425 Lexington Ave. (Rick Kopstein/NYLJ)
Holwell Shuster & Goldberg, a five-year-old boutique that continues to be flush with litigation work from the financial crisis, will double its office space when it moves into three subleased floors from Simpson Thacher & Bartlett in midtown Manhattan by the end of the year.
Holwell Shuster’s move to 425 Lexington Ave., under a new 16-year sublease with Simpson Thacher, comes as the firm’s head count has reached 65 attorneys. Founding partner Richard Holwell said the firm envisions adding another 25 to 35 lawyers at most.
The real estate move is unusual in the Manhattan market because of the long term of the sublease and because the building has had only two tenants since the day it was built, Simpson Thacher and Canadian Imperial Bank, said Holwell Shuster’s broker, Savills Studley’s Craig Lemle.
Holwell Shuster learned about the office, across the street from Grand Central Terminal, before it could go on the market. It’s the only space to become available at 425 Lexington since the property was built in 1987, Lemle said.
Simpson Thacher, which rents about 500,000 square feet in the building, renewed its lease in 2013 for another 20 years and has renovated its floors, Lemle said. The firm’s New York head count has hovered around 620 full-time equivalent lawyers in recent years.
In a statement, Simpson Thacher said it had excess space after the remodeling, which included creating interior glass walls. It said the remodeling “provided a more efficient use of our existing space, allowing our increasing number of lawyers to occupy fewer floors while leaving room for future increases.”
The sublease deal had a concession package that included a payment from Simpson Thacher to Holwell Shuster, which the boutique will use to make a conference center, and a period of time where Holwell Shuster pays no rent, said Lemle, who worked on the deal with Nick Zarnin.
Holwell Shuster and its brokers declined to specify the deal costs, “We’re very happy with it,” Holwell said.
Room to Grow
Holwell Shuster’s office expansion contrasts with the ongoing trends of Manhattan law offices consolidating their space or reorganizing to take up less square feet.
Holwell Shuster was founded in 2012 by Holwell, a former Southern District judge, and his former colleagues from White & Case, including Michael Shuster, Daniel Goldberg and Dorit Ungar Black.
The firm initially leased space from Sullivan & Cromwell downtown. The growing firm moved to midtown last year under a sublease from Mendes & Mount, where the boutique has occupied about 30,000 square feet.
Under its new sublease, which starts next month, Holwell Shuster will occupy nearly 60,000 square feet. The space can accommodate 110 lawyers, Holwell said, adding the boutique envisions growing to 90 or 100 lawyers. The new space “will allow us to reach maturity,” he said.
Goldberg said the firm’s head count growth has been through additions of associates and staff attorneys, who are full-time employees of the firm. Its partner additions have mostly come through promotions, with the boutique rarely making lateral partner hires.
Financial crisis litigation has driven the firm’s business, though it has also expanded into other areas.
The firm is representing the trustees of 170 trusts that bought residential mortgage-backed securities. The trusts have asserted claims against the Lehman Brothers estate for damages arising out of RMBS trusts sponsored by Lehman. The case is heading toward an evidentiary hearing in Southern District bankruptcy court this October.
Holwell and Goldberg said the boutique hasn’t experienced a slowdown in litigation related to the recession.
“It’s true that the financial litigation can’t go on forever, but the key is to replace it with new business,” Holwell said. “We think that’s happening and that’s why we’re optimistic about our continued growth.”
In another large case, Holwell Shuster is representing Visa in antitrust litigation in the Eastern District of New York. The firm was retained about four years ago, serving as co-counsel alongside Arnold & Porter Kaye Scholer.
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