June 07, 2016 Articles

In-House Spotlight: Raymond A. Hafner IV of Linn Energy

An interview covering his career path, his role as an in-house attorney, and the challenges facing the industry.

By Will Taylor – June 7, 2016

Raymond A. Hafner IV, counsel for Linn Energy, sat down with Energy Litigation newsletter editor Will Taylor to discuss his career path, his role as an in-house attorney, and the challenges facing the industry.

How would you describe the day-to-day business of Linn Energy?

We are an upstream oil and gas company with a focus on North American long-life, low-decline assets, where we can make improvements and achieve better long-term results than companies that are looking to make money more quickly. Our operations and assets are located in the contiguous 48 states. If everything is going according to plan, it should be a very boring business, but because our assets are numerous and geographically diverse, there are a lot of stakeholders with a day-to-day interest in our operations.

What changes have you seen in your business over the past few years?

The biggest change is obviously the drop in oil prices. At $100 a barrel, there are not many projects that do not make sense and it is easier to grow and keep stakeholders happy. But the drop in oil prices has also coincided with increased regulatory scrutiny, and together those two factors do not leave much room for error. The good thing about being on the legal side of the business is that lawyers are able to add a lot more value during difficult times or when the company is facing challenges

How has Linn Energy weathered the industry downturn over the past year? How has it affected your business?

Linn and other companies have become highly focused on operating as efficiently as possible and prioritizing projects that are economic in this price environment. As with the rest of the industry, though, Linn has been working through its financial issues and how to order our capital structure and how to retain talented employees. But, again, this is an area where lawyers are able to add a lot of value, and you get to deal with novel legal issues.

What type of legal issues does Linn Energy face on a regular basis?

I primarily handle disputes, and the most common types of disputes involve stakeholders connected to operations, such as surface owners, royalty owners, or personal injury cases involving contractors. During the downturn, we have seen a significant uptick in quiet title cases alleging our leases have expired due to low production. We have also seen an increase in cases in which Linn is a plaintiff seeking compensation from a vendor or working interest owner. There are also dozens of state, federal, and even tribal governmental agencies to which we report and with which work on a variety issues, from environmental inspections, employment issues, and ensuring we correctly pay federal and Indian leases. Because we operate in so many states and different areas of the country, we are always seeing new issues.

What is the litigation philosophy for your company?

The overwhelming majority of our litigation is not material, and so our goal is almost always to achieve a quick and efficient resolution that allows the parties to move forward. I am always happiest when I can resolve a case before it is filed or before I have to hire outside counsel because that can be my biggest value-add to the company. If I can add those matters up over the year and the avoided costs of litigating total more than my salary, I know that I have some job security. But if there is an issue worth litigating or a dispute in which we do not think we are liable, we will get the best counsel we can and are willing to fight all the way. The key question in-house is always “what is the best result for the company?” compared to “what is the best result for this case?”

Can you describe how your career has developed from law school, through private practice to your current position with Linn Energy?

When I went to UVA [University of Virginia], I took on extracurriculars that provided substantive experience, including a criminal defense clinic, arbitration moots, and intramural moot court. I was one of those 3Ls in the library in the spring writing an entirely voluntary brief. I started my career at Jones Day, and I do not think there was a better law firm for a person like me because the system really was merit-based. If you raised your hand, you largely got to do the work. I had a few lucky breaks, and early on I was doing work that would normally go to senior associates. I spent almost half my career at the firm working on one large matter with hundreds of attorneys involved across almost a dozen firms. My soft skills and the way I was able to be responsive to the many client and partner needs got me noticed, and at one point I was the only associate allowed to send emails to various people at the client. It was not the most fun because I had to field dozens of requests at all hours and then translate, edit, and prioritize the requests, but it made me realize that I was uniquely good at communicating with lots of different people, in a way that many attorneys are not. That realization led to my decision to go in-house. Simply being able to talk to different types of people—from accountants to field operators to IT [information technology] engineers—is a major part of what I do now and how I am able to successfully resolve disputes before they lead to litigation. Really listening to what a client needs, understanding the full scope of the issue, developing a solution, and then anticipating future needs or how to avoid future issues is a major part of my practice.

How has your job changed over the past few years?

