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Slowly Coming Back
Washington law office revenues are on the risea reversal from 2009, when the gross revenue of top Washington-area offices fell for the first time in more than a decade.
During 2011 the 25 highest-grossing D.C. offices collectively hauled in $6.14 billion, according to The National Law Journal D.C. 25 survey, which ranks the top money-makers among the area's law offices. That's a 3.9 percent increase from the $5.91 billion collected in 2009, the last time the survey was conducted. During that same period, revenue per lawyer grew from $897,000 to $927,000, an increase of 3.3 percent.
Arnold & Porter pulled in the most D.C.area revenue last year$423 million. That places it ahead of Hogan Lovells, which led the list two years earlier. King & Spalding and Jones Day are new additions to the chart, replacing O'Melveny & Myers and the now-defunct Howrey.
Arnold & Porter chairman Thomas Milch says the firm was able to remain busy over the last couple of years mainly through its work in the areas of antitrust, telecommunications, environmental, and health care law. "There was no single matter that did it for us," he adds.
Arent Fox also cited a variety of factors. "People are working more efficiently and working harder, and that is translating to more reasonable performance in gross revenue," says Matthew Clark, the firm's managing partner. "Rate increases have been modest, and summer associate classes are smaller than they were years ago."
Clark says many of the firm's groups that performed well were focused in Washington, including practices like intellectual property, patent and trademark, and health care: "Our government relations practice continues to succeed where business has a nexus with the federal government and Congress."
Anthony Pierce, the partner in charge of the Washington office of Akin Gump Strauss Hauer & Feld, says that traditional Washington practices such as lobbying and government contracts remain key to driving his firm's fortunes. "The law firms that anticipate where the government is going in its regulatory or investigative focus, and what activity is going to happen in Congress, are going to do well," he says. "If you're a firm that can't meet those needs and anticipate them well, you're going to have a tough time."
Mary Young, a legal consultant with the Zeughauser Group, attributes the rise in gross revenue to a decline in head count. "What you're seeing is that firms are tightening the ranks," Young observes. "The people that are left tend to be more productive." Couple that with modest rate increases, she adds, and it helps to boost firm revenues.
Young said that despite the trimming, revenue will continue to remain strong given that clients continue to pay top dollar for experienced first-chair litigators, transactional gurus, and the like. "Clients are willing to pay well above $1,000 an hour for those people, and those rates continue to go up," she says.
The firm with the highest D.C. revenue per lawyer was Williams & Connolly, with $1.2 million per attorney. Four other firms showed revenues per lawyer higher than $1 million, including Gibson, Dunn & Crutcher; Skadden, Arps, Slate, Meagher & Flom; Latham & Watkins; and Bingham McCutchen. For four of those five, revenue per lawyer rose from 2009. (Williams & Connolly's lawyer revenues were almost identical those two years.)
Despite the boost, law firm leaders continue to sound guarded. One reason is that from 2008 to 2009, gross revenue among the top money-making firms fell by 2.7 percent, or $163.9 million.
At Wiley Rein, which saw a $10 million increase in gross revenue from 2009 to 2011, chairman Richard Wiley says a focus on government and litigation allowed it to remain strong during a challenging time. "While the economy has been slow and will probably be slow, I think firms are going to continue to be cautious," Wiley says. "Some of them had major layoffs of staff and associates and even some partners."
Roger Warin, chairman of Steptoe & Johnson's executive committee, said in an email that although some practices remain busy, demand isn't quite as high as it was in the decade prior. "While many practices are busy, demand across the board still has not returned to prerecession levels," Warin wrote.
According to Milch, firms have increasingly taken a conservative approach to their finances. This has meant raising rates when appropriate, and squeezing more billable hours out of fewer attorneys. He also notes that corporate in-house counsel also have been feeling the financial pinchgiving firms an opening for new business.
"The pressures that are on in-house counsel mean that they appreciate client services more than ever," Milch says. "I don't think we have found some magic recipe for success. It requires constant vigilance and good fortune."
A version of this story appeared in The National Law Journal, a sibling publication of Corporate Counsel.