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Akin, Gump, Strauss, Hauer & Feld Balance, in good times and in bad, has been R. Bruce McLean’s mantra for the past few years. And given Akin Gump, Strauss, Hauer & Feld’s ability to maintain its No. 9 spot on the D.C. 20 during a rocky economy, his approach appears to have worked. “We’ve had a long-term strategy of balancing our portfolio,” says McLean. “We tried to avoid jumping on the bandwagon.” Indeed, the firm, which brought in $154 million in D.C. area revenue last year, seemed to be running the other way at times. For the past four years, Akin Gump not only sustained, but also added to, its bankruptcy group — while other firms were shedding bankruptcy lawyers in favor of the hotter high-tech gurus. Now, the investment is paying off. Countercyclical practices, like litigation and bankruptcy, are busier than ever as clients struggle financially, with many going under and others suing to protect their assets. “For three of those years, we didn’t look so smart,” McLean told Legal Times in January. “In 2001, we looked brilliant.” That has helped shield the firm from the economy to an extent, but like many other firms on the D.C. 20 list, it could not fully avoid bumps in the road. Profits per equity partner for the D.C. area dropped from $665,500 in 2000 to $603,000 in 2001, and the firm’s total lawyer head count fell by nearly 30. But McLean says comparing the 2000 and 2001 profits per partner numbers are like comparing apples and oranges. In calculating the PPP figure in the past, says McLean, partners were given credit for work they generated but which was sent out to other offices. This year, he says, the numbers provided for the D.C. 20 survey did not include that work. Regardless, the 248 attorneys in the D.C. area still managed to increase gross revenue, working on matters involving such things as President George W. Bush’s plan to have Medicare endorse prescription drug discount cards for seniors. In September, a group of D.C. attorneys, on behalf of the National Association of Chain Drug Stores and the National Community Pharmacists Association, had a hand in litigation that helped block Bush’s proposal. D.C.-based attorneys also worked on the merger of Akin Gump client the Westport Resources Corp. with the Belco Oil & Gas Corp., and a 15-year natural gas tolling agreement for a subsidiary of client Allegheny Energy Inc. The firm also brought on some big names in the past year. For the firm’s Northern Virginia office, things started off with a bang in January when it snatched nearly a dozen partners and associates away from Greenberg Traurig’s neighboring outpost. The group’s local clients included Cable & Wireless, Winstar Wireless Inc., and Blackboard Inc. The firm also attracted the likes of former U.S. Secretary of Agriculture Dan Glickman, Richard Coll of Deutsche Bank/Bankers Trust, and Greg Frazier, the chief agricultural trade negotiator with the Office of the U.S. Trade Representative. –Jennifer Myers Arent Fox Kintner Plotkin & Kahn For Arent Fox Kintner Plotkin & Kahn, 2001 was not kind. The firm took up highly publicized merger talks with Philadelphia-based Pepper Hamilton, only to call them off in the fall. Talks began again a few months later, but finally broke down a few months ago. Overhead costs boomed when the firm built out approximately 50,000 square feet of office space. That, combined with the weight of associate salaries, gobbled up a chunk of the D.C. office’s $115 million in revenue. With less net income to distribute to the partners, profits per equity partner dropped by $10,000 — to $420,000. With that, the firm dropped from a No. 13 spot last year to the last spot in the rankings. But chairman and managing partner Marc Fleischaker warns of being too influenced by the averages reflected in the survey or by one year’s numbers. “Most of our partners make what they would make in a comparable D.C. firm, regardless of the averages,” says Fleischaker. “The range of compensation is comparable to most firms.” Still, he concedes that “we need to increase our profitability.” Fleischaker, who took over the managing partner post when Christopher “Kit” Smith stepped down three months ago, promises to “pay closer attention to costs this year.” “Our capital expenditures are way down in 2002. We really did what we needed in 2001,” adds Fleischaker. For the associates who come to Arent Fox for the more-flexible billable hours — 1,900 are required, but 150 of these hours can be pro bono — they can breathe easy. Fleischaker says the firm is not looking to increase billable-hour levels to bring in more money. And while the firm is “open to the possibility” of a merger and has a committee that explores that issue, the firm is “not on the merger hunt,” Fleischaker says. “We don’t view this as a situation we have to do.” But some things are under the microscope, including the administrative staff and expenses like the firm’s retreat. For attorneys failing to meet workload goals, management will be “addressing hours issues where appropriate,” says Fleischaker. Considering that Arent Fox increased its gross revenue by $8 million — without increasing the number of attorneys and without any large contingent fees — Fleischaker’s tight purse strings could restore the profits per partner numbers. But will that be enough to prevent defections to firms already experiencing greater profitability? Just months into 2002, a nine-partner construction law and project finance group from Arent Fox defected to the D.C. office of Thelen, Reid & Priest, where profits per partner hit $500,000 in 2000, according to the most recent survey from The American Lawyer. Seven of the attorneys were equity partners, and many had been with Arent Fox for decades. Some associates are expected to follow. The construction group took a chunk of work for one of Arent Fox’s bigger clients, Clark Construction, though the firm retains some litigation and all of Clark’s transactional matters. –Jennifer