Shook, Hardy & Bacon is downsizing in the Kansas City, Mo., office tower specifically built to house the firm a decade ago.
As first reported earlier this week by the Kansas City Business Journal, the firm is seeking to sublease three floors of space in the office tower where it serves as anchor tenant. In doing so, Shook Hardy becomes just the latest Am Law 200 firm to scale back its real estate needs amid an evolving market for legal services.
“We simply don’t need as much office space as we did in the past,” Shook Hardy’s chief operating officer William Johnsmeyer said in an interview with The Am Law Daily.
The firm moved into its current headquarters at the 2555 Grand Office Building in downtown Kansas City’s Crown Center complex in 2003. The 23-story tower, which was sold for $155.8 million in 2008, was put up for sale again last year by the Hines real estate investment trust. Shook Hardy is seeking to sublease 75,000 square feet of space it has now vacated—roughly three floors—for the remaining 10 years on its current lease. Johnsmeyer says the firm hopes to complete the subletting process within the next six months.
According to Johnsmeyer, Shook Hardy—which ended a 17-year run on The Am Law 100 list earlier this after its gross revenue dipped slightly in 2013 to $308.5 million, and its profits per partner dropped 7.8 percent, to $830,000—hopes to maximize efficiencies in the space it already inhabits. It’s a goal many large firm leaders and administrators share. In terms of what the firm is striving for, Johnsmeyer cites a recent “legal office of the future” design by architectural firm Gensler.
The idea is to use less physical office space, redesign the space that remains and adopt new technologies geared toward attorneys working remotely or traveling between offices beyond a firm’s headquarters. “A lot of this comes from the fact that we don’t use as much paper as we used to,” adds Johnsmeyer, noting that Shook Hardy has reduced its library space as it increases its reliance on electronic forms of information storage and access.
Another reason to shrink physical office space is the fact that Shook Hardy’s head count has decreased over the past four years as as the firm, which currently numbers 440 lawyers, slipped into The Am Law Second Hundred. Known for its product liability litigation work on behalf of big tobacco companies, Shook Hardy was forced to choose between representing Lorillard and Philip Morris USA in 2011. When it chose the latter, a team of roughly 25 lawyers left Shook Hardy’s Kansas City headquarters to launch a midwestern outpost for Hughes Hubbard & Reed, according to our previous reports.
Even amid the losses, which included the defection of a health care and life sciences duo to Norton Rose Fulbright in Washington, D.C., earlier this year, Shook Hardy has also been hiring. The firm launched a college sports practice in May by picking up of counsel William Odle and Corbyn Jones—the latter a former Canadian Football League quarterback—from Missouri-based Spencer Fane Britt & Browne. (Shook Hardy also absorbed a five-lawyer firm in Denver last month.)
Johnsmeyer says Shook Hardy will be “somewhat selective” when choosing the tenant or tenants to whom it will sublease its space. “We probably don’t want a plaintiffs firm in that spot,” says Johnsmeyer, mindful of his firm’s corporate clientele. “Another professional services firm, ideally in engineering or accounting, would be perfect.”
Other Am Law 200 firms are also on the move.
Sedgwick, which moved its back office operations into Kansas City’s Crown Center earlier this year, also took on 26,074 square feet in Newark in January. New Jersey’s largest city prepared to lose another big-firm tenant the following month when Patton Boggs announced it was closing its Newark office and relocating a handful of lawyers to suburban Florham Park.
Within months, of course, Patton Boggs clinched a merger with Squire Sanders that took effect on June 1. A spokesman for the combined firm now known as Squire Patton Boggs tells The Am Law Daily that it is has not yet determined where it will relocate its Garden State operations. A real estate broker who handles the office that Patton Boggs had announced it planned to abandon at One Riverfront Plaza, also known as the Newark Legal Center, did not respond to a request for comment on whether a potential tenant is lined up to sublease the space.
Below, by region, are some notable real estate-related developments involving Am Law 200 firms this year.
Seyfarth Shaw made headlines in April by announcing its intention to leave Chicago’s Citadel Center in 2016 for new space at the Willis Tower, which somewhat controversially lost its title as the country’s tallest skyscraper to New York’s One World Trade Center.
In committing to the 15-year lease for roughly 200,000 square feet, Seyfarth is set to occupy roughly two-thirds of the space it inhabits at its soon-to-be-former headquarters. The move is so significant its prompted loan modification requests at both of the affected skyscrapers, according to commercial real estate website CoStar.
One firm opting to stay in its existing headquarters is Dorsey & Whitney, which earlier this year agreed to shed two floors of space while remaining an anchor tenant at an office tower in Minneapolis, according to a report by the Minneapolis-St. Paul Business Journal.
In Cleveland, Vorys, Sater, Seymour and Pease will be moving into 41,000 square feet of space in a new downtown building, according to an April report by The Plain Dealer.
New York City
The Am Law Daily reported late last year on Jones Day’s consolidation of its trio of midtown Manhattan offices with a mammoth 330,210-square-feet lease at Brookfield Plaza in the city’s financial district beginning in 2016. In February the firm inked a short-term sublease for 11,972 square feet of space through 2016 to New York’s Wood, Smith, Henning & Berman, according to the Commercial Observer, which also reported last month on LeClairRyan’s sublease of 12,332 square feet to a company called Law Firm Suites.
