A Day of Reckoning for NY Law Firms When the Lease Expires
Manhattan law firm offices are designed to dazzle clients with breathtaking views and the latest wizardry at a cost of hundreds of thousands of dollars a month. But a decade later when the lease expires, law firms face a day of reckoning.
October 12, 2018 at 09:06 AM
4 minute read
Manhattan law firm offices are designed to dazzle clients with breathtaking views and the latest wizardry at a cost of hundreds of thousands of dollars a month. But a decade later when the lease expires, law firms face a day of reckoning.
When Flemming Zulack Williamson Zauderer folded this year after 47 years, the name partners said they didn't want to take on the long-term financial commitment that a new lease would require. The same was true for Wormser, Kiely, Galef & Jacobs, which disbanded after 80 years. Kornstein Veisz Wexler & Pollard made a similar decision after a 35-year run.
“I miss just a little having a huge corner office overlooking the harbor, having a whole wing of conference rooms and of course you miss the people you worked with,” said John Zulack, 76, who went to Allegaert Berger & Vogel when Flemming Zulack dissolved. “But it was easier when you're 50 or 60 or 65 to sign a new lease for 10 years. But when you're my age, that's an obligation you don't really want to impose on your family.”
Negotiating a lease 10 years out takes quite a bit of prognosticating for any firm. Will the senior partners be healthy? Will they be comfortable with work lives that are as frenetic as when they were 30? Will they be capable of generating the kind of business they did in their prime? But for small and midsize firms In New York's hot real estate market, the expiration of a lease is often a point of no return, leaving some of the senior partners bitter but launching others in exciting new directions.
“So I view the expiration of a lease for a law firm as an opportunity,” said Mark Zauderer who joined Ganfer & Shore (now Ganfer Shore Leeds & Zauderer) when his former partners parted ways. “It's an opportunity for all involved to assess their goals for the future and allow partners with different goals to pursue their objectives whether it be on the one hand retirement or continuance of an active practice. I wanted to practice for a decade or two more and continue to serve my clients with lawyers at my firm who had been working with me.”
Daniel Kornstein, who was 67 when Kornstein Veisz ceased operations in 2015, said he was looking for “a final move that would get him through the rest of his career” when he became a partner at Emery Celli Brinckerhoff & Abady. He said it was a very emotional time for him. “It was like taking down the flag of a place I created,” he said, noting he had been at his own firm since the age of 29.
“It had to end for reasons that were not unusual,” he said. “Always in New York real estate is a major consideration and lease renewals are part of that particularly for small firms and medium firms. ”
He does wish that the partners showed more foresight in planning for secession but thinks his firm is far from alone in failing to do so.
“ Young lawyers need to be taught and trained how to generate business so that when the founders get older or move on, the younger people are able to move right in and take over,” he said.
Andy Heinz, a partner at Desmarais, a growing midsize firm that just negotiated a new lease in the old Helmsley building, said it's crucial to get it right when signing a lease.
“The primary expense of law firms are the people and the lease,” he said. “We didn't want to get into a super expensive place where you're living on the edge all the time.”
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