For many of New York City’s top real estate law firms, transactional work — whether it be representing buyers, sellers, borrowers or lenders — is considered meat and potatoes.
So this month, in addition to just ranking firms by attorney headcount, we also looked at two other metrics: Who handled the highest dollar volume of New York City sales of $5 million-plus for buyers and who handled the highest dollar volume of mortgage closings at that same amount for lenders (see charts on page 94).
The deals — which included both commercial and residential transactions that closed between May 2016 and April 2017 — offer a window into just how much investors and developers rely on their legal counsel and just how large the transactions are that lawyers are shepherding to the finish line.
On the sales side, the top 10 law firms worked on deals valued at a combined $13 billion during that time period, while on the loan side the total stood at a massive $39.7 billion, according to The Real Deal’s deep dive. While the firms are obviously not pocketing that money, they are billing significantly on those cases.
Taking the top three spots on the sales ranking were Fried, Frank, Harris, Shriver & Jacobson with deals valued at $3.92 billion; Greenberg Traurig with $1.99 billion worth of deals; and Shearman & Sterling with $1.98 billion.
On the debt side, Sidley Austin took the top spot with a massive $5.33 billion in lender-side deals. It was followed by Katten Muchin Rosenman with $5.19 billion and Morrison & Foerster with $4.86 billion.
By and large, there was little crossover between the two rankings. The lone exception was Fried Frank, which made both lists.
“On the equity side, lawyers and clients are looking at how high the upside is,” said Eugene Pinover, chair of the New York real estate group at DLA Piper, which didn’t appear on TRD’s ranking but represented buyers in $313 million worth of purchases. “The lenders and their attorneys are looking at how low the downside is,” he said. “They’re different personalities.”
Jonathan Mechanic, chair of Fried Frank’s real estate practice, said the firm tends to represent “just about everybody.”
“In many circumstances, we’re representing somebody at one end of the table and someone at the other end of the table [on another deal],” he said.
The firm, for example, represented JPMorgan Chase in a $748 million first-mortgage and mezzanine financing package it provided in November for the 39-story hotel-and-retail tower at 20 Times Square that the Witkoff Group, Howard Lorber’s Vector Group, Ian Schrager and several others are building. It also represented the developers when they purchased the site back in 2015.
Over on the debt side, there was a healthy mix of law firms that specialize in either balance-sheet lending or securitization. Both Sidley and the No. 6-ranked firm Dechert, for example, have a reputation for focusing on CMBS.
Andrew Lance, a partner in the real estate practice at the No. 4-ranked Gibson Dunn & Crutcher, said that before the financial crash, the firm primarily worked on the equity side of deals. But since then, it’s built up a bigger book of business with lenders.
The firm, for example, represented Blackstone Real Estate Debt Strategies in a $350 million construction loan it provided to the Georgetown Company and hedge funder Bill Ackman in October to reposition the former Ford Motor Co. building at 787 11th Avenue, which they bought in 2015.
“During the aftermath of the financial crisis, we started getting involved through several relationships with the higher-octane, balance-sheet debt lenders,” Gibson Dunn’s Noam Haberman said. “Since then we have consistently been working on complicated and highly structured loans.”
Timothy Little, head of the national real estate practice for Katten Muchin — which represented AIG in a $925 million loan it issued to RXR Realty on the investor’s $1.28 billion May purchase of 1285 Sixth Avenue — said competition is ramping up to represent the top lenders. “The banks have tried to narrow down the number of firms they work with,” he said.
But winning over those clients means making them happy with both the legal work and billing. Clients, Little said, have a pretty good idea of how much a deal should cost. “If the number comes in higher, then you’re going to be on the end of an angry phone call,” he said.