Myers Arnold & Porter Arnold & Porter, the venerable Washington powerhouse, once again eked out the top spot in the Legal Times D.C. 20 by earning the highest revenue of any big firm in the local market. Like nearly all its competitors at the high end of the charts, Arnold & Porter enjoyed a healthy fiscal 2001 despite the malaise afflicting the broader economy and last September’s terrorist attacks. The firm’s 589 lawyers delivered $372 million in revenue firmwide last year — a robust 20 percent increase over 2000. Locally, the firm pulled in $248 million in 2001, also up about 20 percent. Arnold & Porter’s perennial rival for the top spot, Hogan & Hartson, booked slightly higher firmwide revenue — $385 million — but locally racked up $241 million, and so once again placed second in the D.C. 20. Arnold & Porter proved an efficient, and profitable, moneymaker last year. The firm had 392 lawyers toiling in the seemingly recession-resistant D.C. legal market last year — 85 fewer than Hogan. But under chairman Michael Sohn, each Arnold & Porter lawyer last year generated $630,000 in revenue, on average. While that’s just slightly less revenue per lawyer than the firm earned in 2000, it’s still among the highest in the District. Hogan, by contrast, squeezed only $506,000, on average, out of each of the firm’s 477 D.C. area lawyers. Howrey Simon Arnold & White’s 272 local lawyers posted an average of $584,000. Wilmer, Cutler & Pickering’s 313 locals each produced about $595,000. When the rank and file generate more revenue, partners tend to take home fatter checks. That was certainly true at Arnold & Porter last year: The firm’s 138 D.C. and McLean partners each enjoyed a $706,000 profit, on average — up from $670,000 in 2000. Hogan’s 139 D.C. and McLean partners reaped $575,000, on average — up from $555,000. Either way, the draws probably covered the club dues. Sohn and others at Arnold & Porter explain their success by pointing to big-ticket, legal-fees-are-no-object matters that D.C. partners handled last year, including a protracted Intel Corp. patent dispute and an array of antitrust battles. Three examples: Sohn last year represented PepsiCo Inc. before the Federal Trade Commission, which opted not to block the company’s $13.4 billion purchase of Quaker Oats. Partner Deborah Feinstein advised Kraft Foods Inc. on the FTC’s investigation of its $19.4 billion Nabisco acquisition. And partner Donna Patterson won antitrust clearance, in the United States, for the General Electric Co.’s hoped-for purchase of Honeywell. It’s quintessential Washington legal work. And last year, like so many years before, it paid. –Otis Bilodeau Covington & Burling Covington & Burling, D.C.’s prototypical white-shoe firm, did just as one might expect. With a double-digit increase in gross revenue, the firm maintained its No. 3 ranking, following D.C. landmarks Arnold & Porter and Hogan & Hartson. Covington pulled in $192 million in gross revenue in 2001, up from $177 million the year before. Additionally, profits per partner and revenue per lawyer remained healthy. Profits per partner hit $690,000, an increase of nearly $40,000 over 2000. And revenue per lawyer grew by $11,000 — to $605,000. Following the events of Sept. 11, work for a number of firms decreased. But Covington’s core insurance and corporate groups saw no decline, instead finding themselves busier than before. “A lot of companies renegotiated their financial terms” after Sept. 11, explains partner Andrew Friedman. Post-Enron, “a lot of companies are continuing to take a look at their [directors and officers] coverage,” says insurance partner Saul Goodman. He expects that to continue through 2002. But even before the terrorist attacks on New York and the Pentagon, Covington’s traditional practice groups were not lacking for work. In a big win in April 2001, a Minnesota trial court affirmed a February 2000 jury verdict in favor of Covington client 3M, which had sued dozens of insurance companies in 1996, seeking coverage for breast implant claims against it. The firm’s decade-long commitment to biotech has also proved a smart investment. An outgrowth of Covington’s traditional food and drug regulatory work, the 100-lawyer life sciences group, as they call themselves, has provided some shelter from the economy. “Over the past several years, a lot of big products have been going off patent,” says life sciences partner John Hurvitz. “With that, there’s an anticipated dip in earnings and an increasing demand for late-stage product opportunities.” Additionally, says Hurvitz, some of the firm’s clients — which include Human Genome Sciences Inc., AstraZeneca, Mederex, and Millennium Pharmaceuticals Inc. — have looked to partner with other biotech and pharmaceutical companies. Recently, Covington worked with the Schering-Plough Corp. and Merck & Co. when they decided to partner up their two respective cholesterol-fighting drugs. And Covington represented Mederex in dozens of its collaborations with other biotechs. Hurvitz expects the demand for biotech to continue to grow, especially now that the human genome has been mapped and companies will work to “unlock how our bodies operate” and “address pressing health needs.” And as always happens when something’s hot, more firms will likely jump on the biotech bandwagon. “We’re not just lawyers who happen to one day be doing a deal in life sciences and the next day, a dot-com deal,” says Hurvitz. “We’ve had a dedicated commitment to this for a long time.” –Jennifer Myers CROWELL & MORING This time last year, when Crowell & Moring slipped out of the D.C. 20 with $89 million in gross revenue, managing partner John Macleod told Legal Times, “I look forward to talking to you next year.” What he knew then, and what Crowell’s $149 million in 2001 revenue reflects, was that a premium fee came through in the first week of January 2001. It was not included in 2000 gross revenue. And it was not the only one in 2001. (MacLeod declines to disclose the size