How did a locally focused, four-attorney real estate practice transform into a 111-person, national department responsible for 21 percent of Ballard Spahr's total revenue? The heads of the firm's real estate practice said it's the direct result of a pioneering culture, talent, depth and a deep client base.

In May 1985, a group of four lawyers came to Ballard Spahr from another big Philadelphia firm with the idea of creating one of the top real estate practices in the city of Philadelphia. The real estate practice originally started as part of Ballard Spahr's business enhancement department but began to grow and was formally spun out as its own practice in 1988. All four attorneys responsible for the real estate practice's launch are still with the firm today.

"When we joined Ballard Spahr, it was the first time a group of lawyers went from one big firm to another," said Michael Sklaroff, a partner in the firm's real estate department and one of the original attorneys who helped establish the practice. "We were pioneers in a way."

Bart I. Mellits, chair of Ballard Spahr's real estate practice, joined in 1988, moving to Philadelphia after working at a major New York firm. He said he was excited about the opportunity to grow the newly minted practice.

"At the time, Ballard Spahr was not known for real estate, but it was an opportunity to be on the ground floor of something that was growing and purposeful," Mellits said. "There was a plan to grow this practice and be a major player in the real estate industry."

The plan worked and today Ballard Spahr is one of the top real estate practices both locally and nationally, handling tens of billions of dollars in transactions in virtually every state in the country. The firm has a diverse client mix that includes lenders, developers, universities, hospitals, hotels, cultural institutions, retail centers and stadiums. In addition, the firm also handles multiple facets of real estate law, such as land use, development, leasing, acquisition and sales, construction and design and finance.

Locally, Ballard Spahr's list of projects reads like a who's who of the city's most well-known structures. In some capacity, the firm's real estate department has played a role in the development of the Kimmel Center, Comcast Center, Citizens Bank Park, the Franklin Institute and the Philadelphia Wholesale Produce Market.

"You can point to the Philadelphia skyline and see the projects we've worked on," Mellits said. "It's great, because we are part of the fabric of the city and helped the folks who spent the money to build these structures achieve their goals."

A drive through Drexel University's campus will show a work-in-progress on a $100 million student housing project that got underway thanks to Ballard Spahr's real estate advice. The 360,000-plus square foot, mixed-use project is a combination of student housing and retail space and is being touted as the "new gateway" to the University City section of Philadelphia. The project was a partnership between the university and America Campus Communities.

Ballard Spahr's work has focused on Philadelphia's historic side as well. The firm represents the National Center for the American Revolution (ARC) in its planned development of a museum near Independence Hall and the Liberty Bell. The firm represented ARC in a complicated land exchange that required the National Park Service to conduct a review to ensure development of the building wouldn't detract from the historical value of the property. The firm also had to assist ARC in getting approvals from a number of stakeholders including government entities and community groups.

Not all of Ballard Spahr's real estate projects have focused on development. The real estate downturn also forced the firm to get creative in redeploying its resources.

Sklaroff and Mellits said their practice's growth is directly attributable to the culture that enabled them to prepare for the 2008 real estate downturn by launching a distressed real estate practice. The practice represents lenders and other entities with distressed assets by helping navigate both a troubled and recovering market. For example, one attorney in the distressed real estate practice counseled a national special servicer in the workout of a $130 million first mortgage loan on a 1,000-unit, multifamily project.

"The world came to a stop on September 15, 2008, when Lehman Brothers declared bankruptcy," Sklaroff said. "Some of us had experience from earlier downturns, but we had to repurpose and rebrand a transactional practice to be able to represent primarily lenders in distressed situations. It was very much a team effort."

Mellits said the distressed asset initiative was a collaborative effort by the firm's attorneys throughout the country to adapt to the market's changes. Many of the special servicers that had distressed assets were based in East Coast cities such as Miami, New York and Washington, D.C., while the assets were situated in western states. Attorneys on both coasts were meeting weekly to figure out how to best navigate their clients through the recession.

"We were able to go to our East Coast clients and say, 'You have problems in the West, but we have people on the ground in those markets who can help you,'" Mellits said. "The lawyers on the East and West coasts were able to work together and I think a lot of the distressed real estate initiative's success was because of the culture of collaboration at Ballard Spahr."

"The key here is deployment," Sklaroff added. "It's getting boots on the ground in the West and it was challenging because the distressed assets were in the West, which required multi-office deployment because a lot of the clients were in the East."

Not only was Ballard Spahr's distressed asset initiative a collaborative effort among the firm's national offices but it also required contributions from other practices, such as litigation, environmental and natural resources and bankruptcy.

"The distressed asset initiative was not just about lawyers in the real estate practice, but all of the resources we have throughout the country," said Sklaroff. "We are always looking toward our other practices to support and nourish the distressed asset practice."

Although the market has improved, Sklaroff and Mellits said there are still some residual effects from the downturn and challenges still lie ahead, especially in the Philadelphia market. Fewer deals are being completed and lenders are still shy about making loans. The deals that are getting done require more time to close and increase due diligence.

"A conventional deal just doesn't exist anymore," Mellits said. "It is harder closing transactions, and lenders have put more credit requirements than what they used to require to close deals. In this competitive world, lenders still need to make loans. They will start cutting some cords, but nothing near what they did before the downturn."

Sklaroff said the recession is still impacting the Philadelphia region.

"There is still risk in the market," he said. "In Philadelphia, this is not a period of great growth."

The keys to meeting the challenges posed by the recovering market are a diverse client base and hiring and training new real estate lawyers, the attorneys said. While Ballard Spahr's senior partners have helped shape local, state and federal real estate law, its younger partners have already handled nine-figure transactions.

"Making sure you have the right people is the key to meeting the market's challenges," Sklaroff said. "We are very fortunate to have a terrific group of younger lawyers."