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Washington, as everyone knows, is a lawyer’s town, and inside the Beltway, attorneys have long been accorded iconic status as power brokers, a designation that has largely eluded their West Coast and New York brethren. Perhaps no D.C. firm symbolized this mystique 25 years ago better than Covington & Burling. Once home to the legendary Dean Acheson, secretary of state under President Harry S. Truman, Covington was dubbed the “pinnacle of power” in Joseph Goulden’s 1971 book, The Super Lawyers, and its attorneys were widely viewed as the go-to guys for any corporation that had problems with Uncle Sam. Today the House of Covington remains one of Washington’s elite legal addresses, along with longtime stalwarts Hogan & Hartson, Arnold & Porter, and the firm now known as WilmerHale. (Steptoe & Johnson, once part of that favored few, has lagged a bit behind.) But though they are still largely defined by their D.C. identities, Covington and its peers are beginning to resemble their coastal counterparts more and more each year. The legal market has evolved a good deal in just the past generation. Beltway firms no longer dominate the District the way they once did, and they’ve been forced to confront increased competition from an influx of outside shops eager to set up on the banks of the Potomac. As a result, Washington firms can no longer simply rely on their traditional mix of regulatory work and related litigation. They’ve had to extend their reach to places like London; Brussels, Belgium; and California in order to serve clients in a more globalized marketplace. And the Big Four firms have begun to diversify, adding more corporate and intellectual property practices. “Twenty-five years ago, firms centered elsewhere had little or no presence [in D.C.] and there was still a great deal of referral work for Washington matters,” says Michael Sohn, the outgoing chair of Arnold & Porter. “Those days are pretty much gone.” The rankings of this year’s D.C. 20 reflect this. Overall, local revenue was up last year, with the highest-grossing firms breaking the $350 million mark for the first time. The entire 20 smashed through the $4 billion barrier in combined grosses. The Big Four remain the revenue champions in town, yet the local outposts of national firms now rival the Beltway Boys both in revenue and in size. Two of the largest — Skadden, Arps, Slate, Meagher & Flom and Latham & Watkins — were in the top 10. And those outside firms can often offer better pay packages. Profits per partner at Skadden and Latham — $1.9 million and $1.6 million, respectively — dwarf those of their Washington peers. And some of the older D.C. firms, such as Shaw Pittman (now Pillsbury Winthrop Shaw Pittman) and Howrey, are no longer among Washington’s biggest moneymakers. Yet the Big Four firms have all reacted slightly differently to these challenges, carving out divergent strategies that have repositioned them in the global legal market. Today, both Hogan and WilmerHale have become full-service law firms with an international reach that now stretches into Asia. Transformations at Covington and Arnold & Porter have been slower, and while the firms still cultivate blue-chip clients, they have struggled to keep up in the global rat race. Though some remain skeptical of the internationalist push, firms continue to merge and expand into new markets. How the Big Four transform in the next quarter-century will determine their status among Washington’s — and the world’s — elite firms. SAFETY IN NUMBERS Twenty-five years ago, the nexus of the District’s biggest law firms was located within a small radius of the White House. In 1980 government oversight was at a peak. Regulatory agencies that no longer exist, such as the Interstate Commerce Commission, generated significant business. For Washington law firms this was prime time, but each still had its own niche. WilmerHale, a spinoff of Cravath, Swaine & Moore, received the most referral work, and its relationship with the New York giant helped it reign over the securities regulatory world. Covington, then the largest firm in town, and Arnold & Porter were known for their antitrust work. Covington, for example, defended AT&T Corp. against private antitrust suits stemming from the government’s monopoly probe. And Hogan stood out for its influence inside the local corporate community. “We had a much greater business and finance capability, and that was a way to differentiate ourselves from the competition,” says Hogan Chairman J. Warren Gorrell Jr. That background set Hogan apart from its peers. But its more than 75-year legacy was beginning to face challenges from newcomers. Hogan decided early that it would have to expand beyond its Washington roots to survive. So in 1984 the firm made its first move, opening an office just across the Potomac River in Northern Virginia. The goal: to bring new high-tech companies into Hogan’s fold. “Opening the office across the river was fairly revolutionary for us,” says Janet McDavid, a partner at Hogan. “I think we may have been an early adopter in moving outside of our core Washington area.” It worked. And not only did the office crack a new market, the move softened firm partners to a model of growth — something other old-line D.C. firms had a hard time embracing — and one that would remake Hogan into one of the nation’s largest law firms. Meanwhile, President