of the fee or the client, other than to say that the fee was generated by the litigation department.) Premium billing is a contingent fee structure that can allow firms to create revenue beyond the hourly figure that would otherwise prevail. Crowell collected several such fees in 2001, including one in the final week of the year. “It’s a part of our strategy to be on the lookout for good premium fee work,” says Macleod. “But we manage that to make sure we don’t get carried away with it.” With two of these fees bookending the year and several others coming midyear, the litigation group helped push Crowell’s revenue up 67 percent. The antitrust group, which shared in some of the premium fee work, also did well, according to Macleod. The surge in revenue lifted profits per partner above the $1 million mark, a figure usually seen only by New York firms, and revenue per lawyer rose 60 percent — to $707,000. It was a great year on the books, but Macleod is quick to caution that 2001 should be seen in a wider context. “The reality is that this year wasn’t that terrific, and the years on either side of it were better than they’ll appear,” he says. Indeed, the first premium fee of 2001 had been expected in 2000, and the last one was expected for 2002. Growth has been more steady than fiscal year accounting suggests. One area of growth for Crowell in 2001 was intellectual property. After losing its 11-lawyer team to Shaw Pittman in 2000, the firm picked up the 14-attorney boutique Evenson, McKeown, Edwards & Lenahan in April 2001. Specializing in patent litigation, which has picked up this year in many firms, the new group was able to work with Crowell’s litigation group to attract several new projects. Likening the combination to a 2+2=5 situation, Macleod says that Crowell attracted work that the two groups standing alone might not have gotten. It was a banner year for climbing the D.C. 20 chart, but Crowell & Moring is not on the revenue roller coaster the survey suggests. “Two thousand one itself was fabulous,” says Macleod. “But in fairness it should be seen as part of the larger picture.” –Wheatly Aycock Dickstein Shapiro Morin & Oshinsky Dickstein Shapiro Morin & Oshinsky held steady in the middle ranks of the D.C. 20, pulling in $137 million in 2001, $3 million more than in 2000. The 2 percent increase comes on top of a 33 percent increase the year before. Firmwide, revenue topped $152 million, up 6 percent from 2000. Profits per partner and revenue per lawyer fell slightly — revenue per lawyer by less than 1 percent to $559,000, and profits per partner by about 4 percent to $665,000. The fluctuation comes from the timing of premium fee collection, says managing partner Angelo Arcadipane. Dickstein dedicates 6 percent to 10 percent of its practice to premium billing matters, and in 2000, he says, the firm had larger than usual revenue from them. In 2001, Dickstein’s premium fee revenue fell, but its regular revenue — the noncontingency based returns — grew by 14 percent. “What I call our base and traditional practice has continued to grow, and we have very pleasant spikes in revenue resulting from contingent fees occasionally,” says Arcadipane. Expanding the base practice by 14 percent in the 2001 economic climate was accomplished largely by work in the energy, litigation, and technology groups, according to Arcadipane. “We had very little excess capacity this year,” he says. “We were not immune to the downturn in the corporate transaction and technology work, but we were able to employ the people who would do that in many of our energy deals.” With about 40 attorneys permanently assigned to the energy section, about 100 did energy-related work in 2001, much of it corporate work for energy clients. Dickstein energy clients include the KeySpan Corp., Pepco, and Indeck Maine Energy. Larry Eisenstat, head of the electric regulatory practice, says industry events forced participants to be very active in 2001. The California energy crisis created a lot of work for Dickstein, particularly on behalf of Duke Energy, a client that constitutes about 15 percent of the energy section’s work. Much of Dickstein’s 2001 growth in nationwide revenue was in New York, where the office tripled in size and raised revenue in that office by 66 percent-from $9 million in 2000 to $15 million in 2001. In January, the firm took on the 23-attorney Cravath, Swaine & Moore spinoff Roberts, Sheridan & Kotel, which bulked up the office’s tax and corporate practice. Two more practice groups signed on before the year’s end, bringing the office head count to about 60. –Wheatly Aycock Finnegan, Henderson, Farabow, Garrett & Dunner In a time when practice diversity has again become the rage, intellectual property boutique Finnegan, Henderson, Farabow, Garrett & Dunner might look like a one-trick pony. But that label fails to look at the complexity of Finnegan Henderson’s IP practice — and the financial success it has reaped. “Probably unlike the other firms in the top 20, we specialize in one area of practice alone,” says managing partner Christopher Foley. Yet within that one practice exist a number of specialities — and thus enough diversity — to safely cushion the firm from the recessionary market. In 2001, its D.C. office reaped approximately $150 million in gross revenue, more than a $25 million increase over 2000. “Certainly, the dot-com problems over the past year and a half have had an impact on the trademark side,” says Foley. However, any declines have been “offset by the other areas that the firm is involved in. We have a very healthy biotech and chemical practice. We are looking into the IP part of the economy with vigor.” Some of Finnegan Henderson’s clients include AOL Time Warner, the Coca-Cola Co., Eli Lilly & Co., and Nortel Networks. In the biotech arena, the firm “saw an increase in litigation to protect our clients’ interests vis-�-vis generic infringers,” says Foley. While others were contracting because of the economy, Finnegan Henderson