The Washington Post

For law firms, ‘it’s a very different world out there’

“Bigger is better,” the growth strategy that once had large law firms racing to open up offices around the world and snapping up entire practice groups of rival firms, appears to be a thing of the past.

Eight of the District’s 10 largest law firms maintained or shrank their local attorney rosters between 1 and 4 percent since the end of 2011. Two firms, Skadden Arps and Steptoe & Johnson, grew local attorney head count modestly, by 4 percent and 3 percent, respectively.

The holding pattern comes as law firms witnessed two industry stalwarts — venerable Washington firm Howrey and 103-year-old New York firm Dewey & LeBoeuf — fall apart within a matter of weeks in recent years. Howrey and Dewey, now both in Chapter 11 proceedings, expanded aggressively even as the demand for legal services contracted during the global recession. And their peers apparently took note that growth by sheer numbers was an unsustainable strategy.

Several firms did some large-scale hiring as they brought in attorneys from the two struggling giants. Those that took in the most Howrey lawyers were Winston & Strawn (51), Baker Botts (32) and Jones Day (at least 21). The firms that took in the most Dewey attorneys were Winston & Strawn (60) and Morgan, Lewis & Bockius (65).

Firms had already begun scaling back before Howrey and Dewey collapsed, but pressure to maintain profits is pushing the industry to take more drastic measures than simply reducing associate class sizes and offering clients more alternative fee arrangements.

“Firms have done some belt-tightening but haven’t made a lot of hard decisions at the partner level,” said Jeffrey Lowe, managing partner of the D.C. office of legal consulting firm Major Lindsey & Africa. “Non-equity partners or equity partners who don’t have robust practices will be vulnerable in the years ahead. No one wants to let partners go, but as firms become more focused on the bottom line ... that’s probably the next course of action. It sounds bleak, but it’s a very different world out there these days.”

Timothy Hester, chairman of Covington & Burling’s management committee, said firms with diverse regulatory practices in Washington are faring better than those that rely more on transactional work. Global and regional law firms are still opening Washington offices to be closer to government agencies.

Although Covington had a net loss of four attorneys since the end of 2011, the firm’s D.C. office has grown to 503 from 418 attorneys since 2007, spread across several practice groups including patent litigation (centered around the U.S. International Trade Commission in D.C.), government contracts, antitrust, bank regulatory enforcement and white collar defense.

“You’re going to see a continuing solid set of needs for practices in Washington because there’s so much going on here that’s fundamental to business needs,” Hester said. “Unlike New York, our workloads don’t tend to cycle quite as much based on the volume of transactional work.”

9

Total attorney positions
lost by the
top 10 firms in the first half of the year,
a drop of 0.3 percent.

Catherine Ho covers lobbying at The Washington Post. She previously worked at the LA Daily Journal, the Los Angeles Times, the Detroit Free Press, the Wichita Eagle and the San Mateo County Times.
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