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Washington area law firms may have more work coming in these days, but it appears they are using fewer lawyers to do it. The Legal Times 150 survey of the area’s largest law offices shows little growth and even significant declines in attorney head count at many firms. Firm managers insist that business is good and that, for many firms, the declines are simply a matter of becoming more efficient in their work and more conservative in their hiring practices since the decline in the economy a few years ago. Whatever the reasons, the 150 largest firms saw the number of lawyers on staff decline from 14,265 in 2003 to 14,186 in 2004. The biggest percentage declines in head count came at the D.C. offices of Clifford Chance (42 percent); Piper Rudnick (21.3 percent); and Kelley, Drye & Warren (20.9 percent). However, Piper Rudnick’s other local office, in Reston, Va., saw the greatest increase in head count among the region’s law offices � 78 percent. The reason: Piper moved lawyers to Reston to help alleviate space issues in the D.C. office. Other big gainers included the D.C. offices of Greenberg Traurig (up 40 percent); Cadwalader, Wickersham & Taft (35 percent); and Weil Gotshal & Manges (31 percent). For the biggest offices, however, hiring and head count have been static. The lawyer population at 75 percent of the firms surveyed changed by no more than 10 percent in either direction. Among the 20 largest law offices, only one � Steptoe & Johnson � saw double-digit percentage growth. (See ” Steptoe’s Growth Spurt.,”) Altman Weil consultant Ward Bower attributes the slow growth to outside economic factors. The so-called economic recovery has not been very robust, Bower says, at least in terms of job creation at the firms. “I think they’d rather run lean for a while,” he explains. In addition, Bower says national law firm leaders have lamented to him the rising costs of health care and other employee expenses. So while business may be good, the costs of hiring more lawyers and economic uncertainties make restrained hiring the preferred strategy. “It’s pretty tough for kids coming out of law school, I think,” Bower says. Legal Timessurveyed more than 250 firms with offices in the D.C. metropolitan area to come up with a list of the largest law offices. The rankings are based on attorney head count as of April 1, 2004. The order of the top four firms on the survey remained unchanged from 2003. Hogan & Hartson maintained its longtime position at No. 1, with 464 lawyers in its D.C. office. But it’s facing stiff competition from Arnold & Porter, the No. 2 firm, which this year reported 461 lawyers as of April 1. Both firms lost a few lawyers: Hogan dropped by nine from 2003, Arnold & Porter by five. Because the survey covers the period from April 2003 to April 2004, it does not take into account Wilmer, Cutler & Pickering’s merger with Hale and Dorr in May. The old Wilmer, Cutler sits at No. 3, with 371 lawyers in its D.C. office as of April 1 � a 2 percent jump from the previous year. The new Wilmer Cutler Pickering Hale and Dorr has about 450 lawyers in the D.C. office, says co-managing partner William Lee in Boston. No. 4, Covington & Burling, counted 356 lawyers in its D.C. office, an increase of less than 2 percent. Steptoe & Johnson’s 10 percent jump helped it move up three spots to No. 5. Also climbing the chart was No. 6, Akin Gump Strauss Hauer & Feld, which moved up from No. 9. Morgan, Lewis & Bockius (No. 7); Howrey Simon Arnold & White (No. 8); and Dickstein Shapiro Morin & Oshinsky (No. 9) all saw head counts dip. Rounding out the top 10 is Jones Day, which climbed six spots and bumped Piper Rudnick’s District outpost. The static numbers at many firms come at a time when revenue has been on the rise. Last year, the 20 highest-grossing D.C. firms alone made more than $3.7 billion, according to Legal Times‘ annual survey of law firm revenues. John MacLeod, chairman of the region’s 12th largest firm, Crowell & Moring, says that “our revenue growth has outpaced our head count. It’s a function of our [billable] hours being up in comparison to last year’s.” MacLeod estimates that billable hours at Crowell increased between 3 and 4 percent. The firm’s head count, at 236 lawyers, increased slightly over the last year, jumping just 1 percent. MacLeod adds that the increase in revenues for D.C. offices also may have been driven by an increase in billing rates. Similarly, Christopher Foley, managing partner of Finnegan, Henderson, Farabow, Garrett & Dunner, says the D.C. lawyers have been working harder, but the firm tends to be a little bit conservative in its hiring. “You’re only as good as