was able to expand in 2001, putting a lease down on a 97,000-square-foot office in Reston, scheduled to open next month. The firm also grabbed two partners from Boston’s Wolf, Greenfield & Sachs, partnered them with two Finnegan folks, and opened the doors in 2001 to its Cambridge, Mass., outpost. But despite Finnegan Henderson’s success in 2001, no one lives in a bubble, and watching overhead is a fact of life. “We always focus on efficiency and not going over the top in terms of fringes,” explains Foley. That meant no layoffs of staff or attorneys in 2001 — a trend that the firm plans to continue in 2002. “We have no plans to lay off attorneys or nonattorney staff,” says Foley. “We have provided bonuses to our nonattorney staff. They were hearty, and we plan to continue that practice.” In fact, it’s unusual not to see the same faces year after year at Finnegan Henderson. Only a handful of associates left the fold. Adds Foley: “As historically has been the case, the firm has had no partnership turnover in 2001.” –Jennifer Myers Hogan & Hartson Hogan & Hartson is the giant among Washington’s law firms. Last year, Hogan put 761 lawyers to work in offices in 18 cities. No other homegrown D.C. firm came close to these numbers. Hogan’s longtime local rival, Arnold & Porter, boasted 589 lawyers in only seven out-of-town offices. Similarly, at Howrey Simon Arnold & White, 501 lawyers booked hours in seven out-of-town offices as well. Hogan’s reach continues to grow. In January 2002, Hogan finally sealed a long-simmering deal with New York’s Squadron Ellenoff Plesent & Sheinfeld. That acquisition expands Hogan’s New York corporate and tax capability, and swells the firm’s ranks to nearly 900, including Squadron Ellenoff’s Los Angeles-based lawyers. Squadron Ellenoff brings along corporate work for at least one prize client: Rupert Murdoch’s News Corp. Hogan has handled News Corp. regulatory matters here and some corporate work in Europe. All of which should prove fruitful over time for the steadily growing Hogan & Hartson. But in terms of 2001 financial performance, the firm’s size and geographic reach didn’t deliver standout results. To be sure, Hogan lawyers fared well during an economic downturn. Under chairman J. Warren Gorrell Jr., the firm saw its firmwide gross revenue leap by about 20 percent over the prior year, to $385 million. And locally, Gorrell oversaw a similar jump, from $203 million in 2000 gross revenue, to $241 million last year. Yet compared with peers like Howrey and Arnold & Porter, Hogan’s 2001 numbers show some softness. Hogan’s average revenue per lawyer, $506,000, was lower than A&P’s $632,000 or Howrey’s $584,000. And, of perhaps greater moment to Hogan partners, their average profits of $575,000 — while up from $555,000 in 2000 — continued to lag behind profits at A&P and Howrey. Still, in a weak economic year in which some New York and San Francisco Bay area firms saw profits dive, Hogan enjoyed strong performances from both its litigation and corporate squads. Gorrell says the litigation practice was “as strong as at any time in the past 25 years.” One major matter in 2001 was the sprawling Gemstar-TV Guide case at the International Trade Commission. The firm racked up thousands of hours on the matter. And Hogan’s business and financial group — fully 40 percent of the firm’s lawyers — stayed busy on deals like an $8 billion acquisition for mega-REIT Equity Office Properties Trust. –Otis Bilodeau Howrey Simon Arnold & White Howrey Simon Arnold & White expanded into Chicago and London last year and hired fairly aggressively outside Washington. From 435 lawyers firmwide in 2000, the firm swelled its ranks by 15 percent last year, to 501 lawyers — not including the new associates who joined last fall. The local head count remained unchanged. The empire building diluted profits, but not by much. Firmwide gross revenue climbed from $241 million in 2000 to $292 million last year, while local revenue climbed from $151 million to $159 million. Revenue per lawyer also jumped, from $554,000 to $579,000. And despite taking on substantial office leases — including about 12,000 pricey square feet in London — Howrey Simon raked in average per partner profits of $762,000 last year, just a fistful of dollars less than the year before. Howrey Simon managing partner Robert Ruyak has made it clear that he expects last year’s investments — along with the firm’s recent launch of a new Brussels office — to deliver healthy returns in the near term. “We made big investments last year,” Ruyak said in January. “When you bring on new people, it takes a while for them to be profitable for the firm.” Among the breadwinning matters Howrey Simon tackled in 2001 were a welter of intellectual property suits involving client the Monsanto Co. and a sprawling antitrust dispute in which the firm represents poultry giant Foster Farms against vitamin suppliers that allegedly conspired to fix prices. –Otis Bilodeau Jones, Day, Reavis & Pogue Litigation juggernaut Jones, Day, Reavis & Pogue thrived on conflict-related work last year, and enjoyed a 20 percent bump in local gross revenue. Partner profits also crept up from an average of $775,000 in 2000 to $815,000 last year. That’s a nice round number for a Washington lawyer and one that only a handful of local practices could top last year. Latham & Watkins, which tied Jones Day at the $117 million local revenue mark, managed to significantly outrun the Cleveland-based firm in profits per partner. Latham’s equity stakeholders took home just more than $1 million each last year, on average. But Jones Day — like several other major out-of-town firms with big local offices — was much more profitable than many home-grown shops. At Patton Boggs, for example, which also earned $117 million in local revenue, the average profit per partner was only $471,000. (As in 2000, Swidler Berlin Shereff Friedman was once again the exception to this rule. Swidler Berlin’s partners cleared $831,000 on average in 