Like the market itself, the commercial real estate practice is rebounding from a deep low. Tech companies expanding into new digs and an uptick in off-market deals are helping keep big-firm real estate departments busy in San Francisco. Some are even thinking about hiring again, but stress they’re going to be very cautious — and choosy.

“I laid off a lot of people. It was very unpleasant,” said William Murray Jr., who leads the real estate practice at Orrick, Herrington Sutcliffe. He said his San Francisco group dropped from 18 to 12 attorneys because of the recession, and he doubts they’ll ever return to those pre-crisis levels. “My standards for hiring are tougher. I want to make sure I hire only people who can make it through another tough downturn.”

Murray said it’s not easy to identify those people and they are few and far between, but he said the ideal candidate will have experience handling the type of capital market transactions Orrick specializes in and can show they kept themselves busy even during the recession.

DLA Piper partner Stephen Cowan, whose own group in San Francisco dropped from 25 to 15 lawyers since the real estate bubble burst, echoed the sentiment. The pipeline at his firm has more promising matters than last year, including multiple portfolio transactions, purchase and sales deals, among them a purchase of 24 properties across the United States worth around $850 million, and a new redevelopment project in Mission Bay. “Every single person is busy,” Cowan said, ticking off the matters: “We’re doing more leasing, more financing, representing lenders and more borrowers.” His group’s even handling a large acquisition with no financing involved, he said.

But he’s not yet ready to claim a comeback strong enough to warrant a hiring surge. “Law firm management and real estate partners are very leery of the depth of the downturn,” Cowan said. The upturn could be a temporary blip, he said, and hiring won’t pick up until his firm is sure of sustained business. “Thinning the ranks is very, very painful.”

Orrick partner Michael Liever said his real estate group has been handling more work for tech companies buying campuses or leasing more space as they prepare to expand, such as Facebook Inc.’s move into the former Sun Microsystems headquarters. Most of the action is happening South of Market in San Francisco, he said, and in Menlo Park and Palo Alto. Orrick has represented two landlords in negotiations with Apple Inc. for buildings across the San Francisco Bay Area, for instance. Murray says the team has handled four $100 million deals in the past three to four months — mainly acquisitions of properties or portfolios of properties. “We didn’t have anywhere near that volume in ’08 and ’09,” Murray noted.

In March, Orrick handled the Westin San Francisco hotel’s restructuring, representing Westbrook Partners, which bought the debt on the property and took a deed in lieu of foreclosure on the property. Media reports put the mortgage debt at about $150 million.

Orrick’s San Francisco office added one fifth-year real estate associate from a Chicago firm a month ago and a first-year is starting at the end of August. The firm will be hiring one or two more lateral associates in the fall, partners say, if the deals keep coming. The ideal candidate these days will have just the right mix of experience and fire in the belly, Murray said. “There are people that have a hunger and that love real estate and I think they end up surviving better,” he said.

Gibson, Dunn Crutcher, known for caution in lateral hiring in good times and bad, is also beating the bushes for the perfect candidates to add to its 14-attorney San Francisco real estate group. Firm Chairman Kenneth Doran said demand in real estate has surged. Gibson is in a different position than many of its peers, Doran said, because it didn’t lay off any attorneys during the downturn. This year, the firm added one of counsel in Los Angeles and is in the process of hiring another in San Francisco. “We are cautious and selective,” Doran said.

Charles Thornton, a San Francisco partner at Paul, Hastings, Janofsky Walker, said clients are still risk averse. He said he has more off-market deals in the works than usual, which aren’t subject to a public bidding process. Two are acquisitions of office buildings and two are other types of commercial properties, all in California. “You sign a confidentiality agreement,” Thornton said. “You negotiate directly.”

Thornton said he’s not sure why more negotiations are happening behind closed doors now. One driver might be the complexity of deals these days, and various pressures on sellers. The loans attached to a property may be in default, there may be issues between the borrower and the lender, or a seller may have a deadline to get certain assets off its books in this fiscal year.

All those factors make turning to a single reputable buyer more appealing than a public bidding process that tends to be more fraught with risk, including the risk the deal won’t close or will be negotiated down in price after the buyer has done due diligence, Thornton said.