In the same way that I would raise my hand at the firm, once I proved I was able to do the job for which I was hired—manage litigation—I was given the opportunity to expand my role into handling compliance, regulatory, and environmental issues. I have also worked on deals and negotiated a variety of agreements. Unlike in a law firm where the goal is to become a specialist, my goal in-house is to develop into a generalist so that even if I do not know the right answer, I at least know the right questions. My approach to career management is pretty simple, which is to do good work and make your client’s job easier. In my experience, if you can consistently do good work and handle new responsibilities, the opportunities will follow.

What is your favorite part of the job?

I love getting to do new things and learn new areas of the law. I like getting a new set of facts and learning new aspects of Linn’s business. I also enjoy managing a much larger docket compared with my case load at the firm. If it is new, it is going to be interesting to me. But there is definitely a learning curve, and I have to recognize when I need help or more experience. When I started, the latest hire was responsible for negotiating our IT contracts and licensing agreements, which I had never done. I was told to just do a redline, make everything in our favor, and then negotiate the details until I got the hang of it. I had never even redlined a contract before, but I followed the advice, and when I sent the contract back to the software company, I had inadvertently assigned my company all the IP rights to their software. Fortunately, their in-house lawyer was exceedingly patient and calmly explained that they would not be able to agree to that as it would ruin their business. In my head, I was embarrassed but told them we could live with the original language. Eventually, I learned how to do those types of agreements, but it takes a little courage to try new things where you know you do not know what you are doing.

When hiring outside counsel, what do you look for?

There is a Tolstoy line that “All happy families are alike; every unhappy family is unhappy in its own way” and it is the same for outside counsel. My best outside counsel all do the same things well, and my less favorite outside counsel do a wide variety of things I do not like. The best outside counsel are responsive, are experts in their field and jurisdiction, avoid surprises in the matter and on the budget, communicate at all major decision points, and make me feel completely confident in trusting them with a matter. They give you that sense of confidence in a variety of ways, including raising issues you did not think of, being willing to tell you that you are wrong, or always being prepared with options on how to proceed. They are always your first call whether you ultimately hire them or not. Nothing makes me more nervous about an outside lawyer than when I am raising issues or asking questions that lawyer has never thought about.

If you were to give advice to young lawyers who want to wind up where you are today, what advice would you give them?

Make sure your soft skills are strong, and grow and maintain a wide professional network. In-house litigation positions are rare, and if no one in or near the company can personally recommend you, you will be at a disadvantage. But it can be as simple as having a law school classmate working at a company you see a job posting for and you have stayed in touch over the years, which is what helped me. I would also recommend starting your in-house search early and being patient for the right opportunity.

In terms of doing the job well, you have to have enough experience—including depositions and court appearances—to understand what you are hiring outside counsel to do. Without that, you will not have the confidence to tell an outside lawyer making $900 an hour that you want to take a different approach or, even worse, you will fail to understand the merits of the lawyer’s position. You should talk to and listen to war stories from all the experienced lawyers you meet because in a way their experience can become yours and you can apply it to the matters you have in-house. The in-house environment is very different. In a law firm, the advancement process is relatively simple: You do lots of work and do it well. In an in-house environment, the dynamic is more complex. As an in-house attorney, you are a cost center and your biggest victories will likely involve avoiding litigation altogether. The metrics on which you are evaluated are more complex. It is not all about billing hours.

When you are not working, how do you spend your free time?

I am a voracious reader and love watching great television shows, such as Better Call Saul, which is one of the funniest and most accurate depictions of lawyering ever made. On weekends, I try to spend my time outdoors, cycling or playing disc golf, and if it is the fall, I am usually watching University of Houston football.

If you woke up tomorrow and could not be a lawyer, what would you do for a living?

I would probably go back into journalism, which I used to do. I love long-form journalism and nonfiction business books. It was always a blast to just call up decision makers or people in the news and find out what was going on. When I became a lawyer, I realized that what happens behind closed doors is much more interesting than what is in the press and the best journalists are able to put you inside those closed doors. If I was not bound by the duty of confidentiality, there are tons of great stories I would want to tell.

Keywords: energy litigation, Raymond A. Hafner IV, Linn Energy

Will Taylor is an associate at Jones Day in Houston, Texas.

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