Broadband Stimulus Work a Recession-Era Boon to Law Firms

Law firms with large communications practices, including Davis Wright Tremaine and Wiley Rein, are among those that said they've been busy holding conference calls, webinars and other meetings with potential stimulus fund seekers. A Davis Wright Tremaine webinar Tuesday had 85 participants, said Paul Glist, co-chair of the communications, media & information technology practice. As part of their rainmaking, some firms work to educate would-be grant seekers. “There is quite a gantlet you have to run” before seeking federal money, said Richard Wiley, named partner at Wiley Rein. “We've put out materials on that, we've had briefings on that … and we've gotten business as a result.”

The Federal Communications Bar Association expects to grow, due partly to interest in broadband and in the federal stimulus program, said Mark Schneider, until June 30 the group’s president. In the past 52 weeks FCBA’s ranks shrank about 5 percent to 2,500. Schneider expects the group to stage more events on broadband. “Just like the ‘96 [Telecom] Act generated interest and provided us with programming events and opportunities, so will the broadband stimulus,” he said.

Nine of the 11 firms added clients from broadband stimulus work, the survey of communications practices employing about 700 lawyers found. Participating practices ranged from Wiley Rein, with about 280 lawyers, to four- lawyer Baller Herbst. Ten firms declined to participate.

Some firms said clients heretofore inactive have gotten into gear. Many said broadband activity has offset a decline in deal-making work. “That would be the largest source of new business, coupled with restructuring work, which continues to increase,” said Akin Gump’s Tom Davidson, communication and information technology practice head. Rini Coran has “had no problems adding clients in areas where there’s growth,” and broadband is “a pretty big growth area,” said partner Robert Rini. Stimulus-related billing “represented significant new work” at Wilkinson Barker and Knauer, said Bryan Tramont, managing partner.

The imminent spending surge has been “stimulating in every sense of the word,” said Andy Lipman, head of Bingham McCutchen’s 12-lawyer telecommunications, media and technology group. Lipman, who expects to hire more lawyers this year, said he’s hearing from potential clients across the gamut of broadband services, including fiber, wireless, local governments, rural companies and equipment vendors.

Many attorneys expect stimulus advisory revenue to grow further. NTIA and RUS only released their first $4 billion worth of notices of funding availability July 1 (CD July 2 p13), with more to come, they noted. “There’s a lot of interest in this broadband money,” said Nicholas Miller of Miller & Van Eaton, with mainly municipal clients. “There’s work available at the advisory level. But it’s relatively limited in value or dollar amount because folks don’t want to spend money until they've got the grants, if they can avoid it.” Stimulus work has brought clients to Fletcher Heald, but “it’s a little early from our standpoint,” said Vincent Curtis, co-managing member. “We're hopeful it will be a substantial increase, but it’s been kind of slow.”

‘Lots of Calls’

Several firms heard from clients after the funding notices were released by Vice President Joe Biden. “We are assisting both new and existing clients navigate their way through the NOFA and application requirements,” said Glist. Baller Herbst “had lots of calls since the NOFAs were published last week, both from existing and new clients,” said President Jim Baller. It’s added several clients, he said.

Hogan & Hartson has heard from new and existing clients in the past week, some “interested in applying for grants or loans, while others are interested in partnership opportunities or in learning more about the programs,” said Michele Farquhar, co-director of the communications group. “This increased business has helped to keep our attorneys busy, plus we've also seen an increase in work in some related areas, including communications litigation.” The firm’s legislative, education, energy and government contracts practices have also helped clients with broadband stimulus issues, Farquhar said.

With much work to be done, the true revenue boost may come later, said some lawyers. The reality of government grant and loan criteria may drive off once-eager clients, several attorneys said. “We've had a lot of people who were sort of kicking the tires for applying for the stimulus money, and we've cautioned everybody that we had to see how the rules would play out,” said Donald Evans at Fletcher Heald. “Now that the rules have become clearer, the people who were focusing on it” are deciding if they will apply, and some won’t, he added. Under last week’s notices, recipients can use 5 percent of awards for consulting fees -- some of which will go to law firms, said Evans.

Once NTIA and RUS issue grants and loans, their rules will make work for lawyers hired to keep clients compliant, and over the long haul the broadband capacity generated will mean more regulatory business, some attorneys said. Hours billed for those tasks will be the stimulus law’s enduring gift to communications law practices, they said. “The administration has made pretty clear there is going to be monitoring and reporting and you have to make sure it’s a viable business,” said Glist.

Broadband work is enriching practices, but some observers said it’s unclear if that will make up for declines elsewhere. “It’s having an offsetting effect,” said William Henderson, associate law professor at Indiana University. “Whether it’s going to be enough to buoy these firms over the next 12 months, I don’t know.” Once grants are made, “you're going to have some legal work,” and there’s now “some anticipatory kind of work,” said Vice President Joe Altonji of Hildebrandt, a law firm consultant. “But the big uptick is probably still farther out.”