Priciest land use law firms in NYC: ANALYSIS

Kramer Levin has top disclosed rate of $1,225 per hour

By Adam Pincus

Zoning is impacting the city’s skyline as it has not in decades. Just look at Hudson Yards.

But the process is dynamic. In the past week a Brooklyn councilman told Industry City its rezoning plan was dead without a delay. Northwell Heath wants to undertake a $2 billion redevelopment in Lenox Hill. Last month the city launched a rezoning outreach for Gowanus in Brooklyn and another in Manhattan for Soho and Noho.

If developers want to understand all of this, and to shape the city’s zoning map themselves, they turn to a small community of attorneys who specialize in the complex land use language.

And like any in-demand, limited resource, it’s not cheap.

The law firm Kramer Levin Naftalis & Frankel had the highest rate reported last year for a land use attorney, at $1,225 per hour, a review of records filed with the NYC Office of City Clerk revealed. Top attorneys included Gary Tarnoff, Paul Selver and Michael Sillerman.

The next highest was for Fried, Frank, Harris, Shriver & Jacobson, which had a fee of at least $1,125 for its five land use partners, the records revealed. The land use attorneys are Carol Rosenthal, David Karnovsky, Melanie Meyers, Tal J. Golomb and Zachary Bernstein. (The firm’s highest lobbying rate was $1,475, but sources told PincusCo Media that that figure was not billed by their land use partners. The firm would not disclose the top rate for its land use team. The $1,125 figure is the minimum rate Fried Frank’s lobbyist partners bill, according to the filings.)

The third highest fee was for Stroock & Stroock & Lavan, which billed at the rate of $1,095 per hour. Its top land use attorney is Ross Moskowitz.

As the stakes become ever higher with communities and elected officials pushing back on rezonings and developments, landlords will rely more on their land use attorneys to navigate a path that allows them to build. The rates paid to top attorneys appear to have risen slightly in the past few years. In a 2014 survey of top real estate attorneys by The Real Deal — focusing mostly on transactional lawyers — the top rate pegged to an attorney was $1,100, for Fried Frank’s Jonathan Mechanic. At the same time, unidentified real estate attorneys charged as much as $1,200 per hour, according to the report.

PincusCo Media reviewed the 2018 retainer agreements filed with the NYC clerk as part of lobbyist disclosure requirements, for more than two dozen firms. The review only covered firms that had four or more projects filed last year.

The lobbying law requires lobbyists to register and file disclosure records when they expect to spend or earn $5,000 or more in the city. Clients must also file an annual report. The analysis only included law firms, so top lobbying firms such as Kasirer or Capalino+Company were excluded even as they do significant land use work.

Developers selected their land use attorneys for new projects by default — or by design.

Steven Charno, president of builder and landlord Douglaston Development, said the firm chose Kramer Levin at 601 West 29th Street in Hudson Yards, which recently completed a rezoning from manufacturing to skyscraper residential, mostly by default.

In part he chose Kramer Levin because his firm has a long-standing relationship with the firm. But also, the company that sold to Douglaston had already started a rezoning process with Kramer Levin.

Developers consider the possibility of a rezone into their pricing for a site.

Charno said when Douglaston tied up the site with a contract, they believed the zoning would change. They expected that in part because it’s adjacent to two major rezoned areas — Hudson Yards to the north and the Special West Chelsea District to the east.

“You are trying to get as good an idea as possible whether you will be successful. If you have real concerns you could structure the purchase to protect yourself based on the zoning you are able to get,” Charno said.

As for the billing rates, the firms charge varying amounts, and insiders said it’s hard to identify an absolute value distinction for each fee level. Many of the attorneys at the top of the market have done all kinds of projects.

Jay Segal, a shareholder at Greenberg Traurig, said clients typically don’t select a firm based on the fee.

“Usually it’s not about rates. People have property that a land use attorney can help increase in value many times. They realize if the relative fees between different land use counsel differ by 10 percent or so, that is not nearly as important as likelihood of success or [getting along with the attorney],” he said. 

Firms discount for nonprofits, for repeat customers or for other special circumstances. They can cap fees or have variable monthly rates.

“Using the billing rate as a ranking measure is almost meaningless, due to the methods used today by law firms,” said Mitch Korbey, partner and chair of the land use and zoning group at Herrick Feinstein, such as discounts or fee caps.

In addition, “firms are increasingly moving towards creative billing methods as alternatives to the ‘billable hour’ – as we innovate and move into the mid-21st century,” he said.

Top projects for second place Fried Frank last year included Alloy Development’s complex known as 80 Flatbush Avenue, that won City Council approval in September, and JDS Development’s 247 Cherry Street, that won City Planning approval in December.

Stroock & Stroock’s Moskowitz, in third place, worked on several projects last year including the rezoning of Madison Realty Capital’s 69-20 Queens Boulevard in Woodside which won City Council approval in December.

In fourth place was Greenberg Traurig and its partners Deirdre Carson, Nick Hockens and Jay Segal. The firm’s top rate was $1,075 per hour. One of their large projects last year was Mikhael Heletz’s Excel Development Group’s rezoning of a portion of a block in Kips Bay including 339-345 East 33rd Street, which was approved by the City Council in August 2018.

In fifth place was Cozen O’Connor, with partners Kenneth Fisher and Vivien Krieger. The top billing rate was $980 per hour. One of their large projects was to navigate the ULURP process a parcel in West Harlem owned by GF Capital Management & Advisors.

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