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In 1978, Angelo Arcadipane, then 37, had just left his own practice to join Dickstein, Shapiro & Morin as a partner. With 44 lawyers, the firm was one of the 20 biggest in the District and offered Arcadipane an annual salary of $57,000. “I was very excited about it,” says Arcadipane, now managing partner of the firm, which has expanded its name to Dickstein Shapiro Morin & Oshinsky. Today, average profits per partner at the top local firms are close to $700,000 � with Dickstein topping $1 million � and the 20th biggest firm has more than 200 lawyers in the District alone. In the 25 years that Legal Times has chronicled the work and lives of D.C. attorneys, the legal business landscape in Washington has undergone a dramatic transformation. Interviews with more than 25 lawyers, consultants, marketers, and recruiters paint a picture of a profession that has become increasingly competitive and money-driven, as partnerships that were once largely fraternal and informal have begun to mirror the structure of the companies they serve. “Law firms today do look much like corporate America,” says Bob Glen Odle, who became the first administrative partner of Hogan & Hartson in 1979 and served as firm chairman from 1989 to 2000. “You can’t have a law firm of 1,000 lawyers without having a serious business model.” In the last quarter-century, law firms have rapidly grown larger, adding lawyers, opening new offices, and merging with other firms to expand their reach nationally and internationally. Revenues and profits have skyrocketed, as have billing rates. The culture of practicing law has changed as well. Lawyers today are far more apt to make lateral moves from one firm to another. They work longer hours and have less job security. Marketing has become a key component of business development, as practice areas have grown narrower. However, the workplace itself has become far more diverse, with women and minorities making inroads into what was once largely the domain of white men. Technology has also transformed the practice of law, thinning the ranks of support staff and putting lawyers on call 24 hours a day. “It’s a much more fast-paced and fascinating practice than it was,” says Wiley Rein & Fielding managing partner Richard Wiley. “For me, it’s continued to be tremendously rewarding and challenging.” THE RISE OF THE MEGA-FIRM The advent of mega-firms and attorney compensation to match is perhaps the most significant marker in the growth of legal business in D.C. since 1978. Consider these numbers from 25 years ago: D.C.’s largest law firm was 214-lawyer Covington & Burling. The 10th-biggest firm in the city had 66 lawyers. Today, there are more than 60 law offices in D.C. with over 66 lawyers. The largest local firms are pushing 500 lawyers in the District, with head counts of close to 1,000 firmwide. Out-of-town firms have also burgeoned, going from de facto mail drops to major outposts that compete head-to-head with homegrown Washington firms. Of the 50 largest firms in the city today, 28 are branch offices. By comparison, in the late 1970s, only a few non-native firms � notably, Morgan, Lewis & Bockius; Fried, Frank, Harris, Shriver & Jacobson; and Akin Gump Strauss Hauer & Feld � had large outposts in the District. Fueling the growth was the recognition by general service firms of the advantages of regulatory expertise and a location near the federal government. “Every law firm in the country with more than two lawyers felt that they needed a Washington office,” says Odle of Hogan & Hartson. Adds Arnold & Porter chairman Michael Sohn: “When I started practicing law, there were just a handful of D.C. regulatory firms here. That’s no longer the case. It means you need to have objectives beyond being a first-rate Washington regulatory firm.” Indeed, the growth of out-of-town firms and the ensuing competition has pushed Washington firms to expand beyond the Beltway. The trend is perhaps best illustrated by Hogan & Hartson. In 1978, the firm had one office. Today, it boasts 19, spanning from Miami to Beijing. And Hogan isn’t alone. Howrey Simon Arnold & White now has 10 offices ranging from Amsterdam to Menlo Park, Calif., compared with one in 1978. Arnold & Porter has grown from its home office to eight satellites, including ones in Los Angeles and Brussels. In recent years, law firm mergers have helped propel the growth. A few notable firm marriages include Howrey & Simon’s 2000 combination with IP firm Arnold White & Durkee and Venable’s 1999 merger with D.C.’s Tucker Flyer, which helped shift the Baltimore firm’s focus to D.C. Pillsbury Madison & Sutro picked up 70-lawyer IP boutique Cushman, Darby & Cushman in 1996, while Holland & Knight acquired 50-lawyer Dunnells & Duvall in 1994. The 2002 merger of Piper Rudnick with 81-lawyer Verner, Liipfert, Bernhard, McPherson, and Hand propelled Piper into the D.C. 20. Some notable splits have occurred as well, such as the departure in 1978 of a large group of lawyers from Jones, Day, Reavis & Pogue’s Washington office to form Crowell & Moring. And in 1983, 39 lawyers from Kirkland & Ellis left to form Wiley, Johnson & Rein, now Wiley Rein & Fielding. Even more startling may be the increase in the money that flows through the firms. By 1993, the top 10 D.C.