2001.) Stephen Brogan, Jones Day’s local partner in charge, points to a host of big-ticket disputes that his team logged hours on last year, along with regulatory work relating to several corporate deals. The firm represented the Procter & Gamble Co. in its acquisition of Clairol from the Bristol-Myers Squibb Co., for example, and advised Pfizer Inc. on its worldwide tax planning related to the pharmaceutical giant’s $90 billion merger with the Warner Lambert Co. Brogan’s 220 D.C. troops also handled Bayer AG’s patent and antitrust litigation over Cipro, the antibiotic made famous by last year’s anthrax scare. Locally, Jones, Day won licensing work for AOL Time Warner Inc. Jones Day also managed to poach at least one high-profile D.C. litigator last year. Glen Nager, who heads up Jones Day’s appellate practice firmwide, wooed George W. Bush’s one-time election lawyer, Michael Carvin, in April 2001. Carvin, a former name partner at litigation boutique Cooper & Carvin (now Cooper & Kirk), enjoys close ties to the Capitol’s conservative Republican elite. –Otis Bilodeau Latham & Watkins Latham & Watkins has emerged as one of the two or three most lucrative big-firm practices in Washington. The firm had 178 lawyers billing hours in its D.C. and Reston offices last year. They delivered about $118 million of the 1,165-lawyer firm’s $770 million in gross revenue. Several D.C. practices grossed a lot more than $118 million. But Latham’s D.C. and Reston partners — like the local partners at Skadden, Arps, Slate, Meagher & Flom — reaped much larger checks last year than most of their peers at D.C. firms. That’s a function of mega-firm economics — Latham’s 313 equity partners had about 850 associates and of counsel racking up hours last year — and the Los Angeles-based firm’s grip on high-end corporate work in both New York and Europe. Latham’s equity partners, on average, drew a comforting $1.05 million in recession-plagued 2001. (Skadden’s partners each drew about $1.6 million, on average.) Except Crowell & Moring, which reaped several profit-swelling success fees last year, no other large D.C.-based firm came close to those numbers. Latham’s D.C. managing partner, Eric “Rick” Bernthal, says the firm’s D.C. area lawyers benefitted in 2001 from strong domestic and international demand for project finance expertise — a highly profitable practice for the firm, led locally by partner John Sachs. The firm’s local litigators also stayed busy on bet-the-company cases. One example: Nine local partners, including Maureen Mahoney and Everett “Kip” Johnson Jr., and about 15 D.C. associates have been defending embattled health care services giant HCA Inc. in a series of cases that arose from the federal government’s investigation of alleged Medicare and Medicaid fraud at the company. –Otis Bilodeau McDermott, Will & Emery McDermott, Will & Emery, at No. 12, had an outstanding year in the D.C. metro area. The Chicago-based firm’s local office brought in more than $137 million in gross revenue and outperformed the firm as a whole in revenue per lawyer and profits per partner. After a slightly down year in 2000, the office upped its revenue by 25 percent in 2001, elevating its revenue per lawyer to $675,000 and its profits per partner to $940,000 — compared with $644,000 and $925,000 firmwide, respectively. D.C. managing partner Timothy Waters says the office was a net importer of work in 2001. The biggest magnet was the intellectual property group, which constitutes about half of McDermott Will’s 150 IP lawyers firmwide. Waters credits the office’s IP group-along with the antitrust, tax, and trial practices — with mitigating the late-year slowdown in corporate work. The upswing in patent litigation created a lot of work for the office. In April 2001, 14 D.C. IP attorneys successfully represented medical technology company Medtronic Inc. in a stent graft patent infringement case brought in Wisconsin. Last December, five D.C. IP lawyers — including group chair Ray Lupo — fended off a $246 million patent infringement suit levelled by the Intel Corp. against McDermott client the Broadcom Corp. In the antitrust/trade regulation group, chair Raymond Jacobsen Jr. says that an enforcement-minded agenda at the Federal Trade Commission and Department of Justice contributed to the group’s success in 2001. He says McDermott Will’s antitrust work in 2001 was broad-based — representing clients across the food and beverage, steel, explosives, medical devices, and defense industries — and that “the only common theme is that the FTC and DOJ have been aggressive about going after transactions of varying sizes, and their investigations have been thorough.” Waters adds that a lot of tax work was generated out of the D.C. office, and that the August 2000 acquisition of partner Margaret Warner — along with her litigation group from what was then Carr Goodson Warner — proved valuable in 2001. Warner represents several large insurance companies, particularly in disputes in the international insurance and reinsurance markets. Waters says her trial practice, along with the tax, antitrust, and IP work “helped us deal with this vastly uncertain 2001 period.” –Wheatly Aycock Morgan, Lewis & Bockius From a public relations standpoint, Morgan, Lewis & Bockius’ decision to lay off 50 associates firmwide — the first mass reduction by an East Coast-based firm — was a nightmare. Internet chat boards warned that the firm was on shaky ground. Headhunters spoke of greener pastures. But how much of that was really warranted? Looking at Morgan Lewis’ 2001 numbers — and its move up one spot to No. 7 — the firm may be making the right moves to position itself strongly in the District. “We did that looking forward to a flattening economy” in 2002, says D.C. managing partner Michael Kelly of the associate reductions. Indeed, due to the timing of the layoffs in October, any savings from the associate reduction will not be felt until the 2002 fiscal year is completed. Regardless, Morgan, Lewis