In April, the Commercial Observer reported on Morrison & Foerster officially becoming the first new tenant to move into 250 West 55th Street with the start of the firm’s 15-year lease for 180,000 square feet at the brand-new office tower. Also on the move in midtown is White & Case, which inked a deal in April that will see the firm slide slightly uptown from its current offices at 1155 Sixth Avenue to take over 440,000 square feet at 1221 Sixth Avenue in 2017.
Troutman Sanders, a firm known for its New York real estate expertise, reached a deal last month to relocate its office in the city from the historic Chrysler Building to 87,000 square feet of space at 875 Third Avenue. Staying put in Manhattan are McKenna Long & Aldridge, which signed a 12-year renewal for 32,052 square feet in December, and Duane Morris, which re-upped the following month for 89,000 square feet at 1540 Broadway.
Other deals have yet to transpire.
Though no official deal has been announced, Skadden, Arps, Slate, Meagher & Flom is reportedly on the hunt for new Manhattan space and could become an anchor tenant inhabiting up to 600,000 square feet at the as-yet-unfinished Hudson Yards development once the firm’s current lease at 4 Times Square expires in 2020. Reed Smith was reportedly close to becoming an anchor tenant with 160,000 square feet at Seven Bryant Park, but bowed out of the deal in April, according to The Real Deal.
The Daily Business Review, a sibling publication, reported earlier this year on White & Case’s 10-year lease for 57,494 square feet at the Southeast Financial Center in downtown Miami. Wilson Elser Moskowitz & Dicker also renewed a separate long-term lease for 14,707 square feet in Miami last month, and other cities throughout the Southeast have snagged new law firm tenants.
The Charlotte Business Journal reported in March on McGuireWoods’ lease renewal through 2027 for 150,000 square feet at the Fifth Third Center, while regional rival Womble Carlyle Sandridge & Rice is evaluating several options for a possible office move in Raleigh, according to The News & Observer.
Sidley Austin, which tripled the size of its space in Singapore in December, has found new office space in Dallas following its high-profile raid on Weil, Gotshal & Manges last year. Sidley has left the city’s KPMG Centre for two-and-a-half floors in the nearby Trammell Crow Center, according to The Dallas Morning News.
As Sidley makes its way into the Trammell Crow Center, Perkins Coie is preparing to pack up and leave. The firm confirmed in January that it will depart the building for 36,175 square feet of space in downtown Dallas’ Ross Tower, formerly known as Lincoln Plaza.
Earlier this year Holland & Knight, which went on a Patton Boggs-related lateral hiring spree in Dallas last summer, doubled the size of its lease in the city by taking 22,459 square feet, according to the Dallas Business Journal. And in Houston, Wilson Elser announced in January that it had relocated its office in the red-hot energy center to 13,500 square feet at Two Houston Center.
Sheppard, Mullin, Richter & Hampton announced in April that it would reduce its footprint in Washington, D.C., to 64,000 square feet of space by becoming an anchor tenant at 2099 Pennsylvania Avenue, according to The Washington Post, which notes that the firm will fill space being vacated by Holland & Knight. The nation’s capital was the first city in which Sheppard Mullin established a presence when it began expanding beyond its California base a decade ago.
In March, Brown Rudnick secured a seven-year extension in the Beltway for 35,000 square feet at the historic Homer Building, according to CoStar. The following month the Washington Business Journal reported that Reed Smith had renegotiated a new lease under which it consolidated its operations in 79,692 square feet at the Franklin Building, potentially making room for new tenant The Washington Post.
The Am Law Daily reported in May on Foley & Lardner’s decision to shutter its office in downtown San Diego—the firm maintains an outpost in suburban Del Mar, Calif.—after subleasing its space near the top of the city’s Emerald Plaza skyscraper.
In Silicon Valley, where Alston & Bird agreed to take Dewey & LeBoeuf’s old office space in East Palo Alto earlier this year, Pepper Hamilton announced in May that it would relocate to 13,175 square feet of new space to accommodate its growing operations in the area.
K&L Gates, which in December inked a deal for 21,200 square feet in Portland, Ore., had its offices at the top of the Umpqua Bank Plaza building examined in detail by the Portland Business Journal in April. Perkins Coie also renewed its lease in Portland earlier this month for 59,000 square feet at The Brewery Blocks building.
Elsewhere in the northwest, Holland & Hart announced earlier this year the relocation of its office in Boise.
Debevoise & Plimpton and litigation boutique Kobre & Kim have both relocated to new office space in London. Leading British firms including Macfarlanes and Mishcon de Reya are also preparing to move into new headquarters. Magic Circle firm Clifford Chance, whose London headquarters is reportedly on the verge of a sale, saw a plan to sublet six empty floors fall through last month, according to U.K. publication Legal Week.
K&L Gates has moved into new office space in the Polish capital of Warsaw, while DLA Piper has called off its search for new space in Liverpool by inking a lease to remain in its current location. The global legal giant has also officially relocated to a new complex in Sydney.