the last case,” says Foley. “You never know what’s coming through the door next.” Finnegan, which ranked 21st, saw its D.C. head count drop by nine lawyers in the last year to 189. LOST A FEW, GAINED A FEW On Legal Times‘ annual revenues survey, Dickstein generated the third-highest revenues during the 2003 fiscal year, $249 million, and nearly $2 million in profits per partner. At roughly the same time, the D.C. office registered a 7 percent (or 19-lawyer) decline � the biggest drop among the 20 largest law offices. “We’ve lost a few here and there, and we’ve gained a few here and there, but the people who are here are working harder,” says firm managing partner Michael Nannes. Nannes says the numbers reflect strong business growth, but relatively flat hiring. For example, the lawyers in the office’s transactional practices are seeing more work these days than they had in the economic decline between 2001 and 2003. “Those people now are working considerably harder” in 2004 compared with 2003, Nannes says. “But we haven’t yet gotten so overwhelmed that we had to dramatically raise the head count,” he adds. Nannes notes that Dickstein has increased hiring since the close of the survey period, adding five lateral partners. For its part, Piper Rudnick is no stranger to dramatic growth. Its 2002 merger with Verner, Liipfert, Bernhard, McPherson and Hand, for instance, added about 80 lawyers to the D.C. office. Theodore Segal, the firm’s D.C. managing partner, says that moving lawyers between the District and Reston was a byproduct of that merger: “In the immediate aftermath of the Verner, Liipfert merger, we maxed out on our space here in Washington.” Segal says the D.C. office also experienced a modest decline as a result of “normal attrition.” But the office is hoping for continued growth, he adds. The firm hopes to move into a new building in downtown Washington with room for about 230 lawyers. At Akin Gump, where head count increased 5.5 percent to 270 lawyers in the District, D.C. managing partner R. Bruce McLean says that lawyers in the office are busier. He attributes much of the growth to increasing workloads in intellectual property and litigation. In the District, 90 lawyers litigate full time, McLean says. However, the office saw several “false starts” in the recovery of the transactional practices, notes McLean. “I think we’ve seen what has been sustainable improvement in the last six months,” he says. There were, of course, other exceptions to the pattern of restrained attorney growth in D.C. law offices. Cleveland-based Jones Day joined the top 10 largest offices this year, after a 12-lawyer increase that brought the head count up to 241 lawyers. D.C. managing partner Mary Ellen Powers says the office’s intellectual property practice and the issues and appeals practice accounted for most of the growth in the last year. Jones Day hired most of the lawyers from defunct IP boutique Pennie & Edmonds, and while most of them reside in the New York office, four Pennie lawyers work in the District. In addition, the office hired seven former judicial clerks, including three from the Supreme Court, to work for the office’s appellate practice, Powers says. Other firms based outside the D.C. metropolitan area also bumped up their lawyer populations. Paul, Hastings, Janofsky & Walker’s D.C. office jumped 14 places, from 61 last year to 47. D.C. office chair Barbara Brown attributed much of the upsurge to the firm’s international trade group. The Asian practice, she says, has stimulated the transactional work in the District. The 88-lawyer office, which showed an increase of 18 over the previous year, has become the third-largest office in the Los Angeles-based firm, surpassing those in San Francisco and Atlanta. “We’ve roared ahead of everybody in terms of the pace of growth here,” Brown says. Paul, Hastings will move into new and bigger space in January 2005 to accommodate the growth, Brown says, adding that she hopes her office will increase to 130 lawyers or more in the next year. Growth among branch offices, big mergers, and a recovery of the transactional markets could help push the region’s lawyer numbers back up again. Consultant Bower predicts that the recruiting season this year is likely to be more aggressive than last year. That prediction may prove true at Finnegan, which is now focusing on its new recruits. Foley, the firmwide managing partner, says the firm extended offers to everyone in this year’s summer associate class and anticipates 15 more summer associates in the D.C. office next year. Says Foley: “I think that’s all a positive sign in terms of evidence of growth.”

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