Washington’s top law firms together posted slightly increased revenues last year, marking an overall gain for the second year in a row. Still, top lawyers saw little reason to celebrate.
The 25 highest-grossing Washington offices collectively pulled in $6.3 billion last year — 3 percent more than during 2011. Revenue per lawyer inched up by nearly 3 percent, reaching an average of $951,000.
Arnold & Porter retained its position at the top, recording $436 million in gross revenue. Hogan Lovells, the largest firm in the District of Columbia by headcount, remained in second place with $418 million. Wilmer Cutler Pickering Hale and Dorr leapfrogged Covington & Burling to take the No. 3 spot.
Overall, most firms saw between a 3 percent and 6 percent increase in revenue. But to hear Arnold & Porter chairman Thomas Milch put it, all is not rosy. “I think that it is an extraordinarily tough market right now in every way,” he said.
The problem, of course, is the desultory recovery from the 2008 recession. Mary Young, a consultant at Zeughauser Group, said firms among the D.C. 25 took steps when the downturn hit to deflect the economic blow. “A lot of these firms are well-managed firms that have come through the recession right-sized and more profitable than others,” she said. “We are not back to the golden era of 2000 to 2007, and it may be several years out.”
Crowell & Moring chairman Kent Gardiner said his firm, which saw $236 million in gross revenue, was relying heavily on its litigation and regulatory practices. “We continue to be in it for the long game with our clients,” he said. “In a sense, we are riding the economy with them.”
One way firms strive to remain competitive is through alternative fees — or as Gardiner calls it, “value-based billing.” Clients increasingly are demanding that Crowell share in the risk.”You have to master expense management and innovative pricing while continuing to attract new client relationships and expanding on existing ones,” Gardiner said. “The new definition of solid success is the firms that manage that equation well.”
Gardiner expects practices including intellectual property, government contracts, privacy and cybersecurity to remain strong. Of those last two he said: “Our clients are telling us that it is at the very top of the list of their concerns. So much of their assets are in electronic information. It’s been open season in terms of cyber theft.”
Kirkland & Ellis posted the biggest revenue gains, showing a nearly 10 percent increase at $219 million. Firmwide, revenue at Kirkland increased 11 percent to more than $1.9 billion, according to the 2013 Am Law 100 survey, NLJ affiliate The American Lawyer‘s ranking of law firms by revenue. Wiley Rein and Gibson, Dunn & Crutcher each saw D.C. gross revenue rise by 9 percent.
Only two firms saw Washington revenues decline greater than 1 percent: Patton Boggs (7 percent) and Steptoe & Johnson LLP (3 percent). Patton declined requests for comment about the dip. Roger Warin, chairman of Steptoe’s executive committee, attributed the decline to “severally unusually high contingency fees we received in 2011.” Steptoe, he said, received more than $15 million for the firm’s long-running representation of American POWs in the first Gulf War. Warin said the firm was pleased with its 2012 results, which he said reflected “plenty of activity” in regulatory practices — including antitrust and energy — and litigation groups.
Skadden, Arps, Slate, Meagher & Flom and Kirkland & Ellis posted revenue per lawyer of $1.275 million, knocking Williams & Connolly out of the top spot. Gibson, Arnold & Porter, Latham & Watkins and Finnegan, Henderson, Fara­bow, Garrett & Dunner also saw greater than $1 million revenue per lawyer.
Contact Matthew Huisman at ­firstname.lastname@example.org.