-based firms had a combined revenue of a little more than $1 billion. Just nine years later, in 2002, that number had tripled. Last year, 10 Washington firms ranked among the top 100 firms in the nation in total revenue. Billing rates have risen in tandem. For example, senior partners who in 1978 might have charged between $150 and $200 an hour now can command more than $600 for 60 minutes of work. As a result, both partners and associates are seeing much fatter paychecks. In 1978, a first-year associate could expect to earn about $23,000 a year. Adjusted for inflation, that’s about $65,600, compared with the going rate at big firms today of $125,000. Salaries rose in fits and starts. The first big increase came in 1986, when first-year associate salaries hit $50,000. Two years later, pay had jumped to $70,000. It took 11 years to reach $100,000 in 1999, but just one more to hit $125,000. Partner compensation has also risen steeply. For the top 10 D.C. firms in 1986, average profits per partner were $220,000. Now, there’s not a top 20 firm where partners take home less than half a million dollars, on average. In 2001, Crowell & Moring became the first home-grown firm to post profits per partner in excess of $1 million. As salaries ballooned, so did workloads, and more pay necessarily raised expectations of hours billed, says Hunton & Williams’ D.C. managing partner Andrea Bear Field. “If salaries are higher, overhead is higher,” she says. “It does mean people have to work more hours before the firm starts making a profit.” Indeed, the billable requirement for associates has risen from an average of 1,500 hours in 1978 to 1,950 hours or more today. Associates have also become more fungible. “Law firms don’t enter into relationships with employees with the expectation that they’re hiring a future partner,” says Charles Garrison, a recruiter for the headhunting firm Garrison & Sisson. And vice versa. Most lawyers no longer expect to spend their entire career at one firm, as was the case a few decades ago. “I think there was more allegiance to the institution and pride in the institution,” says William Coston, managing partner of Venable’s D.C. office. “There was an expectation that you weren’t a free agent.” In the mid-1980s, legal recruiting firms began to cash in on the growing market for lateral associates and partners. “It’s changed from, ‘We don’t want anything to do with you, Mr. Recruiter,’ to them seeking us out,” says Garrison. With some reluctance, firms also began to embrace marketing. Jay Jaffe founded Jay Jaffe Associates in 1978 to serve architecture and accounting firms, then saw potential in law firms, and scored his first legal client in 1981, Chicago-based Fagel & Haber. But Jaffe found D.C. firms slow to accept the gospel of advertising. Prior to the early 1980s, law firms didn’t advertise or market themselves beyond staid brochures � in fact, many bar associations actually banned law firms from advertising. In 1977, however, the Supreme Court struck down such bans in Bates v. State Bar of Arizona. Although the decision opened up a new avenue for firms to reach potential clients, full-service D.C. firms saw advertising as “something unseemly,” Jaffe says. But in 1990, Howrey & Simon crossed the divide by hiring Jaffe as its first in-house marketing director. He launched the firm’s breakthrough national ad campaign in 1991 with a plain, black-and-white ad in The American Lawyer magazine. In 1993, the firm kicked off its long-running “In Court Everyday” campaign. “We needed to professionalize the way we approached communications about the firm,” says Ralph Savarese, who managed Howrey for 18 years, until 2001. The firm’s move didn’t go unnoticed. Dickstein managing partner Arcadipane remembers the Howrey ad � and going to his firm’s partnership a few years later with a request for a $300,000 marketing budget. Trying to convince the partners that law firm advertising could be more than photos of personal injury lawyers on the backs of telephone books wasn’t easy. “It was a disputed proposal,” he says. “They said, ‘Isn’t it better to take clients to dinner with that money?’ “ Now the firm has a marketing staff of 15. Although he won’t disclose how much Dickstein spends annually, Arcadipane notes that consultants recommend that firms spend 2 to 3 percent of revenue on marketing. Today, few of the top firms in D.C. are without an in-house marketing department. “It has become a competitive necessity,” says Michael Kelly, the D.C. managing partner of Morgan, Lewis & Bockius. PRACTICE MAKES PERFECT Over the last two and a half decades, “cross-selling” practice groups has become a cornerstone of business development, even as lawyers became increasingly specialized in specific practice areas. “I grew up as a generalist,” says Shaw Pittman managing partner Stephen Huttler of his early career. “Practices are much more complex and more specialized than they used to be.” Now clients hire attorneys based on their knowledge of a very discrete area of law, he notes. Longtime D.C. real estate lawyer Joseph Fries agrees that his practice area, like many, has become more sophisticated. Fries used to think of himself as a “dirt” lawyer. But now the Arent Fox Kintner Plotkin & Kahn attorney’s duties have extended far beyond building permits, land surveys, and construction contracts. He finds himself just as busy securitizing real estate loans and arranging agreements between complex webs of investors. “I’ve become a corporate lawyer,” Fries says. The evolution in Fries’ practice area is hardly unique. Changing federal regulations, the emergence of new industries, and economic recessions and booms are just a few of the factors that help to shape and re-shape practices. Telecommunications is a clear example of a practice that grew along with an industry. In the mid-1970s, telecom and media law in D.C. was the province of just a handful of firms. The Federal Communications Bar Association had 750 members in 1978 � compared with 3,000 in 2003. There was one long-distance telephone company and three TV networks. “It was an industry that was on the verge of really exploding,” says John Johnson, a Paul, Hastings, Janofsky, & Walker telecommunications partner who started practicing in 1974. First came the breakup of AT&T in 1982, then the Telecommunications Act of 1996. “The bar followed the industry and grew enormously,” says Johnson. Wiley Rein founder Richard Wiley, who served as chairman of the Federal Communications Commission from 1974 to 1977, says the public and legislators’ focus on telecom has intensified. “Now there are more players, more competition, and more complexity,” says Wiley. “Congress and the courts are being brought to bear.” In many ways, intellectual property law underwent a similar transformation. A nascent area in the 1970s, intellectual property began to gain importance as a practice area in the later part of that decade. Then, in 1982, the U.S. Court of Appeals for the Federal Circuit was founded by combining judges from the U.S. Court of Claims and the now-defunct U.S. Court of Customs and Patent Appeals. Prior to that, patent infringement wasn’t carefully considered by most courts, says Douglas Henderson, a founding partner in the 300-lawyer IP firm Finnegan, Henderson, Farabow, Garrett & Dunner. “There were debates by economists as to whether patents were of any value at all,” he says. Coupled with reforms at the U.S. Patent and Trademark Office, the new appellate court helped foster a presumption of validity for patents � making it worthwhile for companies to spend big money to acquire and defend their IP holdings. By the mid-1990s, most big firms had added IP groups, primarily to handle high-stakes patent litigation, as the tech boom fueled the growth in both patent and trademark work. As it was for IP, 1982 also proved to be a seminal year for antitrust. It was the year that Department of Justice antitrust chief William Baxter released new merger guidelines. The rules, which have been revised four times since their promulgation, transformed federal merger policy, says A. Douglas Melamed, co-chair of Wilmer, Cutler & Pickering’s antitrust and competition group. “It required antitrust practitioners to be knowledgeable about economic analysis and brought about a rigor and discipline in antitrust thinking,” Melamed says. “It went from a sort of sloppy, political field into something more technical.” BRAVE NEW WORLD The introduction of personal computers in the 1980s spurred a revolution in the ways that lawyers do their jobs and even how firms are run. Now technology such as cell phones and BlackBerries means response times to clients are measured in minutes and seconds rather than days and hours. Support staff almost never use typewriters or take dictation. Long telephone conversations about changes to a brief can now be compressed into a rapid � although sometimes unending � e-mail exchange. “I can push a button, and a 50-page brief is in the hands of 20 people,” says Coston of Venable. The flow of information via the Internet has also influenced how firms project themselves to prospective clients. “People