Summary List Placement
Boies Schiller Flexner LLP, the elite litigation firm that has been rocked by controversies entangling its co-founding partner David Boies and the recent departure of several top attorneys, is reevaluating a pricey office it opened last year in the Hudson Yards on Manhattan’s West Side.
The decision to downsize or exit its gleaming new headquarters represents an abrupt turnabout for the firm, which had planned for years and spent millions of dollars to relocate from Midtown to three floors at the newly built office spire 55 Hudson Yards.
It also underscores both the upheaval at the firm and how the ongoing pandemic has prompted tenants across industries to reevaluate their office needs.
“We are giving careful thought to where we want our offices to be, what size we want our offices to be, and how our offices will be staffed,” Natasha Harrison, co-managing partner of Boies Schiller, told Business Insider in a statement. “We are re-thinking our complete geographic footprint, including 55 Hudson Yards.”
Scores of companies have decided in recent months to cast office space onto the market for sublease, creating an unprecedented inventory of such availabilities across Manhattan.
Roughly 16.9 million square feet of sublease space was on the Manhattan market as of October, according to data from the real-estate services firm Cushman & Wakefield. That’s a 70% increase from a year ago and amounts to a record sum exceeding past downturns such as the recession of the early 2000s and the great financial crisis.
Boies Schiller originally committed to four floors at 55 Hudson Yards, totaling about 83,000 square feet, in 2015, years before 55 Hudson Yards was completed. It moved into three of the floors, subleasing the fourth to allow it time to grow into the additional space, according to a person familiar with its move.
Boies Schiller built out its space in a manner befitting a white-shoe law firm with national name recognition and prestige, procuring modernist furniture, a sculpture of undulating wires draped from its ceiling, and other design accents such as industrial-chic concrete-like paneling.
The space was designed by Aaron Schiller, whose father Jonathan Schiller co-founded the law firm, a link that irritated some lawyers given the cost and lavishness of the design. Aaron Schiller and the law firm’s leaders have said his work was high-quality and competitively priced.
The firm’s original plans for growth have been pared back in recent years as David Boies’ reputation and stature in the legal industry have been bruised by his involvement with the disgraced movie mogul Harvey Weinstein. Rifts have also opened within the firm as it has undertaken a management and compensation restructuring that led some attorneys to depart.
With so much space available on the sublease market, two real-estate executives familiar with Boies Schiller’s plans said it would consider offers to take some or all of the space, with the latter scenario requiring the firm to relocate to a smaller office elsewhere in the city.
“We have taken on an agile, ambitious restructuring, and are engineering and delivering the kinds of changes we believe are right for the firm now and moving forward,” Harrison said in the written statement. “A strategic review of our firm’s real estate portfolio was put on the table early on in the restructuring, and it remains under review.”
Harrison, as well as co-managing partner Nicholas Gravante, have previously said they planned to close about half of the firm’s offices across the country and cut back its headcount.
Boies Schiller’s website shows it headcount has fallen to 207 attorneys, down from a peak of 350 a few years ago.
Several large tenants have moved to downsize their offices or have initiated reviews that could result in that decision.
Uber, for instance, has begun marketing over 25% of the over 300,000 square feet it occupies in Lower Manhattan. AT&T has begun to reevaluate the 1.5 million square feet that its subsidiary, WarnerMedia, has at 30 Hudson Yards. And the advertising and media firm Dentsu International recently decided to shed 320,000 square feet it leased last year at the Morgan North Post Office Building.
With working from home the new normal for millions of white-collar workers, companies including Justworks, First Republic Bank, and Allianz have been seeking subtenants for their New York offices, Business Insider reported earlier this summer. Outside of New York, Yelp, Airbnb, and others have also sought to try to recoup money by subleasing empty spaces.
The decisions stem from the pandemic, which has damaged the economy, spurred tens of millions of layoffs, and has changed how office workers do their jobs.
The pandemic has yielded mixed results for big law firms.
Some practices, including bankruptcy and capital markets, have been very busy, and a handful of firms, including Milbank, Cooley and Davis Polk & Wardwell, have awarded special bonuses of up to $40,000 to their associates.
But some firms have made pay cuts and layoffs. JLL, the real-estate services firm and brokerage, said that 8% of its tenants that sought rent relief from March through May were law firms. And at least three big firms — Jenner & Block, Schulte Roth & Zabel and Simpson Thacher & Bartlett — have sued their landlords or been sued in disputes over rent abatements.
Office experts increasingly believe that, while tenants may return to the workplace, many will adopt greater flexibility, allowing employees to work both in the office and remotely. If that translates into fewer workers in the office at any given time, many companies will seek to downsize their space, experts say.