Generally speaking, Thornton said, the hottest properties today are office buildings in major markets, like Silicon Valley, San Francisco and L.A., that are fully leased to credit-worthy tenants.

Joan Story, a real estate finance partner at Sheppard, Mullin, Richter Hampton in San Francisco, said work has picked up on the transactional side since last year, but certain areas continue to be hit and miss, especially on bigger projects. Story said residential development on the urban fringe will take a lot longer to recover. That — and the uncertainty many still feel about the permanence of the upswing in commercial real estate — has kept Sheppard’s San Francisco group steady at 17 real estate and land use lawyers. One new first-year associate will be coming on board from the firm’s summer program, but no one’s been added laterally so far this year. “We’ve not talked yet about any lateral hiring in the San Francisco office,” she said.

What would it take for the firm to jump-start hiring? “More deals,” Story said. “A sense that the pickup we see is not just sporadic but is sustained. I guess nobody really believes it yet.”

Subscribe to The Recorder

Article source: http://www.law.com/jsp/article.jsp?id=1202506643112&Real_Estate_Coming_Back_but_Firms_Still_Cautious_on_Hiring

Pamela Lakey, SSL Law Firm partner

Image: Hillary Jones-Mixon/The Recorder

As the real estate recovery hobbles along, partners at SSL Law Firm are surprisingly upbeat.

During the worst of the downturn, older San Francisco land use and real estate firms like Cassidy Shimko Dawson Kawakami and Ellman Burke Hoffman Johnson folded and big firms have shed lawyers from their real estate departments. By contrast, the 10-year-old real estate-focused SSL boutique has notched its biggest gains. Five lawyers joined the San Francisco firm from Ellman Burke at the start of 2010. Since then, six more have joined from bigger firms.

With a total of 26 attorneys, SSL has grown into among the biggest real estate groups housed in the Bay Area. “SSL is a counter-trend,” Orrick, Herrington Sutcliffe real estate partner Michael Liever said. “They’ve really carved out a nice niche for themselves.”

The firm boasts marquee public company clients like Apple Inc., Salesforce.com, JPMorgan Chase and Boston Properties, and recently had a hand in big deals like the Hunters Point Shipyard redevelopment project and Facebook Inc.’s move to Sun Microsystems Inc.’s old Menlo Park, Calif., campus. The partners acknowledge they don’t draw Big Law paychecks, but say they have a lot more control over their professional and personal lives.

SSL was founded in 2001 by three in-house counsel from Spieker Properties. Sara Steppe was general counsel and Pamela Lakey and Dana Stone were associate GCs. When Spieker merged with Equity Office Properties, the trio opted not to relocate to Chicago, deciding instead to open their own shop: Steppe, Stone Lakey. Equity Office Properties was their first client.

Lakey, whose career trajectory included two years at Steefel, Levitt Weiss and two at Brobeck, Phleger Harrison, said the plan was to build on the firm’s leasing work foundations and become what she calls a full-service real estate firm, handling land use, environmental, bankruptcy and other real estate-related matters. She said she had no idea it would happen so suddenly, though. “We thought we’d gradually hand-select people who worked with our model — business lawyers and deal makers,” said Lakey, who has been co-managing SSL with Sally Shekou since the firm’s early days. “But the change in the Ellman Burke firm turned out to be good fortune for us.”

Though the firm is small, SSL lawyers routinely appear opposite Big Law attorneys. In the Facebook deal announced earlier this year, SSL, led by Lakey and Shekou, represented property manager RREEF. Attorneys from Orrick; Paul, Hastings, Janofsky Walker and others handled various other aspects of the deal. SSL handles commercial leasing for Apple and is starting to handle retail leasing for the company, led by partners Jodi Fedor and Lisa Maxwell.

The firm also has been adding renewable energy clients, with partner Christine Griffith handling matters for NextEra Energy Resources Inc. in the Montezuma II Wind Energy Project in Solano County, for example.

SSL is also one of the largest women-owned firms anywhere. Although Steppe and Stone have retired from the firm, nine of its 11 partners are female.

