IN OCTOBER, one of Washington's most formidable law firms -- Arnold & Porter -- will inaugurate its posh new quarters in the recently-completed Thurmond Arnold building at 1200 New Hampshire Ave. NW.

And when they do, they will simultaneously unveil the largest art collection yet assembled by a law firm here -- paintings by Morris Louis, Helen Frankenthaler and Gene Davis, along with sculpture, prints, drawings, and photographs by 75 other American contemporaries -- all acquired at an estimated $250,000.

"Many of us have art in our own homes, why not in the office?" says Arnold & Porter's partner James McAlee, who heads the firm's art committee, but refuses to discuss cost. "We decided that we'd outgrow the campus-like atmosphere of our townhouse headquarters and needed a modest art collection to warm the walls of a contemporary building. It's a trend, you know. Many law firms are doing it."

Of course, there is no doubt, as any Washington dealer will happily attest.

Why? Some lawyers appreciate art; some depreciate it along with the office furniture. Whatever their reasons, law firms all over town are buying art these days, and their bulk-buying habitsd have become a major force in the art market here.

Contemporary art, along with the plaque at the door and the carpeting on the floor, has now become de rigueur in classy law offices.And the visitor to Arnold & Porter will see all three immediately upon exiting the elevator at the eighth-floor reception area -- the topmost of four floors occupied by the firm.

On the right is the brass plaque declaring the firm's imprimatur, hung almost subliminally, reassuringly, on the angled interior walls. Thus becalmed by implications of tradition, the eye sweeps willingly across the vast expanse of carpet to the Morris Louis painting, a strong and beautiful one titled "Blue Stripe."

Thus lured to the Louis, the visitor is then likely to be drawn toward one of the luxurious seating arrangements, or around the corner to the left where a large stripe painting by Gene Davis overlooks a dramatic triangular courtyard. A ho-hum Frankenthaler painting punctures the end of this corridor, but the next turn reveals a major black painting titled "Disc" by Sam Gilliam -- by far the firm's most daring acquisition.

Strolling on past several pairs of rooms containing coffee and Xerox machines, one arrives at the dining room, where a Stuart Davis tapestry will hang. One inevitably stops to marvel at what looks like a cocktail lounge adjoining a broad terrace, graced by a Peter Reginato sculpture. This "Garden Room" is where members of the firm gather for evening cocktails and conversation, and a large Robert Stackhouse drawing is a happy respite in this forest of bamboo furniture. The decor, it must be said, often does not sustain the high level of the art.

Prints by Richard Estes, Sam Francis, a fine painting on paper by Sidney Guberman, and fashionable names like Lichtenstein, Indiana, Oldenburg, Rauschenberg, Kelly, Mangold, Hockney, Katz Pearlstein and Nevelson fill out the roster which is, overall, solid if unsurprising. The exception is the inclusion of several early 20th-century printmakers like John Marin, John Sloan, and Peggy Bacon, which offer a nice shift to intimate scale and mood in several small conference rooms. The same can be said of some drawings by Kevin McDonald and a color photograph by William Christenberry. Walking the circle that constitutes the floor plan of each of the four floors, it becomes clear that the strongest works have been concentrated in a kind of executive heaven on the eighth floor.

"I know it sounds like a cliche," says McAlee, "but when I walk around here and see something like that Frank Stella print, I feel good."

So, it must be said, does Washington dealer Chris Middendorf, 28, who, with New York's Andre Emmerich, got the much sought-after job of filling the four floors of wallspace with art.

"We looked at a number of dealers," said McAlee, who had collected "a few things" for himself, among them two Frankenthalers, two Olitskis, and works by Motherwell, Hans Hofmann and Gene Davis. "Andre Emmerich is a good friend of several partners here, and we looked to him for the major oils. But he was not interested in doing a collection of graphics, so we looked at a number of Washington dealers and picked Chris Middendorf. There was a certain lack of pretentiousness about him, and besides, he's very knowledgeable."

He also made the firm an offer they couldn't refuse: cost plus a very small commission, so small that it has encouraged other dealers in town because, as one put it,"one can't survive on that profit. Now that Chris has set the fashion for big discounts, the rest of us may have to follow along." Commissions in such cases are always negotiatable, but usually range from 20 to 50 percent, rarely less.

"I'd do it again for a collection of this size, but only for one of this size," said Middendorf.

Emmerich, dealer of Morris Louis, Ken Noland and Helen Frankenthaler, supplied the centerpiece of the collection, the superb Morris Louis. He also supplied the Frankenthaler, an Ann Truitt sculpture and one or two others items (including, oddly, a Greek vase), accounting for roughly half the budget.

Middendorf did all the rest, adding a large number of prints, some drawings and a smattering of photographs by masters like Walker Evans, Robert Frank, Berenice Abbott and Diane Arbus, all purchased through Lunn. He also added the Guilliam.

"Since this is an American firm in Washington, I tried to convince them that they should have 20th-century American artists, including some from Washington, and they agreed," says Middendorf.

He then proceeded to acquire representative examples by area artists Tom Dineen, Borin Rose, Bill Christenberry and Leon Berkowitz from the Middendorf/Lane stable; as well as Kevin McDonald, Michael Clark and Jacob Kainen from Harry Lunn; and Robert Stackhouse from Henri.

