Kyle Sanders, Managing Partner, Gray Reed

In an interview with Invest:, Kyle Sanders, managing partner at law firm Gray Reed, discussed Houston’s diversified economy, rising M&A activity, and Gray Reed’s integrated approach to serving mid-market businesses. Sanders also highlighted the firm’s investments in artificial intelligence, its focus on developing young attorneys, and the growing opportunities surrounding data centers. “We’re selling people a home, not a rental,” Sanders said of the firm’s approach to recruitment and retention.

How would you describe Houston’s business climate, and what are clients most focused on in the current economic environment?

Houston’s economy remains strong and diversified, even though everything seems to touch energy. It is also diversified through healthcare and other sectors. Over the past several years, clients have increasingly wanted a more integrated service model. They are not just looking for a law firm; they are looking for a partner in the direction and strategy of their business.

Several years ago, we started Gray Reed Advisory, a business consulting arm. It allows us to provide an integrated service model and address clients’ business issues beyond their legal needs. Gray Reed Advisory includes our government relations and public relations practices, meaning we can be a full-service firm for clients, especially during a crisis. That has become a powerful tool as we continue serving mid-market businesses in Texas.

Which legal practices are experiencing the greatest demand, and how has that shifted in recent years?

The economy will always create shifts regarding which practice groups are busiest. Last year, our restructuring and litigation practices led the way. 

Over the last two years, our mergers and acquisitions practice has grown incredibly busy. When economic uncertainty increases, some deals pause. I think people have worked through at least some of that uncertainty, and those deals are now moving forward. We have experienced incredible deal flow. From 2024 to 2025, our deal activity increased from 49 transactions to 75. Our energy practice group ranked second among Texas dealmakers, with 28 energy transactions totaling nearly $2 billion. That is the area that has most significantly increased its productivity and deal flow over the last couple of years.

Which industries do you believe will create the greatest opportunities in Texas in the coming years?

One of the latest trends is data centers and all the disciplines required to establish them and get them operational. It has become a relatively new sector for many firms as data centers have grown more prevalent. We established what we call our GRIDS program to assist with data center acquisition and startup. I believe that will remain a growing area as data centers become increasingly important.

Clients will continue to face regulatory needs and concerns about protecting their businesses from legislative, public policy, and litigation perspectives. As we gain more certainty about the economy and its direction, deal flow should increase. Companies will become more willing to merge, acquire, and make significant investments. That activity has not declined dramatically in Texas, but we see an opportunity for further growth.

How is AI changing Gray Reed’s operations and the practice of law?

We are seeing a change in how law is practiced. Some young associates are understandably concerned about whether AI will replace services they typically provide, but that is not what we have seen. Previously, an attorney might spend 80% of their time analyzing and reviewing documents before reaching the 20% that requires creative thinking. That balance has shifted. Much of the drudgery can now be accomplished in minutes, allowing attorneys to move directly to the critical-thinking portion of a project, where they bring the greatest value.

AI has benefited the firm and given us a greater platform to serve clients directly. It lets us spend less time on tasks and more time addressing clients’ substantive needs.

How does the firm help clients navigate increasingly complex regulatory and compliance requirements?

There is no single answer because every client has a different compliance or regulatory issue. Our responsibility is to offer services that are broad enough to respond to those individual needs.

Having a government relations practice and people on the ground in Austin who regularly handle these matters and understand the regulatory processes is critical. It has become an increasingly important function of the firm to maintain those relationships and have professionals working directly in Austin.

What cybersecurity and data privacy risks are becoming priorities for business leaders?

Data privacy is a critical issue for every business, and it connects directly to our advisory practice. We have counseled clients and helped them respond to security incidents or data breaches. We also consult with businesses before an incident occurs so they can remain compliant and better protected in the data privacy arena.

This will continue to challenge every business because the threats evolve daily. The protections must evolve daily as well.

How is Gray Reed approaching recruitment, retention, and the development of the next generation of legal professionals?

We have always hired young lawyers and attorneys coming out of law school with the intention that they will one day become our partners, rather than treating them as disposable or fungible assets. That approach has served us well. Our culture and our relationships with young lawyers are different from the traditional Big Law dynamic, allowing us to attract and retain talent. Our retention rate remains between 90% and 92%, which is at the top of the market by a good margin.

The recruiting landscape has recently shifted. Big Law firms have accelerated their recruiting efforts, and offers are now going out to young lawyers during the first semester of their first year of law school — not only for summer positions but also for permanent roles. We are responding to that change, but we will continue marketing ourselves as we always have: We’re selling people a home, not a rental.

That philosophy has enabled us to acquire and retain talent, which is also the source of our growth. As young lawyers develop their practices, generate business, and become partners, we grow organically beneath them. That organic model has fueled our evolution and expansion over the last decade.

What are the firm’s priorities for the next two to three years?

We remain committed to being a midsized Texas-based firm serving mid-market companies because we believe that is an underserved sector. We intend to remain within that market.

We also need to stay nimble as our clients’ needs shift. With the evolution of AI, those needs are changing more rapidly than before. Clients now have access to many of the same resources we do, so we must continue finding ways to stay ahead of the market through premium client service.

Another priority is retaining our talent and developing young partners who can eventually lead the firm. Gray Reed is arguably in its third generation. We successfully transitioned from the first generation to the second, which is a significant challenge for many firms, and we have already moved into the third while looking toward the fourth. Succession planning will remain a focus. We need people who love the firm as much as those who came before them and who will care for it before passing it to the next generation.

What gives you confidence in Houston’s future?

Texas’ economic landscape remains favorable and attractive to businesses relocating to the state and Houston. Houston remains a strong economic hub, supported by its concentration of Fortune 500 companies and its commitment to fostering economic development and entrepreneurial opportunities. We are confident that Houston will remain a strong economic center and continue to grow.

Gray Reed has remained committed throughout its existence to being a mid-sized Texas firm serving the mid-market. A decade or two ago, many firms left that segment as they pursued greater scale or struggled to transition from their first generation to the second. We stayed committed, and the market has now grown back into our wheelhouse. Clients value that we provide Big Law-quality service at regional rates, creating significant value for the companies we serve.