watched its gross revenue, profits per partner, and revenue per lawyer increase. While many other firms on the D.C. 20 list increased in at least one of those categories, Morgan Lewis saw a greater rise than some of its companion firms. Compared with its 2000 figures, the firm jumped $17 million in gross revenue, up to $164 million. Additionally, profits per equity partner hit $739,500, up from $711,000 in 2000. Revenue per lawyer also leapt up, going from $502,000 to $558,000. “A down market is where a Washington office shows its strength,” says Kelly. From 2000 to 2001, Morgan Lewis’ D.C. lawyers helped broker seven to eight deals for the Excelon Corp., which buys and sells nuclear reactors. Additionally, the firm’s IP attorneys spent “thousands and thousands of man-hours” putting together Diageo PLC’s purchase of Vivendi SA’s Seagram Spirits and Wine Business, in what was “far and away the most significant” matter the office handled in 2001, says Kelly. The matter hit a snag at the end of the year, when the Federal Trade Commission voted to block the merger, which would have combined two of the largest rum distributors. A settlement soon afterward allowed the transaction to proceed. The office has also watched its expenses. “We’ve achieved some cost savings,” says Kelly. “I don’t think most people working here even notice them.” The firm, for example, has slowed on its new technology spending, something that Kelly says has been easy to do since many clients are also watching the bottom line and choosing not to upgrade as quickly as they have in the past. For 2002, things are looking good. Morgan Lewis’ area offices snagged partners and associates from the likes of Swidler Berlin Shereff Friedman; Howrey Simon Arnold & White; and Kelley Drye & Warren for its litigation, IP, corporate, and bankruptcy work. “Our office continues to be busy for the same reasons it was in 2001,” says Kelly. –Jennifer Myers Patton Boggs Patton Boggs, one of Washington’s most lobbying-driven law firms, managed a robust 17 percent jump in local revenue last year. The firm just broke the $117 million mark in 2001, compared with $100 million in local revenue in 2000. That revenue increase is particularly noteworthy considering that the firm enjoyed an unusual, $10 million success fee in 2000, as a result of work the firm handled for the government of Qatar. And despite higher overhead costs in the form of associate salaries, managing partner Stuart Pape squeezed a 34 percent net profit out of local operations last year — a very slight improvement over 2000. Still, each of the firm’s lawyers generated, on average, less revenue than their peers at some elite D.C. practices. Ultimately, that translated into relatively low average partner profits. Patton Boggs’ 85 local equity partners last year drew about $470,000 each, on average. While that’s up about 6 percent over 2000, it’s still significantly less than partners at some similarly sized firms enjoyed last year. For example, Wilmer, Cutler & Pickering’s 93 local equity partners each reaped about $620,000, on average, while Dickstein Shapiro Morin & Oshinsky’s 90 equity partners chalked up average partner profits of $665,000. One reason for the firm’s relatively modest revenue per lawyer number has to do with the nature of lobbying work, a key driver of the firm’s finances. In general, clients don’t expect to pay for an army of associates when they retain a law firm to tackle a lobbying issue. As a result, firms rarely leverage those matters as fully as, say, a major piece of litigation or a big antitrust review. That means fewer lawyers racking up hours and, all other things being equal, lower average revenue per lawyer. Managing partner Pape says that the firm did benefit last year from ample non-lobbying legal work. The firm’s Dallas office, for example, was able to capitalize on the surge in corporate bankruptcies last year. Patton Boggs has aggressively grown its Dallas outpost from six lawyers in 1996 to about 70 today. The firm also cashed in on the spike in lobbying work related to the terrorist attacks on Sept. 11. In the fourth quarter of last year, the lobbying group tackled bills dealing with airport security, bioterrorism, and the federal compensation scheme for victims of terrorism. “Those more than replaced the matters that were put on hold because of 9-11,” Pape observed earlier this year. Pape also notes that the firm has grown rapidly over the last several years and incurred substantial additional overhead as a result. But he says that’s starting to pay off this year. Through May, he says, revenue is up by $8 million-a 14.5 percent surge over last year-while overhead is up only 5 percent. And profits per equity partner are up a whopping 29.5 percent. If these numbers hold up, Patton Boggs may very well leapfrog up the D.C. 20 chart next year. –Otis Bilodeau Shaw Pittman Shaw Pittman banked on the tech boom in Northern Virginia and found itself with too many attorneys when the sector went bust. The firm laid off 19 associates in December, and a smaller number of staff. The move, which knocked out a number of transactional folks, was meant to fix an imbalance in the firm, according to managing partner Paul Mickey Jr. “Because we anticipated a more robust economy than we experienced in 2001, and hired accordingly, and then had far lower than our usual attrition, we ended up with growing revenue but faster growth in head count,” says Mickey, “leading to the phenomenon that some lawyers were less busy than they and we wanted.” While the reduction may help shore up the firm’s finances in 2002, the Jan. 1 effective date of the associate layoffs did nothing to ease the pain of 2001. Net income in the D.C.-area offices crept up to $56.5 million, from $54 million in 2000. But a larger number of partners forced to split the pie ended up lowering the profits per equity partner figure to $533,000. In 2000, profits per partner hit $555,000. At the same time, Shaw Pittman promoted just four D.C.