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In the busy hallways of Covington & Burling it’s pretty hard to tell that there’s an economic slowdown outside. The D.C.-based firm — long considered a dinosaur saddled with an old-fashioned practice — now finds itself riding high in a market that has humbled many of its peers. Covington added 34 lawyers, more than any other firm in this year’s rankings of the 100 largest law offices in the D.C. metropolitan area. The growth pushed the firm into third place from fifth last year, and placed it among the five firms that showed any growth at all among the top 10. “I think the economy has really played to Covington & Burling’s strengths,” says the firm’s hiring partner, Mark Plotkin. Covington’s focus areas — litigation, regulatory work, and a corporate practice strong in securities, tax, and bankruptcy work — are all in demand as the economy continues to tighten and punish those who tried to profit from the technology boom. Covington is breathing a sigh of relief for having resisted the temptation to follow the crowd to Northern Virginia, Plotkin says. “There were times when all those high-flying IPOs made me jealous, while we were sitting here with our decades-old clients,” he says, adding, “But those clients are still here and doing things.” Close on Covington’s heels was Arnold & Porter, which added 33 lawyers. Dickstein Shapiro Morin & Oshinsky gained 29 lawyers for the largest percentage increase — 11.5 percent — among the top 10. Among other large firms, Finnegan, Henderson, Farabow, Garrett & Dunner relied on a steady flow of patent work to grow by 15 percent, or 29 lawyers, reaching a total of 226. New York-based Skadden, Arps, Slate, Meagher & Flom is up to 236 lawyers in D.C., a gain of 28 from last year. For many of the firms that went after telecommunications, dot-coms, and other emerging technology work, the punishment has included layoffs, hiring freezes, and stepped-up pressure to produce. Also caught in the downturn are firms with transactional corporate practices focusing on mergers and acquisitions. For example, D.C.’s Shaw Pittman was down 30 lawyers, or 11 percent, in its Washington office during the year that ended April 1 — the steepest decline among the top 10 firms. Shaw Pittman was an early and aggressive entrant to the Northern Virginia technology market and still has the largest office there with 92 lawyers in McLean. That’s the same size as a year ago, due in large part to the transfer of about 15 lawyers from the firm’s Washington office. In response to the souring technology market, Shaw Pittman laid off 19 associates in late 2001; another 11 were fired in August, which was outside the survey period. Managing partner Paul Mickey Jr. says he believes that the worst is over. “The firm is noticeably busier now than it was at the start of the summer,” he says. “I do not anticipate any more layoffs.” Overall, the survey shows a reduction in force at 46 firms; in 2001, only 36 firms shed lawyers. “There are certainly lots of firms that are sending the message to nonproductive partners that they need to look elsewhere,” says Stephen Nelson, managing principal with the McCormick Group Inc. in Arlington, Va., a headhunting and counseling firm to law offices. “This is going to continue in the next year,” he says, as targeted associates and partners either jump or get pushed out. Among the big firms reporting cutbacks was Morgan, Lewis & Bockius, whose Washington office shrank by 28 lawyers, or 8 percent, dropping the firm one notch to fifth place. The Philadelphia-based firm laid off more than a dozen associates in Washington last year as part of a firmwide cutback in response to lower-than-anticipated demand for its services. Akin, Gump, Strauss, Hauer & Feld shed 23 lawyers from its home office and fell from sixth to eighth place in the rankings. Chairman R. Bruce McLean blames the downsizing on a slack corporate practice but says the firm achieved the reduction without any layoffs. About a dozen lawyers transferred to Akin’s office in McLean, and the rest were lost through attrition. “Our corporate practice is purely transactional, and mergers and acquisition work is significantly off,” McLean says. “We do work for several private investment funds, and they’ve been inactive for more than a year now.” McLean says the firm plans to pare its incoming associate class to 15 or 20 next year from the 20 to 25 the firm plans to bring in this year. Akin also has been addressing the ticklish and perennial problem of collecting overdue bills. Never an easy task, it gets tougher in a bad economy. “We have focused on improving our collection cycle all through the year,” McLean says, in hopes of avoiding the end-of-the-year crunch. “We are being more upfront with our clients, and we have seen some improvement this year over last.” Only one firm fell out of the top 10 this year: D.C.’s Arent Fox Kintner Plotkin & Kahn, hit by defections and unable to pull off a merger with Philadelphia’s Pepper Hamilton, reported an eight percent decline in its ranks, slipping into 11th place. The firm was replaced in the top 10 by Steptoe & Johnson, which managed to move into ninth place despite no growth at all. Steptoe reported 241 lawyers in its D.C. office on April 1, 2002, the same number as the year before. Arent Fox managing partner Marc Fleischaker says the firm is more profitable despite losing a five-lawyer intellectual property group to Cleveland-based Squire, Sanders & Dempsey and nine construction and international law partners to New York-based Thelen Reid & Priest. “Our profits will be 15 percent to 20 percent higher per partner this year,” Fleischaker says. The firm plans to hire about 15 new associates and is planning some lateral hires, he says. Like Shaw Pittman, Piper Rudnick got stung by the tech market and was forced to cut its Washington office by 10 percent, to 165 lawyers. The cuts were made through a combination of layoffs and attrition. But that figure promises to change dramatically next year. Piper recently merged with the remnants of Verner, Liipfert, Bernhard, McPherson