It used to be so simple: You go to the right schools, work your tail off at a Wall Street law firm and make partner. Then, to signal that you've arrived, you buy a grand but understated apartment on New York's Upper East Side. Like your ascension in Big Law, you climb the real estate ladder gradually—and strategically. Maybe your early purchase was a tidy apartment on one of the side streets in the East 70's or 80's. But as you settled into partnership, you eventually clawed your way to the ultimate prize: a "Classic-8" apartment on Park or Fifth Avenue.
"There was a time when [big firm] lawyers would only live on the Upper East Side," says real estate lawyer Adam Leitman Bailey, who often represents lawyers in apartment sales and purchases. "It used to be they'd do anything to get on Park Avenue, even if they had to take an apartment on the second floor. They felt they had to keep with the Jones or the Schwartzes."
It wasn't that long ago when young partners were salivating over prewar (as in WWII) doorman co-op apartments at prime addresses. Nine years ago, when I first reported about lawyers and their real estate lust ("Rich Lawyer, Poor Lawyer"--see below), youngish partners were lamenting that they were being outbid by bankers, hedge funders and other financial titans, forcing them to camp out on the Upper West Side, downtown or—God-forbid—Brooklyn.
These days, however, young partners no longer pine for the same status symbols. Instead, they're settling in far less pedigreed parts of town—even places like Manhattan's Little India, Hell's Kitchen or Washington Heights. In fact, this new generation of partners seem to be thumbing their nose at the ultimate symbol of success: the right address.
"Our generation is looking for a broader array of neighborhoods," says Duane Loft, a litigation partner at Boies Schiller. A resident of Tribeca who was raised on the Upper East Side, Loft says, "there are now a lot of appealing neighborhoods."
"I don't know anyone who has dreams of living on the Upper East Side," says Ansgar Simon, a tax partner at Boies Schiller. "I'm impervious to status. I drive a Volkswagon Passat." Now a resident in Washington Heights in upper Manhattan, where he lives with family in a 2,500 square feet apartment in a 1910 building, Simon says he appreciates the ethnic and professional diversity of the neighborhood.
"There a shift in the partner population," says an Asian American partner at an Am Law 100 firm who recently bought a condo near Little India. "When I'm in the Upper East Side, I feel out of place," noting the lack of diversity in that neighborhood. "The Upper East Side actually has good values. I saw apartments on Park with amazing views, but when I walk out, I thought, what do I do? How do I make friends?" She adds, "the cooler partners go to Chelsea, Tribeca or Brooklyn."
There also seems to be an aesthetic shift among the younger partners. Instead of a baronial prewar apartment, some are opting for (gasp!) new construction. "The new nouveau riche generation wants the latest in technology, open kitchens, services, floor to ceiling windows, big views that new construction offers," explains Bailey. And because new construction is popping up all over the city, younger partners are spread across a wider range of New York.
What's driving young partners to neighborhoods and buildings that their elder counterparts wouldn't set foot in, isn't just evolving aesthetics but practicality, says a Sullivan & Cromwell partner. Lawyers are willing to trade cachet for convenience, particularly when both spouses work. "People are working harder; they spend a lot of time in the office and want to go home quickly. If you don't live close by, it rules out dropping off your child at school in the morning." And because S&C is located in lower Manhattan, lots of its lawyers live downtown or in Brooklyn, says this partner.
So is the fancy Upper East Side apartment completely dead? Not exactly. Some of the best private schools in the city, like Brearley, Chapin and Dalton, are there. "Those with kids at the uptown schools still want to live there," says an Am Law 100. "Or those stuffy, younger partners who grew up there and can't imagine living any where else."
Photo: Brooklyn home in Showtime's Billions.
Rich Lawyer, Poor Lawyer
(originally printed in The American Lawyer in December 2007)
The prize was a home-cooked dinner for eight, prepared by a parent — one of New York’s most celebrated chefs and a perennial on the Food Network. The bidding started at $3,000 — a fabulous bargain. Nearly two dozen paddles shot up in the air. The bidders were the usual suspects — Wall Streeters, big-firm lawyers, a sprinkling of doctors, a few people with money but no visible means of support.
Nursed by a steady stream of champagne cocktails, the bidders were a competitive lot. At $7,000, the doctors dropped out of the game; at $10,000, most of the other professionals were gone; at $15,000, the lawyers and the trust fund babies bit the dust. With only the financial titans in the game, the bidding got intense: $20,000, $25,000, $30,000. Sold for $40,000! The winner: the wife of a 30-something hedge fund manager.
There’s nothing like a fundraiser at a private school in Manhattan to define your social station. Time was, lawyers were near the top of the heap. Investment bankers and other finance types have long eclipsed them, but the difference used to be one of degree. Then came private equity investors and hedge funders, and lawyers nose-dived on the socioeconomic ladder. “Face it, we have no status,” says an Am Law 100 partner of the pecking order at his sons’ private school. “We go to these school functions, and this well-heeled group looks right through you. They won’t give you the time of day. You’re just one step ahead of the doorman.”
