The District of Columbia government, which plans to take a major plunge into the private bond market later this year, has fired its longtime bond counsel and intends to divide the potentially lucrative bond-counseling contract among several local law firms.

Mayor Marion Barry disclosed at a press conference yesterday that his administration terminated a contract six weeks ago with attorney James L. Hudson, a partner in the law firm of Hudson Leftwich & Davenport, who has served as the city's bond adviser since the administration of former mayor Walter E. Washington.

Hudson supported Patricia Roberts Harris over Barry in last year's Democratic primary election campaign, but Barry and several other top city officials said yesterday that the decision to drop Hudson was not politically motivated.

"I don't see where politics would be involved," Barry said after his press conference. "We're looking at competence."

The city is close to signing a new contract with Sidley & Austin, a large Washington law firm with experience in municipal bonds and securities, according to Alphonse G. Hill, deputy mayor for finance. The firm would advise the city on marketing short-term notes and long-term bonds to finance capital improvements, according to Hill, and it has agreed to recruit a local minority firm to share in the work.

Several other firms will be hired to advise the city on the issuance of industrial revenue bonds, which will be used to spur new business in the city. Among those firms is one that includes attorney Robert Washington Jr., former chairman of the D.C. Democratic State Committee and a close political ally of the mayor.

Until now, the D.C. government has done virtually all of its short-term and long-term borrowing from the U.S. Treasury. But the Treasury plans to cut off those loans next year, and that move is forcing the city to seek private capital.

The law firms retained by the city to advise it on the marketing of bonds and notes stand to reap sizable fees. For instance, the firm that provides advice when the city seeks to market $150 million to $200 million worth of short-term notes this year would earn $100,000 or more, Hill said. The fees paid bond counselors often vary according to the size of the bond issue.