could find out about you in untraditional ways, without having to meet with you,” says Barbara Brown, managing partner of Paul, Hastings’ Washington office. “It followed that you need a way to let the market know who you are and what you can do.” Technology has had more-indirect effects as well. As the new chair of Shaw Pittman’s associates committee in 1982, Huttler recalls asking the firm’s managing partner, Ramsey Potts, to give the junior lawyers a state of the firm address. What Potts delivered was an exhaustive run-down of the firm’s finances � including partnership draws and revenue details � information typically heavily guarded by firm leadership. The speech nearly got Huttler fired by a cadre of irate partners, who blamed him for suggesting it. “The associates loved it. The senior partners did not,” says Huttler. “It was not the culture of the day.” Now, financial information that Akin Gump chairman R. Bruce McLean says was once “guarded like state secrets” is a few keystrokes away, in part because of the Internet and the birth of the legal business press. Another major change has been in the makeup of the firms themselves. In the late 1970s, the city’s largest firms counted few women and even fewer minorities among their lawyers. In 1979, there were 217 female lawyers in the District’s 20 largest firms. There are no similar data for minority lawyers in Washington, but numbers collected by the National Association for Law Placement in 1982 showed that racial and ethnic minorities accounted for only 2.51 percent of the lawyers in 272 firms in 12 cities, including Washington. Willie Leftwich, founder of one of the city’s premier black-owned firms, Leftwich & Douglas, says after leaving the government in the early 1970s, he had little choice but to start his own firm. In those days, he says, he found law firms had little interest in hiring black associates. “Nobody interviewed you,” he says. “There were no pretenses made along those lines.” Women faced similar obstacles. Baach Robinson & Lewis partner Lois Schiffer, a 1969 Harvard law graduate, went to work for the Department of Justice in 1974 after three years at a firm where she was the only woman. “People felt free to say to you, ‘We may never hire you because you’re a woman,’ ” says Schiffer, who was assistant attorney general for the Justice Department’s Environment and Natural Resources Division from 1993 to 2001. Even in the late 1970s, when women had begun to break through the ranks, Duane Morris D.C. managing partner Sheila Slocum Hollis remembers countless curious remarks about gender. “I can’t say how many times I was asked by an administrative law judge, ‘Where’s your transcription machine?’ ” she says. But in the late 1970s and early 1980s, broad changes in society and business, as well as initiatives such as President Jimmy Carter’s effort to place more women and minorities in high-ranking government jobs, began to diversify Washington’s law firms. By 2002, 30 percent of the lawyers in the area’s 20 top grossing firms were women, and 11 percent were minorities. Firms are striving for even more diversity. In response to markedly lower minority retention rates, several firms have hired diversity directors and formed diversity committees within the last five years. Client demands have also helped to spur willingness to change hiring patterns. “Fifteen or 20 years ago there were male clients who preferred not to deal with female lawyers,” says Paul, Hastings partner Johnson, who has been practicing law in D.C. since 1976. “Now, they are putting into requests for proposals how many women and minorities will be on the team. It’s gone from resistance to an almost insistence.” A CITY OF CHANGE Scores of D.C. lawyers agree that explosive growth of firms, profits, compensation and competition in the last 25 years has altered, but not obliterated, the uniqueness of Washington’s legal community. “Washington tends to be a city of ideas, a city of change,” says Venable’s Coston. “That rubs off on the legal industry.” Lawyers, consultants, recruiters, and marketers echo a host of predictions for the future: a further shift away from the traditional law firm partnership structure toward a corporate business model, slower growth in salaries and less job security for associates and partners, and greater consolidation of firms. “Perhaps the overarching change in the profession is that it’s become more business-like,” says Arcadipane. “Everything else follows that. It’s a ripple effect.” But even the most business-minded lawyers say that the past and the future for law firms in Washington can still be distinguished from concerns about revenues and growth. “If it’s all just hours and salary,” says Wiley Rein’s Wiley, “these firms would fall apart.”

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