The firm waited a few years before becoming certified as women-owned. Kyla Chin, who joined the firm from Morrison Foerster, said the partners wanted to get established first. “We didn’t want to be stigmatized by it,” she said. Certification by Astra Women’s Business Alliance in 2005 helped the firm land work from utilities ATT and PGE Co., partners said.

SSL’s exclusive focus on real estate is distinctive, said Shartsis Friese real estate partner David Kremer, who worked opposite the firm on the Facebook deal. “The fact that they have chosen to limit their practice only to real estate is unusual,” he said. “I don’t think that exists anymore.”

Kremer said Bonnie Frank’s and Jeffrey Ebstein’s The Real Estate Law Group in Sausalito follows a similar model, but that firm has only six attorneys. In San Francisco, 26-lawyer Greene Radovsky Maloney Share Hennigh and 35-lawyer Stein Lubin have a strong real estate focus, but handle other matters like securities, tax and business services. The same is true for 50-lawyer Miller Starr Regalia in Walnut Creek.

Kremer said SSL also stands out for the amount of experience each partner has. “Most of their lawyers all had many years of real estate practice under their belt elsewhere before they joined SSL,” he said. “It’s a unique collection of people.”

IN THE SWEET SPOT

Around a conference table in a small 27th floor office at 575 Market St., the partners at SSL — mostly women in their 40s — explain the business and cultural benefits they see in their firm: The sense of ownership, the lack of required office face time and the growing client list of well-known public companies. “You have control over the work you do, whom you do it for, and your hours,” said Fedor, one of the Ellman Burke transplants.

“We’re all in the prime of our careers,” said Griffith, who also joined from Ellman Burke.

“We have the contacts to develop great business opportunities, and the energy and drive to get the best results for our clients. It feels like we’re in that sweet spot.”

Part of their success owes to relatively low billing rates, which have become more of a draw for cost-conscious clients. Partners charge between $300 and $450 an hour. The firm has been attracting new clients — such as California State University, which works with Griffith — and new types of work from existing clients. In addition to the firm’s work for Apple and its retail leasing, JPMorgan Chase is now sending them land entitlement and approval matters, for example.

Partners at the firm bill 1,700 to 1,800 hours a year on average, and often work from home. “Everybody has the capability to work remotely and we don’t babysit that at all,” Lakey said. “And I think that clients like that we’re uber-available.”

The economic downturn also seems to have made SSL more attractive to lateral candidates from bigger firms. “It used to be that big firms were the safe place to be,” said Shekou, who joined SSL from Heller Ehrman in 2002. “When I was leaving Heller a lot of people told me I would be wrecking my career by going to some small, no-name firm.”

Shekou says she’s OK with the fact that she’s not likely to work on a huge corporate merger or an enormous portfolio deal. She joined because she liked the energy of the firm’s young women who were controlling their own destiny. And she hopes the vibe doesn’t change. “We’ve been approached to become a bigger firm’s real estate department,” she said, “but it has never appealed to us because it’s so nice to keep our little group the way it is.”

STEADY GROWTH

The group is less little than it was just two years ago. After Ellman Burke closed, Leslie Browne and Michael Brody first moved to Buchalter Nemer, but changed their minds and came to SSL during the last year. Environmental lawyer Zachary Walton left Paul Hastings in early 2010 to help open the S.F. office of Downey Brand. One year later, he joined SSL. “Larger firms claim to be nimble and responsive to the business needs of their clients, but they are not,” Walton said. “At SSL, we don’t have a bureaucracy that needs to approve your relationships with your clients, giving you the freedom to enter into arrangements that make the most sense for you and your clients.” And he says he isn’t a slave to the billable hour. “I work with two associates and they’re busy, but you don’t have to keep four full-time associates at 2,000 hours each busy,” Walton said.

He also enjoys the absence of management looking over his shoulder, evaluating him. “What you make is based off the work you do. I don’t have an executive committee or a chief administrative officer with a spreadsheet that shows how many hours you billed, and here’s how you ranked against xyz,” said Walton, who estimates he’s on track to bill about 1,700 hours this year.

