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Attorney Robert Ivanhoe spends up to 1,000 hours each year working on high-stakes real estate deals involving some of the choicest property in the world for a single commercial tenant. If only he could bill for it. As the chairman of Greenberg Traurig’s national real estate practice group, he not only manages the 250-attorney practice for the law firm giant, but he also handles his firm’s own commercial real estate demands, which have exploded since 2001. Back then, Greenberg Traurig was half its current size of about 1,660 attorneys. “Sometimes it feels more like a thousand hours a week,” said Ivanhoe, who practices from the firm’s New York office. Besides tending to Greenberg Traurig’s own needs, last year he worked on the largest real estate deal in U.S. history, representing the seller of two massive affordable apartment complexes in Manhattan. Like Greenberg Traurig, dozens of law firms across the country with fast and far-reaching expansion have needed to commit serious resources to finding enough space to keep operations humming. With the size of law firms ballooning, especially in the past five years, finding room to grow has become a full-time endeavor at some firms. Behind payroll costs, the outlay for office space generally is the biggest expense of law firms, which are gobbling up Class A property by the hundreds of thousands of square feet. Some of the heftier deals within the last year, according to GlobeSt.com, an affiliate of The National Law Journal, included Winston & Strawn’s expansion to 430,000 square feet in Chicago; Ropes & Gray’s relocation to 400,000 square feet in Boston; Jenner & Block’s relocation to 383,000 square feet in Chicago; and Andrews Kurth’s 223,000-square-foot expansion in Houston. Other firms leasing at least 100,000 square feet tracked by GlobeSt.com within the last year were Jones Day in Washington; Haynes and Boone in Dallas; Frost Brown Todd in Louisville, Ky.; and Dechert in New York, to name a few. In addition, Goodwin Procter and Sullivan & Cromwell recently signed sizeable leases in New York. Duane Morris now has a five-person team in Philadelphia that manages its lease deals. The firm’s attorney roster has grown by 24% in five years, according to the The National Law Journal‘s annual survey of the nation’s 250 largest law firms. Called facilities managers, the team meets with leasing agents, architects, contractors and vendors. Most of its members have business degrees, with a real estate lawyer from the firm handling the legal end of the transactions. One of those deals earlier this year was an office in Singapore. “We had the whole thing feng shui-ed,” said Sheldon Bonovitz, the chairman and chief executive officer of Duane Morris. He cited a half-dozen leases the firm recently negotiated, including one for 81,000 square feet in midtown Manhattan. The facilities team provides consistency with the opening or relocations of offices, Bonovitz said, especially since the firm wants the “same look and feel” for each location. He added that although the firm has outgrown several of its offices, overhead costs consistently have remained about 6% or 7% of its gross revenues. Gary Sokulski said he is in the process of hiring someone to help him cover Reed Smith’s internal real estate needs. “I’m too immersed in it. It takes too much of my time,” said Sokulski, chief executive officer of the firm. A certified public accountant, Sokulski said that because of Reed Smith’s growth, the time he spends addressing office space issues has tripled. “This is extremely costly and important � millions of dollars can be lost or not,” he said. Since 2001, Reed Smith as grown from 687 attorneys to 1,038, according to the NLJ 250 survey. Centralized decisions As law firms have gotten bigger, they have moved toward a more centralized decision-making process for real estate matters, said Steve London, executive managing director at Studley Inc., a commercial real estate brokerage firm. London has worked with Reed Smith and other law firms on office space deals, mainly in Washington. In the past, landlords and brokers may have cringed when they saw law firms coming because of their reputation for being unable to make decisions. The business structure, in which all partners had a say, could quickly bog down deals, London said. But many big law firms these days are streamlining the decision-making process in order to get deals done. The head of a firm may turn over all details to a small group or, more likely, have a small group oversee the lion’s share of the process, leaving a few key decisions to leaders. In some cases, law firms farm out the work to outside counsel, who take the deal from start to finish. “I wear a couple of different hats,” said Jay Epstien, chairman of the U.S. real estate practice group at DLA Piper. In addition to leading a 600-lawyer international real estate practice, Epstien has represented several law firms in office space deals. He also works on some of DLA’s own office leases, which recently included about 200,000 square feet of space in Washington. “I’m also supposed to practice law in between,” he said. The advantage of hiring outside counsel, he said, is that the lease deal for the firm does not take a backseat to its client work. Regardless of whom law firms designate to take on the assignment, they should be prepared for more complications that in years past, said London, with Studley. Increased merger activity and more lateral movement mean that law firms now want more options about future space needs. They may demand fixed expansion rights, rights of first offer and predefined penalties in case they need to break their leases. Supplemental operating accommodations � such as continuous air conditioning, heat and security during night hours � also add to the mix. In addition, firms still have the disadvantage in negotiations of being asset poor, he said. When a law firm closes shop at the end of the day, most of its assets go down the elevator. And though it is relatively rare for a law firm to board up an office permanently, and even rarer for a wholesale closure, vestiges of the few failed law firms may linger in landlords’ minds for a long time, he said.

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