New York developers spend billions each year building Manhattan condominiums, but they can’t make a single dollar back until they get the OK to sell those units from the state Attorney General’s office.
To obtain that required approval, builders rely on a surprisingly small cadre of attorneys at a few firms to usher their projects through the regulatory process.
In fact, just two firms handled the plans for more than half of all new condos applied for since 2013. One is a household name in New York real estate. The other is a tiny boutique firm little known outside this specialized universe.
The top firm is Kramer Levin Naftalis & Frankel, which represented developers filing 24 plans with 3,422 units, capturing about 31 percent of all units filed from Jan. 1, 2013, through Sept. 30, 2015, a review of AG condo filings by The Real Deal found.
Kramer Levin is a multi-national law firm with a large, broad-based New York City real estate practice. In September, TRD ranked Kramer Levin as the city’s 11th largest real estate practice, with 44 industry attorneys here.
Jay Neveloff, the firm’s real estate chair, said “more and more deals” involve condos. And they are not only residential. He pointed to a commercial condo structure he helped to create at 150 East 42nd Street in Midtown, where Mt. Sinai Medical Center purchased units, as an example.
The next busiest firm could hardly be more different.
Starr Associates lists just eight attorneys on its website and focuses heavily on condo filings. Founding partner Allan Starr worked several years in the attorney general’s office in the 1970s before going into private practice in 1979.
His firm filed plans for 46 projects with a combined 2,798 units, or about 25 percent of the filings over the period, including projects like Related’s 325-unit Carnegie Park at 200 East 94th Street.
In third place was Holland & Knight, with 690 units, followed by Seiden & Schein, with 659 units, and Stroock & Stroock & Lavan, with 324, rounding out the top five.
The concentration does not seem to be based on pay.
Adam Leitman Bailey, founder of his eponymous firm, said most attorneys charge a flat fee for condo filing work, while others bill between $450 and $1,000 per hour, or not much different from typical hourly rates. His firm does not file condo plans but does review them.
Other insiders, who did not want to be identified providing figures, pegged the flat fees for most larger firms between $65,000 and $175,000 for new construction and gut rehab projects, depending on project size and complexity. That would carry the developer from the preparation of the plan through its acceptance. Firms typically bill hourly for work on amendments after the AG accepts a plan.
Jane Rosenberg, a partner at Seiden & Schein, and another AG office veteran, said knowing the bureaucracy was an advantage. “We are on top of their changes in regulations and in policy statements,” she said, as well as other rules, written and unwritten.