In recent years, Washington’s top law offices have been hit hard by the recession. As a result, many have shed lawyers at an unprecedented pace.
But that hasn’t been the case for Lerch, Early & Brewer, the Bethesda, Md.-based firm that quickly but quietly has become the fourth-biggest law office in D.C.’s suburbs.
From 2010 to 2011, according to the Legal Times 150 survey of the Washington area’s biggest law offices, including those in northern Virginia and suburban Maryland, Lerch Early grew in headcount by 27%, from 49 attorneys to 62. The firm also added five partners, to 40. In that time frame, the overall number of D.C.-area attorneys at these offices dropped by about 2 percent.
The year before, the number of lawyers at Lerch Early rose slightly — at a time when overall headcount for Washington law offices suffered its biggest drop in a quarter-century.
So what accounts for Lerch Early’s consistently stronger-than-average performance?
Current and former partners and firm clients say there are several right answers. A diverse set of smaller and midsized clients. A wide array of practice groups. “Reasonable” price points that attract mostly suburban-based companies for long-term relationships. And an emphasis on community and civic involvement — a requirement for would-be partners.
According to Lerch Early Chairman Arthur Lafionatis, the firm doesn’t boast many big-name, high-profile clients. Moreover, he said, if the firm were to lose any single client, it would not constitute a death blow. “We have a very diverse client base and even within the practice groups, there isn’t that one multimillion-dollar client,” Lafionatis said.
The firm has recently engaged in a number of lateral acquisitions. In its biggest, the firm last September added eight land use and real estate attorneys from Holland & Knight. In November, the firm took two bankruptcy lawyers from Jackson & Campbell.
But Lafionatis said nonstop growth is not necessarily a goal for the firm. Instead, he said the firm focuses on smart growth and opportunities for expansion that complement its existing practices.
Lerch Early’s biggest practice groups focus on litigation, land use and zoning, lawyers there say. The community associations group also continues to grow, and the firm’s estate planning and probate practices have remained steady. Some of the firm’s clients include SunTrust Banks Inc., JBG Development, Maisel-Hollins Development Co. and WashingtonFirst Bank.
The firm hasn’t been able to avoid the recession entirely, and some practices have suffered as a result. The real estate and lending program have had fewer transactions, for example, Lafionatis said, though the complexity of the deals has increased. “We are not immune to the economy,” he said.
Lerch Early was founded by Henry Lerch and Wilton Wallace in 1950 as a two-lawyer shop on 15th Street N.W. in Washington, a stone’s throw from the White House. The firm soon added a second office in Bethesda to better serve its suburban clients. It wasn’t until 1970, when Lerch’s son, Harry Lerch, joined the firm that the dynamic changed. Harry consolidated the offices to a single location in Bethesda and began to expand the practice. During the 1970s and 1980s, the firm added attorneys in litigation, estate planning, tax, employment, land use, health care and commercial transactions to broaden its practice base. In 1977, the firm added name principal Robert Brewer Jr.
“Our intention was to have one office in what was a relatively sleepy Bethesda,” Brewer said. “With the subway coming, the red line through parts of Montgomery County would establish and promote business centers.”
As business began to expand in places like Bethesda and Tyson’s Corner, Va., Brewer said the firm tried to tap into the businesses that wanted expert attorneys with suburban pricing. “We’re more expensive probably than a local firm, but less expensive than a multinational firm,” he said.
And having the firm located in Bethesda, Lafionatis said, helps keep the firm’s overhead costs lower than its downtown D.C. competitors, which in turn allows the firm to charge more competitive rates.
Clients seem to be buying into the premise.
“They are not as high-priced as some of the law firms, which makes it more palatable for my clients,” said Dennis Stough, senior vice president and manager of commercial automotive effort for mid-Atlantic at SunTrust. “They are not cheap, they just aren’t unreasonably priced.”
Stough said he’s been doing business with Lerch Early for more than 15 years. He said that their ability to take “legalese” and translate that to business terms is one of the firm’s strengths, and has helped him make better business decisions. It’s a skill, he said, not all firms possess. “If we felt like we were sacrificing quality, we wouldn’t use them,” he said.
Harvey Maisel of Maisel-Hollins Development Co. echoed Stough’s sentiment. “There is a real understanding of their client’s needs and they’re good listeners,” he said.
Of course, rising headcount and clients’ expressions of happiness are one thing. A firm’s bottom line is another. Lafionatis declined to provide the firm’s gross or net revenues, or average partner profits, but said revenues at the firm are on the rise. “Over time, our revenues have continued to grow incrementally, and we have found that our compensation and financial performance are comparable to other midsized regional firms,” Lafionatis said.
One hint regarding compensation came from retired principal John Joyce, who said that he was earning a take-home pay of about $400,000 per year when he retired from the firm in 2005.
Rather than a flat-rate salary pyramid, compensation is calculated based on dollars generated on work and production. “Each principal’s compensation is computed under the plan and any prospective partner’s compensation is modeled on the plan,” Lafionatis said.
Washington lawyers have a reputation for enduring long hours with little time for their families or outside activities. And while there are stressful days, Lerch Early tries to promote a noncrazed environment for its employees.
“They probably take less vacation time, work longer hours and endure more stress,” Brewer said of the firm’s Washington counterparts. But there is a trade-off. “We certainly don’t match the revenues of big firms downtown, but we are profitable and professionally satisfied. We’re just different.”
“At the end of the day, people who are more fulfilled in life are happier at their jobs,” principal Patrick O’Neil said. O’Neil joined the firm in 2000. He is also the former chairman of the Bethesda-Chevy Chase Chamber of Commerce. Community leadership is heavily promoted at the firm.
Joyce joined the firm after Hogan & Hartson (now Hogan Lovells) shuttered its bankruptcy practice in the early 1990s. What attracted Joyce to Lerch Early was the firm’s diversity of practice groups and strong leadership. He also used his chance at his new, much smaller firm to urge partners to become more involved in community organizations. “The first five years I was there, I was probably leading the cry that we have to get out in the community more,” Joyce said. “Whether it’s the bar association or the chamber, that now has become a requirement for your partnership election.”
Joyce said interacting with the community makes for a stronger lawyer. “The way you get business and keep business is through good relationships with your clients,” he said. “I think that is why [Lerch Early has] prospered and done well.”
As the firm continues on its unique path to growth, it also works to maintain the culture that got them where they are. “I think we have benefited from flying under the radar in many ways,” O’Neil said. “We know our market well and we know who we serve well and it’s been a mutual benefit to both us and our clients.”
Matthew Huisman can be reached at firstname.lastname@example.org.