Lawyers — the underclass? To even a marginally rational person, that would be a stretch. Fact is, big-firm lawyers have never been richer. The average Am Law 100 partner took home profits of $1.2 million last year. Lawyers in major firms “are doing great,” says Steven Kaplan, a professor at the The University of Chicago Graduate School of Business, noting that the compensation of that demographic has increased 2.6 times since 1994, even discounting for inflation. In large swaths of the country, anyone making that much money could live like the sultan of a minor principality. So why are some lawyers feeling sorry for themselves?
In the uberprivileged enclaves of New York and Silicon Valley, “lawyers are just a little above middle-class,” says Palo Alto, Calif.-based recruiter Carl Baier. But unlike New York lawyers, those in Silicon Valley seem to complain less. “There’s more memory of lessons learned,” says recruiter Avis Caravello about lawyers who joined dot-coms that quickly crashed. And despite reports that the Valley is overheating again, lawyers remain chastened, adds Caravallo.
Not so in New York. Even with the recent dip in the credit market, lawyers show plenty of hedge fund and private equity envy. Who can blame them? Literally and figuratively, lawyers live in the shadows of those financial gods. They share the same upscale neighborhoods, eat at the same trendy restaurants and relax on the same stretches of white sand in the Hamptons. The difference is that Wall Streeters will buy three or four apartments and combine them, and pick up choice properties by the water. “Our place is on the poor side of town — north of the highway [away from the water],” says a lawyer, sipping a drink poolside at her East Hampton weekend retreat. “Only the bankers can afford the south side.”
Real estate causes a great deal of angst in these rarefied precincts. “Our cost of living goes up because of these people,” says a fifth-year associate about the hedge fund crowd. “Wall Streeters are buying up the pre-eminent prewar apartments on the Upper East Side,” gripes a partner who lives on New York’s Upper West Side. What about the newly gentrifying areas of lower Manhattan or Brooklyn? Get real. “It’s bullshit that partners are living all over the city by choice,” he says.
If the ability to buy a home in Manhattan — where a three bedroom apartment in a “good” building can top $5 million — is the true measure of wealth, lawyers are coming up short. “Twenty years ago, almost all my clients were doctors or lawyers,” says real estate agent Dolly Lenz. “Now 80 percent are from Wall Street.”
“It’s clear,” adds another real estate agent, Judith Thorn, “that young partners cannot afford the same properties as their colleagues in hedge funds.”
A silver lining for some: Many big-firm partners have passed the $1 million mark — that unspoken demarcation between the top and middle drawers of the profession, and those who might plausibly afford a piece of Manhattan. But these days, the real contenders for a snazzy apartment are partners in the $2 million league, says Thorn. (She adds, though, that older partners who bought decades ago and have benefited from the dizzying climb of Manhattan real estate prices can trade up and even fetch apartments in the $6 million to $10 million range.)
And what about those poor schleps making a mere $600,000 or so — the average profit per partner of The Am Law 200? Should they head for the outer boroughs, the suburbs or Cleveland? “It’s still doable [in Manhattan],” says real estate agent Lenz, though she says that a family headed by such a lawyer might just have to squeeze into a tidy 1,600-square-foot apartment. It would also help, she adds, if the partner had some family money.
It’s enough to make otherwise sensible lawyers resent their clients. “You have these young people making $5 million a year,” sputters one 60-something partner. What’s worse, he adds, “they are inexperienced and have to be led by lawyers.”
Deep down (or is it right on the surface?), lawyers feel they are smarter than the average Wall Street Joe they service. “Some seem not to have that much education,” sniffs one lawyer. “Why am I doing all the thinking when I’m making a quarter of what they make?” (A question that may answer itself.)
All this bitterness about money strikes lawyer and author Philip Howard as a perversion of the profession. “Law was never supposed to be a profession to get rich,” says Howard, a partner at Covington & Burling in New York. He says that the fixation with money is symptomatic of the bottom-line focus that drives law firms today. “The profession has gotten confused,” he says. “Lawyers have always been butlers to business.” Besides, he adds, “lawyering skills don’t translate well into trading skills.”
Plenty of lawyers would agree. Some seem relieved not to be on the front lines of business. “There are plenty of hedge funds that collapse,” says a partner who specializes in the field. “Lawyers crave stability, and people who are risk-takers should be rewarded.” And even lawyers who have defected to Wall Street hedge their bets. “I’m keeping up my CLE,” says a former associate who’s now an investment banker.
In fact, some lawyers feel vindicated by the recent turbulence in the financial markets. Calling it schadenfreude would be too strong: Lawyers make money off Wall Street, too. It’s more like nostalgia for staid, simpler times, when lawyers had a secure place in the social firmament, young financiers knew their place, and everyone recalled the lessons of the psalmist: You can’t take it with you.
Of course in those days, no one had to bypass Manhattan to take it to Brooklyn.
Photo: Scene from Odd Mom Out.