We’re kicking off a new feature here at Bisnow Legal —an issues roundtable with all-star law firm managing partners. Our plan was simple: invite three of DC’s finest, ply them with lunch at hotspot BLT Steak, and let their wisdom (no wine for these workaholics) flow.
We rounded up DLA Piper DC Managing Partner Ann Ford, flanked by Covington & Burling Management Committee Chair Stuart Stock, second from left, and Dickstein Shapiro Chairman Mike Nannes, second from right. Lending an outside perspective were real estate pro Phil Leibow (global law firm practice head of Jones Lang LaSalle) and accounting guru John Niehoff (head of the law firm practice of Beers & Cutler); both are fine Bisnow sponsors. Our own Mark Bisnow did Charlie Rose duties. Herewith, installment one.
|Mark: || |
What’s the forecast for Washington law firms?
|Mike: || Some banks, like Wachovia and Citibank, do analysis of data submitted by firms. Most of it suggests 2007 will be a pretty good year for law firms. The industry is seeing a downturn in deal flow right now, but I think people are more concerned about the carry over to 2008. |
|Stuart: || I don’t think anybody really knows how things are going to be in 6-8 months. Things are starting to recover if you talk to Wall Street. But it’s hard to predict, and different practices respond in different ways to the economy. |
|Ann: || Law firms are protecting themselves by diversifying. Not just their practices, but also by region—both U.S. and globally. It’s a bit like a mutual fund. |
We believe Ann is asking John and Stuart if they’ll come over to hang pictures at DLA’s brand new digs on 8th Street.
|Mark: ||How do D.C. firms differ now from 5 or 10 years ago? |
|Mike: ||There used to be an idea that some work was unique to Washington and required a Washington firm. Regulatory is one example. But firms are creating their own Washington capability—93 of the AmLaw 100 have offices here now. So D.C. firms can’t look to that inbound source. |
|Stuart: ||By the same token, what D.C. firms do has changed, too. Whether it’s life sciences or patent litigation, you see more diversity because of the national economy. |
|Ann: ||Think about the revolution that’s happened. When we came out of law school, there were business law firms that dominated the landscape, regional firms with outposts, and also boutiques—FAA, patent, antitrust, and communications. |
|Mike: ||Certainly you’ve seen the absorption of many IP boutiques up into the big firms. I think of three types of Washington boutiques: ERISA, food and drug, and you’ll find some environmental ones, among others. |
|Ann: ||All the rest have been swallowed by general practice firms. I guess it’s a combination of things that made that happen—relaxation of the bar rules, client needs, and just the competitive climate. |
|Mark: ||What about more recent trends? |
|Ann: ||The large scale merger is a recent phenomenon. I joined the firm 18 months after Piper and Rudnick merged. At that point, it was the largest merger in U.S. history of two equally-sized firms. Five years later we did another merger that made us maybe the only firm in the world with equal numbers of lawyers in the U.S. and outside. But it wasn’t just us. You’ve had the Wilmer Hale merger and others. I think that will be increasing. |
|Mark: ||What’s driving that? |
|Ann: ||I don’t think large is always better, but it can be an amazing experience if it’s done right. And I think you’ll see it because people will get impatient. It will be harder for firms who don’t have a big presence in DC to grow their presence. The onesy-twosy strategy won’t work. |
Phil and Mike discuss law firm economics, even though we thought Dickstein Shapiro’s legendary contingency fee victories rendered mortal economics moot.
|Mike: ||There are definite advantages to sheer size. When there’s an ad for DLA Piper in the newspaper it probably costs you .0001 percent of your gross revenue. It costs me a much higher percent. The mega-firms have a different infrastructure scale for mentoring, for training, for diversity. Having the capital for more full time staff to run those programs is an advantage. |
|Mark: ||Is everyone headed toward that mega-firm approach? |
|Stuart: ||I think you’re going to see different models, because size doesn’t determine success. You can have a firm of 200 lawyers and be very successful or a failure, depending on its focus. The real question is what you’re trying to do and if you have the scale to do it. If you’re going to be a patent litigation firm, you need the scale to be competitive in patent litigation. So we look at it practice by practice. |
|Ann: ||I agree with that. One of the most successful firms in town does Supreme Court litigation. That’s all they do. I don’t think they have any inclination to merge with anybody. |
|Mike: ||One thing that’s absolutely clear is that things will change in ways we can’t predict today. Five and ten years ago, all the consultants told us to buy as much office space as we could near Dulles. The accounting firms were going to eat the law firms for lunch in terms of big consolidation. Buy lots of Enron, too. You can’t know where it’s headed—in England, there’s much more talk about law firms going public and being purchased. The biggest impediment to consolidation is the bar rules and huge conflicts. If those rules changed, that’s where you’d have to go to absolute consolidation in my book. |