negotiate the ground lease in Abilene for the flagship site of OpenAI’s $500 billion Stargate initiative. Crusoe first began using the firm four years ago to help it with Bitcoin mining operations.
“The thing that put us in the way of this work is our previous extensive work on renewable and power projects in Texas,” Norton Rose partner Bryn Sappington, who led a 14-lawyer team on the Abilene deal, said in an interview. “It was, ‘How do you get the power?’ Trying to solve those challenges is part of what positioned us.”
Crusoe turned to another energy market veteran for a joint venture to help fund the Abilene project: Carrie Collier-Brown, a partner in Husch Blackwell’s Austin office who has 25 years doing legal work concerning the Texas wholesale and retail electric markets. She also did energy regulatory work for Crusoe’s crypto mining operations. She said she believes her experience led Crusoe to tap her for the funding venture.
“These projects are like regulatory Tetris,” Collier-Brown said. “Being able to demonstrate that we have experience actually putting together these deals, developing the data center, and structuring the power sale definitely has other clients reaching out to us.”
As the biggest law firms are scrambling to position themselves to cash in on the AI-driven data center boom playing out in Texas and other states, they are winning business by touting their deep experience in the state in a broad range of areas such as energy, real estate and regulation that are essential to completing the projects.
Major US firms such as Kirkland & Ellis and Latham & Watkins opened Texas outposts more than a decade ago, drawn by burgeoning work in energy, health care and tech. Others such as Norton Rose and Vinson & Elkins have grown up with Texas, having a presence in the state for more than a century. Norton Rose and Husch Blackwell merged with local firms, both in 2013.
John Grand, a mergers and acquisitions and private equity partner in Vinson & Elkins’ Dallas office, said AI data centers are “real-estate and power plays” that require law firms to understand the regulatory environment and then secure contracts with big tech companies leasing space.
“That’s not all that different when we’re building big solar field projects or LNG facilities and project development where we need the right location, we need the right access to utilities and the projects,” Grand said. “That’s something we’ve been doing for 100 years.”
Practice Strengths
Other firms benefiting from the AI boom in Texas include Latham, which has helped large asset manager clients such as Apollo Capital Management stake capital for data centers in Dallas. Haynes Boone joined Vinson & Elkins in guiding the initial public offering for Fermi America, a real estate investment trust co-founded by former US Secretary of Energy Rick Perry. Kirkland & Ellis advised Blue Owl on the joint venture with Crusoe to fund the Stargate initiative in Abilene.
To meet demands for versatile legal work, Norton Rose has created a wide-ranging team of lawyers focused on AI data centers. Ammad Waheed, a partner leading Norton’s real-estate group in Houston, said the expertise includes corporate, M&A, securities, and real estate. “We’ve got a very deep bench,” he said.
Husch’s data center team also assisted Galaxy Digital Holdings in closing a $1.4 billion financing facility in August to develop its Helios AI data center campus in Dickens County, in the Panhandle region of West Texas. Collier-Brown said the firm is working on about a dozen more data center projects that require state approval.
Amid the convergence of energy and tech sectors, the “hot topic” is whether the state’s already strained electrical grid can handle the increased demand from data centers, Collier-Brown said. In April, the Texas energy regulator said the state’s grid by 2030 will need to support 208 gigawattsof electricity on peak days. However, it then revised the projection to 145 gigawatts by 2031, she said.
“You cannot have AI data centers in the numbers that we’re projecting without enough power to serve them,” she said.
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