There are downsides to working at a small firm like SSL, too. One of the biggest limitations is the pay, said Shekou. Though partners make at least $100,000 a year, Shekou says they don’t make anywhere close to what first-year associates make at the most prestigious firms. “You have to be willing to have a trade-off. You don’t see those huge salary draws, but at the same time, you’re not expected to work those kinds of hours,” Shekou said. “I’m at peace with that.”

Another challenge typically faced by small firms is the perception that its lawyers aren’t the same caliber as big-firm attorneys, Shekou said. That’s unfortunate, she said, because most of SSL’s partners have Big Law experience, and SSL is bigger than most big-firm real estate departments. “But still, we’re not a MoFo or an Orrick, and those are tremendously well-established, venerable firms that people respect and know,” Shekou said.

Still, over the past year and a half, SSL has added about 14 lawyers, including a few contract attorneys, Lakey said. “Every time we say we’re done growing and we just want to sit down and do our job, somebody totally amazing crosses our path. You don’t say no to really great lawyers who are going to be great team members.”

Lakey said there’s no desire among her partners to diversify beyond real estate, at least not anytime soon. “Now is the time to sit down and do our jobs really well,” she said. “We’re not intending to become another MoFo.”

Subscribe to The Recorder

Article source: http://www.law.com/jsp/article.jsp?id=1202500521405&WomenOwned_Real_Estate_Boutique_Grows_and_Thrives

“We’ve made extensive efforts to try to find him,” said Joshua White, the deputy city attorney trying the case. “So far as we know, he’s skipped town.”

In the meantime, Mr. Guajardo’s wife, Debra, has moved to sell two condominiums she owns across the street from the Transamerica Pyramid in addition to 555 Clay Street, the downtown office building that held Mr. Guajardo’s law practice. The three have a combined estimated value of more than $7 million. All are in the early stages of foreclosure.

Public records show Mr. Guajardo has no properties in his own name in California. “We don’t think that’s a coincidence,” said Michael Aparicio, a lawyer with Orrick, Herrington Sutcliffe, a firm that has filed a separate pro bono class-action suit on behalf of immigrants who say they were defrauded.

Both the city attorney, Dennis Herrera, and the Orrick firm are also suing Christopher Stender, an immigration lawyer based in San Diego who began to work out of Mr. Guajardo’s law office after Mr. Guajardo was disbarred in 2008. The plaintiffs say that beginning in 2008, Mr. Stender and Mr. Guajardo worked together to defraud immigrants.

Mr. Stender has retained counsel.

In a court filing Feb. 8, Mr. Stender denied accusations of illegally profiting from his clients. “I have a good reputation,” he said.

In the filing, Mr. Stender also said his “association and employment” with Mr. Guajardo ended last fall, when “I was informed by Mr. Guajardo that he had separated from his wife and had moved out of San Francisco as of Oct. 12, 2010.”

Neither Mr. Stender nor his lawyers responded to e-mail and telephone requests for an interview. Mr. Stender continues to practice immigration law out of a Market Street office.

In an interview, Mrs. Guajardo’s real estate agent, Cesar Contreras of Pacific Union Realty, said he represented “Martin Guajardo’s ex-wife” although The Bay Citizen could not find a record of Mrs. Guajardo’s filing for divorce.

On Feb. 3, the class-action suit expanded its complaint to include Mrs. Guajardo, who, it said, “has financially benefited” from Mr. Guajardo’s “schemes and unlawful acts,” resulting in her possession of “substantial real estate holdings.” The suit was also expanded to include the couple’s two adult children, Alexis and Dulcinea, who both worked for Mr. Guajardo’s firm.

The Guajardo family’s home on Mendosa Avenue in San Francisco’s Forest Hill section, which is also in Mrs. Guajardo’s name, is not on the market.

After trying to reach Mr. Guajardo by phone, this reporter stopped by the cream-colored home, which, atypically for San Francisco, is surrounded by a concrete wall.

Inside, the lights were on, but no one answered the doorbell.

aglantz@baycitizen.org

Article source: http://www.nytimes.com/2011/03/06/us/06bcimmigration.html?src=twrhp