After rapid growth, Washington law firm Howrey fights for survival
Sunday, February 27, 2011
In the infancy of the recession, the Washington law firm Howrey was widely regarded as an industry success story, a hometown firm that had managed to shed its inside-the-Beltway pedigree and turn itself into a global player in antitrust, litigation and intellectual property law.
But just two years after reporting its most profitable year ever, the 55-year-old law firm now stands as a cautionary tale, its towering success all but undone by powerful forces transforming the legal establishment.
The stable of talented lawyers who turned the firm into a powerhouse are defecting en masse to rivals. The firm's once-robust European outposts are nearly empty, its California offices shells of their former selves. The bulk of the partners - a law firm's top revenue producers - who remain have been extended offers to join Winston & Strawn, based in Chicago. And the firm has had to address reports that its collapse is imminent.
The venerable firm is unraveling at a speed that once was unthinkable in the city's staid legal community. Yet its rapid dismantling follows a familiar pattern - lackluster financial results, failed merger discussions, large-scale defections - seen in the dissolution the California law firms Brobeck, Phleger & Harrison; Heller Ehrman; and Thelen in the past decade.
Even as large firms collapsed across the country, Howrey expanded.
"Howrey grew very quickly, and there is sometimes a price to pay for growth," Sean F.X. Boland, Howrey's vice chairman, said in an interview. "We're not a large firm anymore. We lack that balance that you need. . . . Now what we want to do is combine our practices with a firm or firms and get our balance back and move forward."
A D.C. firm, a global player
In many ways, Howrey was the quintessential Washington firm, fundamentally linked to the federal government since its founding in 1956 by Jack Howrey - a chairman of the Federal Trade Commission during the Eisenhower administration - and three partners. The firm made its mark by specializing in antitrust cases, and its base in Washington gave it a natural advantage.
In more recent times, as commerce became more global, corporate clients hired firms with international reach. Howrey responded by acquiring practices around the world, adding outposts to its letterhead that included Dusseldorf and Taipei. At its height, it boasted 700 lawyers in 18 offices, bringing in more than $570 million a year in revenue.
But the same forces that made it easy for Howrey to cherry-pick practices and build its wheelhouse of top lawyers also were instrumental in its slide.
The genteel days when a lawyer might begin and end a career at a single firm - and loyalties were forged with camaraderie and partnership - are largely over. Law firms in Washington and beyond have taken a page from their Wall Street counterparts, becoming as much a big business as the clients they represent.
Lawyers are increasingly transient - loyal to their clients, not their firms. When they walk, they take the clients and leave the firm locked into obligations and real estate leases.
"Law firms are a funny animal. They're very fluid - it's all about the people," Boland said. "As long as you can practice with the right people in the right environment, a little change isn't necessarily bad."