New York law firm’s bond with most expensive office tower in US


Why a group of lawyers was prepared to pay ‘hedge-fund level’ rent to keep its office in the General Motors building

Everyone knows that office space, ideally, reflects a company’s brand (see Facebook and Apple’s multibillion-dollar headquarters). But in the era of the “cloud”, there have been loud mutterings in the client-services industry, especially among law firms, that high rents in prestigious buildings are no longer justified. Certainly this question was raised recently inside the law offices of Weil, Gotshal & Manges LLP as the partnership considered whether or not to renew its lease, due in 2019, in the General Motors (GM) building in New York, the most expensive office tower in America. The lawyers had been there since 1968.

On September 30 it was announced that Weil had decided to stay put – at an eyebrow-raising cost. Their new lease is said to be about $150 a sq ft, which is known in New York as a “hedge-fund level” rent. No other law firms pay anything close to this. “[The building] is part of who we are and our good fortune,” Barry Wolf, the firm’s executive partner, told Crain’s New York Business.

So why the counter-cultural move? What Wolf didn’t say – after all, he’s a lawyer – is that the bond between Weil Gotshal and the GM building is so entrenched, that for some partners, including the firm’s high-profile former managing partner, Ira Millstein, 87, the idea of breaking it had been “frightening”.

9c0f9f50-54de-11e4-b2ea-00144feab7deLast summer, while negotiations were under way, I met with the snowy-haired Millstein in his sunlit office on the 32nd floor. He was anxious to explain his sensitivity. “This building is a game-changer for us,” he explained.

Back in 1962, Millstein was a partner in a predominantly Jewish firm that struggled to get a foot in the door with establishment clients. Enter Max Rayne, later Lord Rayne, a dapper English property developer who wore tailored suits, smoked long slim cigars and had a passion for art through which he’d met a fellow art aficionado and Weil partner named Jesse D Wolff. Wolff, Millstein recalls “was a very nice man and a very good lawyer”. Rayne asked Wolff for help in purchasing a block of land at 767 Fifth Avenue. It sounded straightforward but what Rayne was asking for was almost the equivalent of asking to go to the moon – and a good deal more controversial. Rayne needed to knock down a McKim Mead and White hotel – right as New Yorkers were starting to protest the feckless never-ending dismantling of their landscape – and he also wanted to negotiate with GM, the biggest company in the world, to build a global headquarters in an area of Manhattan where no one else worked.

It sounded to Millstein like an impossible sell. But, somehow GM bought in. The new building would be designed by architect du jour Edward Durrell-Stone. It would be all white marble and 705ft high. When it went up the critics applauded and the protesters were silent. GM took the bottom 25 floors, including a showroom. The upper half was leased to blue-chip brands: among them, Estée Lauder, Helena Rubinstein, the advertising agency Wells, Rich, Greene and the brokerage firm Cogan, Berlind, Weill & Levitt.

Out of gratitude, Rayne pressed Wolff to take space too. But Wolff demurred. The rent at $7 a sq ft was double what Weil currently paid. But then Millstein and Wolff went up to stand on the roof. Millstein looked out: “It was just wow!” Warily, they rented half a floor. “We did this with great trepidation,” says Millstein.

But GM found they enjoyed working with Wolff so much that he became their go-to adviser. He was invited to GM board meetings in a dark-panelled room where the attendees at one end of the table could barely hear the chief executive speaking at the other.

Weil took the lead on GM’s litigation, credit and antitrust advisory work. And in 1991 the lawyers helped structure the deal that took GM back to Detroit. Millstein thought the move was a big mistake. “It took them out of the melee where people exchange ideas,” he said. But he wasn’t being paid for that kind of advice.

In 2009 the lawyers found themselves working on GM’s bankruptcy – which, ironically, only enriched the booming law partnership.

So, as Millstein and his colleagues weighed the pros and cons of whether to stay in the building so responsible for their metamorphosis, the importance of following their gut, of not being afraid of bucking the trend was not lost on them. On the other hand they got where they are by being pragmatists. “Mike Bloomberg now sits on the middle of the floor over at Bloomberg,” one of them mentioned aloud.

Ultimately they compromised. They are giving up 20 per cent of their space, and reconfiguring what’s left into an open-plan, more efficient office. But they agreed that they are not ready to shed the GM building, which remains, in their view, not simply a glossy marketing vehicle but the visceral, tangible embodiment of who they are. It is hard not to admire their story and their spirit – and indeed their building. Only time will tell whether the bold statement was worth it.

‘The Liar’s Ball: The Extraordinary Saga of How One Building Broke the World’s Toughest Tycoons’ by Vicky Ward is published by John F Wiley & Sons on Wednesday, £19.99

Illustration by Heather Gately