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Law firm leaders say they don’t grow just to grow and they don’t set any target for head count, but the numbers suggest that the race is on for firms to reach critical mass in their D.C. offices. The D.C. metro area’s legal market grew in 2006 at a healthy, if modest, 2.3 percent, approximately the same amount it did in 2005, but the market dynamics underlying the growth were markedly different. In 2006, average-size offices grew at a much faster pace than the area’s largest and smallest offices, and many of the firms posting the heartiest growth were the D.C. offices of national firms. In 2005, growth was spread fairly evenly among law offices of every size. The number of lawyers in Legal Times‘ annual head count of the D.C. metropolitan area’s 150 largest law offices grew to 14,879 in 2006. That means these offices — ranging from the 496-lawyer D.C. office of WilmerHale to two firms that tied for No. 149 with 30 lawyers each — added a total of 338 lawyers. This was very much in line with what happened in 2005, when the LT150 firms added 348 lawyers, a 2.5 percent growth. Legal Times surveyed 250 law offices in the D.C. metropolitan area to compile the information for this report. The D.C. metropolitan area is defined as the District of Columbia, Montgomery and Prince George’s counties in Maryland, Arlington and Fairfax counties in Virginia, and the cities of Alexandria and Falls Church in Virginia. The rankings in the LT150 are based on an office’s total number of lawyers as of April 1, 2006, though we also spell out the breakdown between partners and associates. And to capture anticipated growth, Legal Times asked firms how many new associates they expect to add in 2006. The research is presented in a main chart of the 150 largest law offices, as well as on a poster included with the paper issue. AN IMPORTANT METRIC? Firm leaders say they don’t “grow for growth’s sake” and don’t set any head-count targets. So, just how important is head count? Consultants say they look at a firm’s profitability numbers first, but they note that growth is an important metric by which to analyze a firm’s health. “Growth is often an indicator of strategic efforts or initiatives,” says Michael Short, a vice president with the D.C. office of professional-services consulting firm Hildebrandt International. “It reflects more than just the vagaries of the marketplace or happenstance.” Short says he considers swings of more than four to five percent to be relevant. Consolidation and growth remain the most important trends in the legal market, says Marci Krufka, a Newtown Square, Pa.-based consultant with Altman Weil. Washington is a critical market for a firm trying to establish a national platform, Krufka says. Large firms from major markets continue to be under pressure to build their national and international base, according to legal consultants. The exception to that rule may be top-tier, New York-based firms that concentrate on high-end capital-markets and mergers-and-acquisitions work, they say. New York may be the only market where firms have been so profitable that they can remain in a single city, Krufka says. There is no magic number, but firms trying to establish a robust, full-service office in the D.C. area need a 100- to 200-lawyer office, says Lisa Smith, head of Hildebrandt’s law firm consulting group. There isn’t a direct relationship between size and profitability, but there is a critical mass that allows firms to do higher-value work that leads to higher profitability, she explains. MIDSIZE OFFICES GROW MOST Although the overall growth rate in 2006 was little changed from 2005, the size of the offices spurring on that growth was different. In 2005, offices in all segments of the market grew by similar amounts on average, whereas in 2006 average-size offices marked far more dynamic growth than offices at either the top or bottom of the rankings. The average-size office in the LT150 survey had 98 lawyers in 2006. Offices that had between 100 and 150 lawyers grew by an average of 7.4 percent, and firms that had 50-100 lawyers grew by an average of 4.2 percent. Many of the offices with the most notable growth were the D.C. offices of national firms. For example, Willkie Farr & Gallagher saw a 47 percent uptick in its employment numbers and jumped 16 spots in the rankings. Mayer, Brown, Rowe & Maw upped its head count by 42 percent, moving up nine places in the rankings. LeBoeuf, Lamb, Greene & MacRae grew by 38 percent, leaping 22 spots. And Alston & Bird grew by 32 percent, coming up 14 spots in the rankings. In contrast, the top of the chart was particularly stable. The offices at the top of the heap in Washington, with more than 200 lawyers, averaged only a 0.07 percent growth. Moreover, there was little movement in the rankings among these firms, although Skadden, Arps, Slate, Meagher & Flom moved up three spots to number five and Wiley Rein & Fielding moved into the top 10, bumping off Howrey. Offices with between 150 and 200 lawyers actually shrank by an average of 0.4 percent. The smaller offices included in the LT150 survey, those with 50 attorneys or fewer, grew at an average of 2.6 percent — a faster clip than the behemoths, but not in pace with the midsize offices. Compare this with 2005, when growth was much more evenly distributed among different-size firms. In 2005, 200-plus-lawyer firms grew by an average of 2.6 percent, firms in the 100- to 150-lawyer range grew by 3.2 percent, and the smallest offices grew by 3.4 percent. TALENT SHORTAGE The firms in the LT150 say they expect to hire 1,291 associates in the coming year, but some consultants and recruiters question whether there are enough quality associates in the market to meet their hiring needs. The market for lateral associates currently is very tight, they say, especially for lawyers in intellectual property or corporate practice areas. Law firms are reluctant to acknowledge that they have any difficulty recruiting, but last winter’s round of salary increases for incoming first-year associates to $135,000 for many large D.C. law firms and even to $145,000 in some cases would indicate otherwise. In 2005, the LT150 firms said they expected to hire 1,226 new associates. But the survey shows that the firms added only 134 associates in that time period. Given that some percentage of any firms’ projected hires are designed to compensate for attrition, one wouldn’t expect to see 1,226 more associates even if all firms had been able to meet their hiring needs. But the gap between the numbers raises the question of whether there are enough attorneys in the market to implement firms’ growth strategies, Short says. “The competition for good lawyers is particularly fierce now,” Short says. Washington is a mature, well-picked-over marketplace, he explains. “There’s no silver bullet for implementing growth.”
Alexia Garamfalvi can be contacted at ag[email protected].

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