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Every firm’s gain is another’s loss. With firms merging and whole practice groups jumping ship, that’s becoming the story behind partnership changes at Washington, D.C.’s biggest law firms. A survey of the firms with the largest offices in Washington and Northern Virginia shows that firms brought in far more partners from other firms than they tapped from their own ranks in 2000, as they expanded into niche areas of the rapidly changing legal market. Why all the lateral action? For one, firms increasingly regard lateral partners as sure things — experienced hands who bring with them an established book of business and know-how in key practice areas. They are particularly attractive to firms that are looking to expand right now. Managing partners say laterals can turn a sleepy practice into a profitable enterprise nearly overnight. “You would hope you are doing one of two things” when bringing in lateral hires, says Wilmer, Cutler & Pickering’s managing partner, William Perlstein. “Either filling a need with an experience level that you think you can’t grow from within [or going] into an area that is new to you.” Shaw Pittman took in the highest number of laterals locally in 2000, with a whopping 23 attorneys joining the firm’s D.C. and Northern Virginia offices. The firm went hunting for communications and patent specialists, in particular. Much of Shaw Pittman’s growth, according to managing partner Paul Mickey Jr., is attributable to the firm’s acquisition of communications shop Fisher Wayland Cooper Leader & Zaragoza and to a three-member intellectual property team that defected from Crowell & Moring. Mickey contends that gaining — and losing — laterals is a fact of life, particularly when enticing business opportunities often lure top talent away. “When you’re a heavily transactional firm and you have people who are confronted with business opportunities, you have to fill gaps that open up sometimes,” says Mickey. The acquisition of Washington, D.C.-based environmental shop Cutler & Stanfield gave Akin, Gump, Strauss, Hauer & Feld an environment, land use, and project development practice. And the firm nearly doubled its health industry shop by acquiring Washington, D.C.’s Green, Stewart, Farber & Anderson. In total, the firm went outside for 18 partners, while promoting only three in-house attorneys to the position. Arent Fox Kintner Plotkin & Kahn reported seven attorney promotions and brought in another 11 as laterals. “We’re definitely in an expansion mode,” says managing partner Christopher “Kit” Smith. “We want to continue to promote partners, but also to add other partners with additional practices, and that helps expand the opportunities for everybody.” Howrey Simon Arnold & White scored big when it picked up a 12-member antitrust practice from the firm now known as Collier Shannon Scott, headed up by antitrust star James Rill. It also took in four patent partners. A DIFFERENT EXPERIENCE There were, of course, exceptions to the rule. Hometown firm Covington & Burling promoted three associates to partner while hiring on only one other. Managing partner Jonathan Blake says the low number is not uncommon and dismisses trends in the industry. “We’re not influenced by numbers one iota,” he declares. While the firm sees more opportunities with laterals today than in the past, he says, it will stick to its traditional hiring patterns. “We have extremely high standards,” says Blake. Washinton, D.C.’s Swidler Berlin Shereff Friedman, which typically boasts high lateral numbers, brought in just one this year. Managing partner Barry Direnfeld says Swidler is still digesting the 1998 mega-merger that coupled Swidler & Berlin with New York-based Shereff, Friedman, Hoffman & Goodman. Since then, he says, the firm has had little need to acquire lateral partners. The one partner it did hire last year was Edward Pennington, who was picked up to head the firm’s intellectual property group. A dozen counsel and associates were also hired on in support of the practice. One of the world’s largest law firms, New York’s Skadden, Arps, Slate, Meagher & Flom, with 219 attorneys locally, made no partner promotions last year and hired only one partner, Kenneth Gideon. Michael Rogan, managing partner of the firm’s D.C. office, says while the number is low, it’s not unusual for Skadden. “We rarely bring in laterals in Washington,” Rogan says. “Our style is more home-grown. And when we do laterals, we do one at a time.” The lateral frenzy may be making it tougher for associates to rise through the ranks and gain a partnership stake. Many firms have introduced two-tiered earning structures, with a nonequity partner status designed to keep associates happy while the firms screen out attorneys who wouldn’t make profitable partners. Swidler Berlin, for example, promoted seven attorneys to the partnership. Out of those, however, none were named equity owners. Hogan & Hartson promoted 21 lawyers to partner status, but none of them are equity partners. Avery Ellis, managing director of the executive search firm Mestel & Co., says firm leaders are feeling pressure to keep profits per partner high. “To attract the best laterals and to retain the best and most productive partners, you have to really keep an eye on the bottom line,” he says. “Logically, something has to give,” he adds, referring to associates’ prospects of gaining full partnership status. But Perlstein suggests associates’ fortunes can improve when firms make smart lateral hires: “Laterals should expand opportunities for associates because they expand the capability of the firm.” But, he adds, “associates should be more concerned when a firm is bringing a self-contained practice group where there’s not room to grow.”

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