LAWFUEL – The Legal Newswire – From American Lawyer – The Washington o…

LAWFUEL – The Legal Newswire – From American Lawyer – The Washington office of Freshfields Bruckhaus Deringer is perched on Pennsylvania Avenue, about halfway between Congress and the White House. It holds a commanding view of the National Archives, and during the summer, Navy bands in starched white uniforms often play music at the nearby Navy War Memorial, making conference calls next to impossible. All in all, it’s the kind of power address you’d expect from the D.C. stronghold of the one of the world’s largest and most profitable law firms.

But the panoramic view is about the only commanding aspect of Freshfields’ Washington presence. Compared with some of the home-grown and out-of-town firms nearby, the firm’s operation, which opened in 1998, is positively tiny — about 20 lawyers largely focused on antitrust, with a little tax work thrown in for good measure. Hardly what you’d expect from a 2,400-lawyer global powerhouse in a city that serves as the de facto epicenter of the legal universe. Moreover, Freshfields is one of only two big U.K. firms to have ventured south from the financial stronghold of New York.

Traditionally, the Magic Circle firms, as the top five British shops are known, focus largely on high-end capital markets and project finance work out of their London base. Yet, like their colonialist ancestors, they have spread around the world, dominating markets in Europe and Asia. Together they employ more than 10,000 lawyers and grossed more than $5 billion last year. To cage an analogy, the sun never sets on their legal empires.

Overall the London giants are still struggling to figure out the U.S. market. Emblematic of that struggle is that while most of the big London firms have offices in New York, only Freshfields and Clifford Chance have ventured into Washington, despite the District’s reputation as a lawyer’s paradise.

In contrast, big U.S. firms with global ambitions have thrived in the nation’s capital. Skadden, Arps, Slate, Meagher & Flom; Latham & Watkins; and Sidley Austin are just a few of the big out-of-towners who have established a strong presence in the District, with 200-plus-lawyer outposts. And traditional D.C. firms are certainly giving it a go in London, with Hogan & Hartson topping the charts at 56 lawyers there, despite being about one-sixth the size of Freshfields. “Just to put up a flag in Washington, or any other city for that matter, it makes very little sense,” says J. Warren Gorrell, chairman of Hogan & Hartson. But he says, “Clearly, if you had a strategy to be a major player in the U.S., it would be essential to have a presence in D.C.”

But despite Washington being a gateway for the world’s largest legal market, the British have thus far proved resistant to Potomac fever. So the question becomes: What’s wrong with D.C.?

To some the question is moot.

“I come at it the other way and say, ‘Why should they be in Washington?'” says Giles Rubens, a consultant for Hildebrandt International in London.

Rubens notes that Washington is primarily a regulatory market. Antitrust deals, agency work, government relations and litigation are the key components of the District’s legal sphere. And while the big U.K. firms may bump into those legal issues periodically, the topics fall outside the firms’ preferred practice focus.

“If you look at their business elsewhere in the world, it’s about very large-scale transactions, and it’s also about work in the financial centers—capital markets, if you like,” Rubens says. “If you look at it from that point of view, Washington is going to be pretty low on their priorities.”

With that in mind, most of the Magic Circle firms are instead intent on bolstering their New York practices in what many describe as an intensely competitive market. Allen & Overy has expanded its New York office by 50 percent in the past few years. “We’ve had huge progress during the last five years,” says Ian Shrank, co-managing partner of the firm’s U.S. practice. “But we’re competing against the biggest and best firms in the country, if not the world.”

An additional factor is that many of the Magic Circle firms’ clients already have established U.S. firms handling their Washington regulatory work. And though Linklaters’ managing partner Tony Angel says he would like to see the firm’s U.S. reach broaden, the clients’ needs are really the driving force behind expansion. “Meeting our clients’ demands determines where we are,” Angel says.

In that context, Washington is viewed by many as tangential to the New York market — not to mention Dubai, Hong Kong, Singapore and, of course, London.

“The issue that you’re facing if you’re Tony Angel is, where are you going to focus?” says William Perlstein, co-managing partner of WilmerHale. “I can see certainly making inroads in New York, but I’d be surprised if they wanted to spend a lot of time and effort breaking into D.C.”

Still, in several respects this position contrasts with the comprehensive multinational posture many firms with global aspirations espouse. Certainly American firms haven’t been shy about pushing into London, Brussels or Beijing to compete for the kind of work traditionally left to domestic law firms. And in the Oxbridge tradition of spirited debate, there is a competing outlook even within the Magic Circle. Some agree with Hogan’s Gorrell that if the British firms ever want to truly break into the lucrative U.S. market, a strong presence in Washington is essential. As more international clients demand Washington expertise, the London firms may feel persuaded to oblige.

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