-area attorneys to partner in 2001, approximately half the number promoted in the previous two years. “We try consciously not to have our decisions be numbers-driven, and, overall, I think the economy had a modest impact on the size of the group,” says Mickey regarding the partner promotions. Despite all of the firm’s challenges in 2001, Shaw Pittman managed to hold its own in the rankings. Touting an increase in gross revenue from $153 million to $165 million, the firm dropped only one spot. Among the top six, only Wilmer, Cutler & Pickering is the newcomer, moving up from No. 7 to No. 4, and effectively knocking Shaw Pittman out of the No. 5 spot. –Jennifer Myers Skadden, Arps, Slate, Meagher & Flom More than many Washington-based firms, Skadden, Arps, Slate, Meagher & Flom felt the contraction in big-ticket M&A work out of New York — normally a fat pipeline of profit for the firm’s equity partners. But while that high-end Wall Street work thinned for Skadden and its competitors among the elite New York firms, the 1,600-lawyer goliath enjoyed robust demand for its litigation and bankruptcy practices. Skadden’s local litigation celebrity Robert Bennett may have snagged one of the firm’s most high-profile matters last year, when he was retained by the Enron Corp. to advise the company as it staggered into bankruptcy and a maelstrom of congressional and criminal investigations. In the D.C. market, the firm’s 230-odd lawyers generated about $181 million in revenue — a respectable 7 percent increase over the previous year’s $169 million. The firm’s revenue per lawyer dropped from $800,000 in 2000 to $760,000 last year, reflecting the slump in M&A and other corporate work for which the firm can command lucrative premiums. Still, managing partners at many D.C. 20 firms would dearly love to see their lawyers generate such high average revenue; only Williams & Connolly matched Skadden by this measure last year. And although Skadden’s profits per partner slipped by about 2 percent, at about $1.5 million on average, it far outstripped the profits of most D.C. competitors. As the managing partner at one D.C.-based firm puts it, “I’ll take a downturn like that any day.” –Otis Bilodeau Steptoe & Johnson For years, Steptoe & Johnson has been a steady workhorse of the D.C. 20 list. You could count on the firm for small, but respectable, increases in gross revenue. Profits per partner remained nicely middle-range. Things changed last year. The firm’s countercyclical practices — bankruptcy and litigation — brought in plenty of money in a down economy. Gross revenue went up $17 million, to $123 million. From 1999 to 2000, the increase was only $8 million. Profits per partner also made a huge leap. The firm’s 91 partners added a whopping $95,000 to their pockets, bringing home a total of $555,000. The leap in numbers came despite a nearly identical head count. Compared with 2000 figures, Steptoe had only 18 more attorneys in the District. Where the real growth occurred was in the practice areas, says managing partner J.A. “Lon” Bouknight Jr. The litigation, bankruptcy workout, and international trade practices were up in 2001, which helped balance out a much flatter year for the corporate group. “We represented the U.S. Enrichment Corp. in a very large trade case over the question of uranium imports,” says Bouknight. The international trade group represented the Canadian lumber industry before the International Trade Commission, and the white-collar practice group worked on the acquittal of former Teamsters Union President Ron Carey. The litigation group also spent a good bit of 2001 working on a $2 billion dispute for Motorola Credit. Growth was not limited to the District. In January 2001, the firm merged with London-based Rakisons, creating a 43-lawyer outpost there. A handful of partners have been added to the mix since the date of the merger. Work between Steptoe and Rakisons actually began in July 2000, at the start of their merger talks. The attorneys collaborated on the representation of the Canadian telecom company Stratus Global Corp. in its acquisition of British Telecommunications PLC’s satellite properties, a deal worth $250 million. Additionally, the firm formalized its presence in the center of the European Union in 2001. Having provided legal advice in Brussels since 2000 through its relationship with Kees Kuiliwjk, Steptoe formally opened an office on Jan. 2, 2002. For Bouknight, the firm’s D.C.-based managing partner, the time has come. As the firms that catered to the dot-coms struggle along with their clients, Bouknight remains happily ensconced in his firm’s more traditional work. The tech-heavy firms “got to ride a very nice bubble that some of us D.C. firms didn’t get to ride,” says Bouknight. –Jennifer Myers Swidler Berlin Shereff Friedman Equity partners at Swidler Berlin Shereff Friedman managed to protect their outsize profits from the bear economy in 2001 by aggressively ratcheting back on costs. Despite Swidler’s heavy bet on the telecommunications sector, which by the end of last year was pitted with bankruptcies and is now a yawning economic crater, the firm in 2001 churned out average profits per partner of $831,000 on gross revenue in the D.C. area of $122.7 million. That’s about one year of prep school tuition lower than last year’s figure, but it’s still by far the highest profits per partner of any D.C.