rocketing property prices in New York are forcing mid-tier law firms to consider their future.
With prices now as high as $90 (£61.50) per square foot in some areas of the city, compared to half that a few years ago, the price of office space is driving the mergers sweeping through the middle market.
New York-based recruitment consultant Jerry Kowalski says: “Real estate prices and availability are now a very significant factor in law firm growth. I met with one law firm with 200 lawyers in New York and their profits were up because their real estate was cheap.
“Firms that have leases that are up for renewal in the next few months are facing real crises.”
High-tech 40-lawyer litigation firm Camhy Karlinsky & Stein has just merged with Florida-based Greenberg Traurig. Camhy Karlinsky’s former managing partner Warren Karp says property prices were a consideration in the merger decision.
He says: “Leases are going up dramatically and you are talking about doubling your fixed costs. Most firms today are looking a few years down the line and it’s certainly one of the factors you are looking at. You are looking to spread your costs over a larger platform.
“We did see other firms where there were real estate problems and we realised the economics weren’t going to work with them.”