Ronald Reagan had vaulted into office, and his California connection gave West Coast firms such as Gibson, Dunn & Crutcher and O’Melveny & Myers a boost inside the Beltway. At the same time, a wave of deregulation, particularly in antitrust, weighed heavily on Covington, Arnold & Porter, and WilmerHale. “There was a question of what the role of the Washington firm going forward was going to be,” says William Perlstein, co-managing partner of WilmerHale. The answer, in large part, was geographic expansion. Soon, Covington looked across the Atlantic, setting up an office in London in 1988 and in Brussels two years later. WilmerHale, which had already landed in London in 1972, moved into Brussels in 1990 and, with the fall of the Soviet Union, into Berlin. Arnold & Porter, by contrast, maintained a domestic focus. Though it had a Denver outpost dating back to 1980, its new offices were limited to New York, in 1987, and Los Angeles, four years later. Hogan made the biggest internationalist splash. In 1989, Robert Odle became managing partner, and during the decade that followed, he doubled the firm from 289 lawyers. His global vision took Hogan to country capitals, where it hoped to leverage its background in weaving together business and government. The first foreign venture came in 1990, when the firm opened a London office. The next year it opened shops in Brussels, Paris, Warsaw, and Prague. An outpost in Moscow followed in 1994, and two years later, Hogan moved into Budapest. But location wasn’t the only problem. Clients began choosing law firms for their specialization and price, and not all firms benefited. Covington, for one, lost a major client, Dupont Co., when new leadership pared down the number of outside counsel in the early 1990s. Yet the white-shoe law firm wasn’t quite ready to accept these broader market changes. Always more conservative than its Washington peers, the firm had long avoided some of the latest legal business trends, such as brand-name marketing and lateral hiring. “My perception was that, for the most part, people at Covington weren’t really thinking about what other firms were doing. For the most part, people were focused on doing high-quality legal work,” says Douglas Phillips, a former partner who is now general counsel at Promontory Interfinancial Network. But even Covington couldn’t buck the trend forever. Eager to move into the corporate arena, the firm, under the leadership of Jonathan Blake, sealed a deal with New York’s Howard, Smith & Levin in 1999, creating a more than 50-attorney office overnight. Arnold & Porter also looked for new prospects. The firm had a long-standing history practicing before the Food and Drug Administration. So clients such as Philip Morris Co. turned to Arnold & Porter to take on some product-liability cases, Sohn says. Such work wasn’t exactly Washington based, but it won the firm a reputation, and it now handles a sizable caseload from the tobacco giant as well as from diet-pill maker Wyeth. MAKE IT THERE? Toward the end of the Clinton administration, WilmerHale was aiming to raise its profile. Hogan, with a base in corporate finance accounting for nearly 40 percent of firm revenues, was beginning to outshine its D.C. peers. So WilmerHale went on a star search, bringing in top government talent, including former U.S. Trade Representative Charlene Barshefsky; William McLucas, former director of enforcement at the Securities and Exchange Commission; one-time Solicitor General Seth Waxman; and Jamie Gorelick, former deputy attorney general at the Justice Department. Then, in 2004, WilmerHale merged with Boston-based Hale & Dorr, transforming it from a Washington-centered firm into one with international reach. The merger created a 1,000-attorney giant and brought in key practice areas including intellectual property and an emerging-technologies corporate practice. Later that year, the newly merged firm made its first mark in Asia with the launch of a Beijing office. Despite these transformations, neither WilmerHale nor its Washington competitors have fully meshed with the New York market. Hogan moved into the Big Apple in 1998, and after two subsequent mergers, it now has a 160-attorney office there. WilmerHale wasn’t far behind. The firm opened a three-lawyer outpost in 1999, focusing on securities work, and since its merger, the office has grown to 130 attorneys. Covington and Arnold & Porter are not far behind, with more than 80 attorneys each. But none of the firms has been able to transform itself into a deal-driven shop like Latham or Skadden. For now, though, they haven’t given up their New York ambitions. And the firms continue to have their sights on building out practice groups and broadening their market share across the globe. Yet they remain Washington firms. Regulatory work still contributes the most to their bottom line. The nation’s capital continues to be an important market, but the future of the venerable quartet of D.C. firms may depend on their ability to continue to spread their roots. “I think you are talking about four survivors,” says David Hensler, an executive committee member at Hogan. “Twenty-five years ago there were a host of firms, most of which no longer exist, some of which still exist but have remained smaller.”
Anna Palmer can be contacted at [email protected]. Emma Schwartz can be contacted at [email protected].

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