Inside DC 2014
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Law firms built outside Washington continue to muscle into a business landscape once locked down by the old regulatory practices of the Capital City.

In The National Law Journal’s annual survey of head count at law firm offices throughout the District of Columbia and its Maryland and Virginia suburbs, the law firms that grew their metro presences fastest have their anchors in Chicago, New York, Los Angeles and elsewhere. Indigenous firms, including Covington & Burling and Hogan Lovells, the city’s two largest law offices, saw slimmer upticks in their attorney numbers.

“Those firms are competing very hard in Washington, but we’re competing very hard in New York and California,” Covington chairman Timothy Hester said of the phenomenon.

Overall, the number of lawyers across the city declined by about 1 percent, if lawyers from the largest 100 law offices in Washington are pooled for 2012 and for 2013.

NATIONAL PLATFORM

Many general service firms not originally from Washington have the latitude to pump cash into the marketplace.

The work their lawyers do here is often national in nature and spans many practice areas, including regulatory and white-collar defense, two practices that pivot around the federal government. The largest homegrown D.C. firms work in similar national and global ways.

“There comes a certain point where I think in any single location, it’s hard to justify growth,” said Daniel Nelson, co-partner in charge of Gibson, Dunn & Crutcher’s D.C. office. “We’re nowhere near those others [in office size].”

Gibson Dunn, founded in Los Angeles with a deep bench of big-name litigators in Washington, increased here in size by 13 percent, or 24 lawyers, to 206. It was the largest office in 2013 to increase its head count by more than 10 percent — with one exception, which we’ll address later.

Nelson said client demand had been strong in 2013 across many practice areas, including antitrust, appellate litigation, mass tort and corporate work.

Quinn Emanuel Urquhart & Sullivan, a 700-lawyer business litigation firm founded in Los Angeles, is another example of an aggressive, fattening Washington office.

The firm opened its Washington outpost in 2011. Last year alone, it grew by almost 50 percent to 57 D.C. lawyers. This was among the largest increases in our survey.

The office’s expansion has been so rapid, Quinn Emanuel has moved through three office spaces in three years. The current location, at 6th and H St. NW, has enough space for 100 or more attorneys to work, office co-head Jon Corey said.

“The planning process is this: There really was no plan or no goal,” Corey said. “As a firm we offer things to partners that other law firms find interesting. We have very little bureaucracy. [Lateral partners] can just come and practice law, and practice law with talented associates.”

Another offering to partners: Quinn Emanuel’s profits per partner happen to be the second highest in the nation, at $4.5 million per partner. In comparison, the profits per partner at Covington and Hogan was around $1.2 million last year, according to the 2014 Am Law 100 survey.

“The answer to a lot of these questions is supply and demand,” said Mary Young, a Maryland-based legal industry strategist with Zeughauser Group, when asked how firms like Quinn Emanuel or Gibson have broadened their footprints in a market once commanded by the regulatory-centered shops of old Washington. “[Firms in Washington] are competing for talent as much as for clients.”

The NLJ list’s biggest gain went to Chicago firm Schiff Hardin, which acquired Washington-based energy boutique Bruder, Gentile & Marcoux in January 2013. The firm added 13 lawyers for a total of 28 in the office.

“I believe our success in Washington is due largely to our strategy firmwide — that is, we grow in response to client demand without regard to geography,” said Ronald Safer, the firm’s Chicago-based managing partner.

TWO BEHEMOTHS

For two years in a row, Covington & Burling and Hogan Lovells have hung around the 440-lawyer mark on this list. The two firms’ relative stasis set a tone throughout the city in 2013; 18 of the 25 largest law offices in Washington stayed about flat in full-time-lawyer head counts from the end of 2012 to the end of 2013.

Stephen Immelt, Hogan’s CEO, said his firm’s and Covington’s regulatory practices, the “broadest and deepest in Washington,” differ slightly from each other and might contribute to the ups and downs. Other large firms can be susceptible to business trends within practice areas, too.”I think each firm has a slightly different mix in terms of how they get there,” he said. “The different pieces of that may see [demand] at different speeds.”

Hogan Lovells contracted its partnership in 2013 by six partners, due mainly to retirements, Immelt said. The firm’s Washington office declined in head count by 1 percent. Covington’s partnership grew by six, a result of the firm promoting associates and adding some lateral partners, Hester said. The firm’s total head count rose 1 percent.

Neither Hester nor Immelt contends the Washington legal market has reached its maximum.

Hester said the minor movements in Covington’s size now could prime it for a long-term expansion in D.C. When the firm moves its offices to CityCenterDC this fall, the newly built complex and lease will give it room to grow.

“We have the capability to grow to 700,” Hester said.

“Do I think we’ll necessarily get to 700? I don’t think so. But we didn’t necessarily think we’d get to this size either. It depends on how the demands shake out over time.”

THE EXCEPTION

Williams & Connolly, another Washington legacy firm, posted anomalous growth among the top 10 firms, gaining about 20 percent more lawyers in the LT 150.

In fact, the office’s head count hasn’t changed. Hiring committee chairman Daniel Shanahan explained the growth as a result of the firm counting its lawyers differently.

In past years, Williams & Connolly hadn’t counted about 50 special-projects attorneys — similar to non-partner-track staff attorneys — in its yearly measure. In 2013, the firm added those attorneys to the tally. They are not new employees, Shanahan said.

A number of the city’s largest firms contracted throughout 2013. At the bottom, with more than 20 percent of lawyers lost, were Bingham McCutchen and Dickstein Shapiro. Both experienced sharp firmwide declines in revenue in 2013.