-based firm. One key contributor: the firm’s leverage. The ratio of associates to equity partners at Swidler is among the highest in Washington. At five wage-earning lawyers to every equity partner, Swidler even trumps the notoriously leveraged Skadden, Arps, Slate, Meagher & Flom, which clocks in with slightly fewer associates to each partner. But while leveraged to the hilt, Swidler nevertheless faced an ominous economic horizon in 2001. “We recognized late in the fourth quarter of 2000 that things were looking very soft in capital markets and transactional and telecommunications,” managing partner Barry Direnfeld explained several months ago. “All discretionary expenses stopped. We did a budget review and put department managers through the wringer” on their costs. The firm froze hiring, dropped about two dozen contract attorneys, and laid off a few associates. In all, Swidler trimmed its head count by about 50 lawyers, including 14 lawyers who defected from the firm’s New York office to Shearman & Sterling. Swidler moved to cut real estate costs, too. Direnfeld relocated the firm’s consulting ancillary and about 60 lawyers from high-rent space in the Washington Harbour complex in Georgetown to an office on Thomas Jefferson Street, N.W. Swidler leased the vacated 20,000 square feet to Foley & Lardner. Direnfeld says that the cost-cutting hasn’t damaged morale, or seriously aggravated partners accustomed to traveling in the front of the plane. To the contrary, he claims, the all-hands-on-deck effort to manage the downturn has only brought his firm closer together. –Otis Bilodeau Williams & Connolly Williams & Connolly makes money when clients find themselves in extremely dire straits. Evidently, there were plenty of those clients in 2001. The firm’s lawyers enjoy a reputation as the Green Berets of high-stakes litigation. They’re a relatively small, tightly knit, highly trained, and notoriously relentless group. The relentless part makes a difference in the firm’s finances. Williams & Connolly lawyers are infamous for working brutally long hours. Firm management declines to discuss the firm’s finances, but the firm’s average revenue per lawyer — a whopping $763,000 — testifies to many late nights on planes and in front of computers. Among the firms in this year’s D.C. 20, only the 1,600-lawyer Skadden, Arps, Slate, Meagher & Flom matched the 175-lawyer Williams & Connolly in terms of revenue per lawyer. Major cases Williams & Connolly worked last year included litigation brought by a group of states that retained senior partner Brendan Sullivan Jr. to tackle the Microsoft Corp. on antitrust grounds. The firm also managed to secure for Warnaco Inc. a disputed licensing agreement with a Calvin Klein entity. The license to sell Calvin Klein trademarked goods translated into about $1 billion a year in sales for Warnaco. After months of preparation for trial by Sullivan and his team, the Calvin Klein team agreed to settle. Many of Williams & Connolly’s clients retain the firm to keep them out of the paper. Perhaps chief among these are law firms, who often turn to Williams & Connolly partners such as John Villa when they confront malpractice or other similar claims. Villa currently represents Vinson & Elkins in connection with the collapse of that firm’s longtime client, the Enron Corp. Overall, Williams & Connolly experienced in 2001 the same type of steady financial growth that has proven a hallmark of the firm over the past decade. Gross revenue climbed by about 6 percent, to $133.5 million. And partners enjoyed some of the largest draws in Washington: Each of the firm’s 80 shareholders collected an average $750,000 profit. Maybe it makes all the late nights seem worth it. –Otis Bilodeau Wilmer, Cutler & Pickering At Wilmer, Cutler & Pickering, a concerted effort to strengthen the firm’s regulation-driven practices paid off in 2001. While firms that bet heavily on dot-com and telecom corporate work suffered, Wilmer Cutler’s first-tier practices, such as its litigation and securities regulation groups, as well as its bankruptcy squad, stayed busy. The firm’s 313 D.C. and Tysons Corner lawyers contributed about $186 million to the firm’s total gross revenue of $234 million. Wilmer Cutler’s local revenue jumped a healthy 24 percent over 2000 figures. And although the firm added about 20 D.C-area equity partners, including some high-priced laterals, average profits rose about 8 percent, to $619,000 per partner. That’s still a long way from the top in Washington: Skadden, Arps, Slate, Meagher & Flom’s partners reaped an average of $1.6 million, and partners at Latham & Watkins pocketed just more than $1 million each, on average. But compared with local firms of similar size, Wilmer Cutler’s profits were respectable. Wilmer Cutler chairman William Perlstein says the firm benefited from some expensive advice given by McKinsey & Co. The management consultancy early last year encouraged Wilmer Cutler’s partners to build on their strength — counseling companies involved in complex, regulation — driven matters, such as Securities and Exchange Commission investigations. Embracing the strategy, Wilmer Cutler last year competed aggressively for and landed several elite government lawyers, such as former Solicitor General Seth Waxman and A. Douglas Melamed, a former acting assistant attorney general for the Antitrust Division at the Department of Justice. Perlstein says regulatory work — in particular regulatory litigation — proved to be an engine for profit growth in 2001. Key regulatory matters in 2001 included work for Qwest Communications International, Verizon Communications Inc., the UAL Corp., and Lufthansa. The firm also represented Credit Suisse First Boston in the SEC’s investigation of alleged securities law violations involving the sale of shares in initial public offerings. The company agreed to pay $100 million to settle the matter. Late last year, Wilmer Cutler partner and former SEC enforcement chief William McLucas made headlines when he was retained by a committee of the Enron Corp.’s board to investigate that company’s implosion. In addition to generating at least $3 million in fees, the Enron assignment earned the firm considerable publicity and further bolstered its claim to being the premier SEC firm in Washington. –Otis Bilodeau Related Charts: Defying the Odds: The D.C. Top 20 Ranked by Gross Revenue A Lucrative Treadmill: Ranking by Revenue Per Lawyer The (Big) Bucks Stop Here: Ranking by Profits Per Partner What the Firms Got to Keep: Ranking by Net Operating Income

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