Correction to This Article
An earlier version of this story incorrectly called K&L Gates' Daniel F.C. Crowley by the first name Dennis.

Law firms have struggled, but recession proved to be bullish for lobbying shops

By Amanda Becker
Monday, September 20, 2010

It's been a bumpy ride for law firms over the past year. The recession left many with more attorneys than work, resulting in large-scale associate layoffs that shrunk local head counts and lowered industry morale. In particular, the downturn ravaged practices aimed at business dealmaking and those that catered to banks and financial firms. But it created work for the District's lobbyists, as politicians and regulators cast a wary eye on Wall Street. Many financial institutions paid big bucks to send representatives to Capitol Hill.

How the two groups aligned and adjusted proved fruitful for some -- and could provide lessons for others.

The law firms

If there's any conclusion to be drawn from the latest snapshot of the District's largest law firms, it's that Big Law hasn't gotten any bigger than it was before.

Given the personnel cuts that began en masse in February of 2009 and continued over the next year, Major, Lindsey & Africa associate recruiter Sarah Van Steenburg said "it's not surprising that the numbers look the way they do right now" at law firm offices here in the District.

Since the last time the region's largest firms reported employment data, only three -- Covington & Burling, Hogan Lovells and Patton Boggs -- have more attorneys on their roster than they did before and the increases are nominal. Many, including some that have dropped from the list of the 10 largest as a result of the downturn-driven cuts, show head count losses in the double digits.

After a quiet year, law firms are beginning to strategically beef up practice groups -- regulatory, labor and employment, health-care law -- that should fuel future growth, albeit slowly, recruiters say. "It's still a new world and not by any stretch back to the way it was," Van Steenburg said.

Even given the changed economic landscape, analysts say it could have been worse. Law firms that originated in the District tend to have the well-developed regulatory and litigation practices that typically to do well in times like these.

"I think D.C. was one of the markets less adversely affected by the downturn because fewer of the firms here were as heavily vested in structured finance or private equity as many of their New York counterparts," said Norm Rubenstein, a consultant with the legal advisory firm Zeughauser Group.

The area's largest law firm, Covington & Burling, is one that analysts often cite as the embodiment of the home-grown, District-based firm. The chair of its management committee, Timothy Hester, said the firm's focus on traditional D.C. regulatory work meant that while some practice groups slowed during the recession, there were no "complete outages."

"We didn't have a huge bet on the type of work that is much more cyclical," Hester said.

But even firms that weathered the storm say the recession has caused attorneys to rethink how they can best provide value for their clients. Even at financially healthy companies, in-house counsel are under pressure to cut outside legal costs. Hester said this "acute sensitivity" to cost management will require lawyers to team with clients to deliver more efficient service -- and perhaps in the long term develop stronger relationships.

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