"I knew at the outset it would be the largst corporate collection in Washington, and that it would be a plum for the gallery," said Middendorf, explaining that cut-rate fee without apology. "I also thought it would get us other clients, including some of the 145 lawyer-members of this firm." He was right. A number of Arnold & Porter attorneys have become new clients.

"The problem in Washington," says Middendorf -- who wore a gray suit and Adidas sneakers to clinch the Arnold & Porter deal -- "is getting into a working relationship with collectors here, many of whom buy in New York. Now I've proven to them that I can find things, and at very good prices."

Middendorf's biggest coup was the acquisition, from a private collector, of a painting by Kenneth Noland, which the firm got for $5,000 less than the going rate for a comparable work in New York. "I also acquired for $6,000 a portfolio of six etchings by Edward Hopper, John Sloan, John Marin and others, published by the New Republic in 1924 to lure new subscribers. A copy of the Hopper print alone sold for $6,000 last May.

The final selection of works was made by majority vote of a committee of seven Arnold & Porter attorneys from works suggested by Middendorf, who started out by giving each committee member a list of 200 20th-century American artists and asked each to indicate 1) three artists they knew, 2) the ones they didn't know, and 3) the ones they knew and wanted in the collection. "That gave me a good idea of what they wanted and what their tastes were," says Middendorf, adding that "hundreds of hours and more than 50 meetings" were involved in getting the final decisions made.

"I also wanted to be sure there was some historical perspective, and stressed the importance of making this an ongoing project," says Middendorf. "Otherwise, we might end up with a collection that looked much like it was formed in 1979 and 1980."

The Arnold & Porter lawyers enjoyed the 16-month-long process of building the collection. "I've found it very educational," admits McAlee. "It's amazing how exposure to an artist can make you interested in his work. For example, I had no interest in Gilliam before, but his work grows on you. fA lot of our lawyers who weren't interested before are now asking for more information about the artists." Middendorf will soon begin giving tours for all interested employes, and a catalogue of the collection is in the works. f

Meanwhile, Middendorf has acquired six more law firms as clients, which he'll tell you with a grin as broad as the entrance to a gold mine. "There's a potentially hugh market out there just waiting to be tapped." He obviously aims to keep tapping it.

Middendorf is but one gallery-owner among a city full of public and private dealers who've long been digging away, trying to find such clients as this. "It's a market that's been growing by leaps and bounds over the past two years," says corporate art consultant Jean Efron, who has, during her seven years in the business, covered the walls of 30 area law firms with art. To help deal with her burgeoning clientele, she has just hired two new assistants.

Many of her current clients are the newly arrived, proliferating Washington branches of law firms from other cities. "They're turning up left and right," says Efron, who is presently working on the walls of Davis, Polk and Wardwell from New York; Pepper, Hamilton & Scheetz from Philadelphia; Holland and Hart from Denver; and two law firms from Los Angeles, Latham, Watkins & Hills and O'Melveny & Myers.

"Seven years ago I had to do a lot of arm-twisting to sell art here, and it was no picnic," says Efron, one of several private consultants now working with corporate collectors. "Now everyone feels they need art just as they need sofas."

"It's true of everyone moving into the large new spaces downtown, not just lawyers," says Georgetown dealer Barbara Fendrick, who has just installed 17 contemporary works in the offices of Sellers, Connor & Cuneo. "People realize they can't just hang old hunting prints any more."

Jane Haslem is another Washington dealer who has pioneered in forming corporate collections, including several law firms and the accounting firm of Peat, Marwick and Mitchell. Osuna gallery has hired Jill Elisofon to deal exclusively with corporate clients. Art appraiser Linda Kaplan did Washington's first mayor corporate collection for the Cafritz Company back in the '60s.

Any dealer, in fact, would be thrilled to have such clients. "I sure would," bubbles Barbara Fendrick. "They've become the mainstay of many galleries, and have often kept me going," Jane Haslem admits.

But why the sudden change of heart about art? Efron and Fendrick attribute it to the new art-consciousness, raised several notchoes with the arrival of the Hirshhorn and the East Wing.

But could potential tax benefits have anything to do with it? When asked, Arnold & Porter's McAlee replied that he did not know. But if he didn't know, who would? "I've asked our tax people to look into it. I'll ask them again and call you tomorrow," he offered.

He called back the next day with the following information: "The Internal Revenue Service takes the position," he said, "that generally art cannot be depreciated. There are some exceptions, for instance if you could show that a work of art had a limited life span of 10 years. Maybe you could argue that the work will go out of style in 10 years," he joked. He had suggested earlier that the firm might ultimately give the Morris Louis to the Corcoran, which has no Louis, and allowed that that, of course, would be tax-deductible.

"Anyhow, I'm quoting Internal Revenue's position, not ours," concluded McAlee, "because we may want to argue the matter at some future date." Lawyers like to keep their options open.

But dealer Jean Efron's answer to the tax question was simpler. "My understanding is that art cannot be depreciated. I just advise my clients to buy good art and put it on their walls. What they do with it after that is up to them."

With luck, the doctors will be next.