September 8, 2014
LAW360
By Jake Simpson
NEW YORK — A surging real estate market has fueled a spate of high-profile lateral partner hires by major U.S. law firms looking to poach top talent from one another, according to industry recruiters and consultants.
Since the beginning of April, the top 200 firms in the Law360 400 have brought in at least 61 partners and 22 counsel who focus on real estate, based on a Law360 review of lateral hiring at U.S. law firms.
Legal recruiters said the market has picked up even more in the last several weeks. Larry Watanabe, founder of California-based legal recruiting firm Watanabe Nason LLC, told Law360 that “at least a half dozen” major law firms have contacted him in the last month for real estate partner searches.
“There’s been more real estate demand in the last few weeks than there’s been in the last year, maybe even two years,” he said.
The hiring surge comes as housing markets pick up steam worldwide. Real estate prices are up significantly in many of the world’s largest markets in 2014, highlighted by a summer surge in the U.K. And while U.S. housing growth has slowed in recent months, several submarkets including hospitality remain strong.
“The legal industry is following broader economic trends,” said Kent Zimmerman, principal with industry consultant Zeughauser Group LLC. “As the real estate market has picked up in the U.S. and in a number of areas internationally, law firms that aspire to have preeminent real estate practices are increasingly interested in attracting top talent.”
Law firms are particularly keen on beefing up their real estate groups by raiding their competition. Roughly half the lateral partner and counsel hires by top U.S. firms in the last five months had previously been attorneys at other top U.S. firms, according to Law360’s review.
In several cases this summer, high-profile real estate partners “ including chairs of real estate groups at top firms “ have jumped to other legal industry giants.
In June, Dentons global real estate co-chair Eric Rosedale was snapped up by Greenberg Traurig LLP, which made Rosedale the head of its international real estate practice. Rosedale said at the time that he would initially focus on the firm’s existing European network and then expand the its real estate offerings in Asia, Latin America and the Middle East.
More recently, Squire Patton Boggs LLP announced on Sept. 2 that it had hired securitization and real estate finance expert Jens Rinze as a partner in the firm’s Frankfurt office. Rinze had been leading Sidley Austin LLP’s financial services practice in Frankfurt before the firm exited Germany earlier this year.
Rinze’s area of expertise, real estate finance, is particularly attractive to U.S. firms looking to shore up their real estate groups because of the higher billing rates that the practice commands. Watanabe said that real estate partners with a capital markets or finance specialty, such as real estate investment trusts, are more coveted lateral hires because they can bill more.
“Generally, firms are looking for high-end real estate finance and capital markets partners,” he said. “Most [major U.S. law firms] are billing out at $700 to $900 per hour for real estate finance and REIT-related work, and in some cases more. Other segments of the real estate market are not willing to bear those rates.”
Geographically, the highest real estate billing rates in the U.S. come from partners based in financial hubs like New York, Chicago and Los Angeles. Not coincidentally, demand for laterals remains the highest in those cities, according to Zimmerman.
Mayer Brown LLP made a big splash in New York in early August when it hired high-profile real estate finance partners Marc Shapiro and Jill Block, who were previously at Pillsbury Winthrop Shaw Pittman LLP. Shapiro, a pioneer in the real estate finance sector, jump-started securitized lending in the hospitality industry in 1993 when he helped secure a $2 billion commitment from a major Wall Street player to create the first program.
The demand for top-tier real estate laterals is unlikely to slow down anytime soon. With global property markets forecasted to grow strongly over the next several months, both Watanabe and Zimmerman said the legal industry will follow the macroeconomic trend and place an increasingly high premium on real estate talent.
“Over the next nine months, real estate will be one of the most highly sought-after practices,” Watanabe said. “It’s a resurgence.”