and Hand, the lobbying powerhouse that saw its ranks shrink dramatically this year after a rapid expansion. Verner had about 75 lawyers left by the time it merged into Piper in late September, down from the 170 it reported in April 2001, when it ranked as the 24th largest firm in the Washington area. D.C.’s Swidler Berlin Shereff Friedman lopped its ranks by 12 percent — 29 lawyers — as its telecommunications and corporate practices cooled off. “We went through rapid growth, and now we are consolidating,” says managing partner Barry Direnfeld. Direnfeld says that the cutbacks were achieved mostly through attrition, but also with layoffs. He notes that the downsizing has not hurt partner profits. “Our profit per partner was $830,000 in 2001, which keeps us among the top firms,” Direnfeld says. Although many law firm managers and advisers say they are seeing signs of a rebound, there is universal caution on new associate hiring for 2003. Even Covington, which had anticipated hiring 39 new associates this year and ended up taking on a few more, is not planning to exceed that number next year. “We are targeting practice areas,” says Plotkin. “We are not targeting growth for growth’s sake.” Wilmer, Cutler & Pickering is taking on up to 50 new associates this year, as well as 10 or 15 laterals, and is still weighing its needs for next year, says chairman William Perlstein. Complicating the picture, he says, is the firm’s labor-intensive immersion in several high-profile Wall Street cases. Wilmer is representing Salomon Smith Barney in front of the Securities and Exchange Commission and other federal agencies. In addition, it is investigating internal accounting irregularities at WorldCom Inc. at the behest of a special committee of the bankrupt company’s board. “We are busier now than at any time in recent memory,” Perlstein says. Yet, he adds, “I can foresee these matters slowing down over the next six months. One of the things I am looking at carefully is what workload we see after these things tail off. It is always hard to predict.” Wilmer ranked in fourth place this year with 360 lawyers, just four shy of Covington. Second-ranked Arnold & Porter plans to add 57 new associates this year. Overall the firm was up a robust 8 percent in the survey period, adding 33 lawyers despite shedding associates in late 2001. Managing partner James Sandman says that Arnold & Porter plans to add the same number of new associates next year: “We expect our practice to continue to be at least as strong as it has been.” He attributes the firm’s continued growth to strong demand for litigation, especially patent litigation, and for regulatory representation, particularly by financial services firms. However, Sandman notes that Arnold & Porter’s transactional practice was down due to the fact that there is nearly no demand for mergers and acquisitions. “Litigation is the biggest driver,” he says. A few firms boosted their size with mergers, including two based in the District: McKenna & Cuneo and Miller & Chevalier. McKenna merged last summer with Atlanta’s Long Aldridge & Norman, which pushed the combined firm’s overall size up to about 400 lawyers. Now called McKenna Long & Aldridge, the combined Washington office placed 37th with 111 lawyers. Last year, McKenna ranked 39th with 98 lawyers in Washington, down nearly 8 percent from the previous year. Miller & Chevalier, always known for its tax practice, also lost lawyers between 2000 and 2001. But this year the firm grew by 22 percent — or 20 lawyers — to 111. The bulk of the jump was due to a merger in July 2001 with Ablondi, Foster, Sobin & Davidow, a D.C.-based international trade boutique. The merger has transformed the firm’s practice by putting the trade group on par, size-wise, with the tax practice, says vice chairman Samuel Maruca. “Up to now the hegemony of the tax group has never been challenged,” says Maruca, who chairs the tax practice. Maruca describes the trade practice as “white-hot,” and says that tax also is busy, especially in the post-Enron environment. “We are independent advisers, and my sense is that’s once again in vogue,” he says. In addition, the reorganization of the Internal Revenue Service and the crackdown on tax shelters has meant more business for the tax group. “We want to add more international tax lawyers and litigators and are looking for lateral partners,” Maruca says. One of the firms with a major percentage increase in its Washington office this year was Greenberg Traurig, which zoomed 33 percent to 57 lawyers. The jump catapulted Greenberg into 77th place from the bottom last year. Joe Reeder, head of Greenberg’s mid-Atlantic region, says the office added about eight lateral partners and associates, but he is at a loss to pinpoint any specific reasons for the big gain. He notes that six practice areas were strong in the last year, among them litigation, appellate, and legislative work. Four firms expanded enough to join the top 100. Minneapolis’ Dorsey & Whitney grew from 42 lawyers in D.C. to 53; D.C.-based tax firm Caplin & Drysdale added 10 lawyers to reach 50; New York’s Sullivan & Cromwell added eight lawyers and now has 46 here; and Kilpatrick Stockton jumped up by 14 lawyers to reach 47. Nelson of the McCormick Group says he is seeing signs that firms are once again thinking about building up in key practice areas. “The statistics I see show that more and more companies are turning to big national and international firms for their work,” Nelson says. “We are seeing regional firms going national, and national firms going global.” He notes, however, that the lousy economy did provide firms with one silver lining: the opportunity to trim fat. “Obviously, when you see a long-term decline, it means there is not as much business to support the same number of lawyers as in the past,” Nelson says. “But sometimes the numbers going down is a sign of good management, of a ‘leaner and meaner’ approach.” Claudia MacLachlan is a free-lance writer based in Washington and a frequent contributor to Legal Times.

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