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September 24, 2009 5:31 PM

McKool Smith Making Moves in Manhattan

Posted by Brian Baxter

After salaries and employee benefits, office space is usually the largest expense for Am Law firms. McKool Smith isn't in the top tier yet, but the 116-lawyer Texas firm tripled its occupancy in New York by subleasing 33,000 square feet of space from Akin Gump Strauss Hauer & Feld in the new Bank of America Tower overlooking Bryant Park.

New York managing partner Robert Cote told Crain's the firm wants to replicate its success elsewhere through an expansion plan that includes adding as many as 100 lawyers in the next three years. (Cote didn't immediately respond to an Am Law Daily request for comment.)

It's been a whirlwind past few months for McKool, a Dallas-based IP and commercial litigation boutique that has scored a string of trial victories this summer. The firm recruited three IP lawyers from Dewey & LeBoeuf in July--including the firm's IP litigation cochair--and added a commercial litigator from Simpson Thacher & Bartlett earlier this month.

McKool opened its New York office in 2007, with 10,000 square feet of space at 399 Park Avenue. The office now has 20 lawyers, but its 15-year sublease with Akin Gump to take over the forty-seventh floor at Bank of America Tower means it can now accommodate 50 lawyers.

Akin Gump moved into one of the last remaining large blocks of office space in midtown Manhattan at the height of the market in August 2006, signing a lease for 203,000 square feet of space. But that was before the bottom dropped out of the commercial real estate market and the recession forced law firms to start laying lawyers off. (Akin Gump shed 56 partners last year in an austerity program that helped revenue per lawyer rise 12.9 percent to $965,000.)

The Am Law Daily recently reported that some firms are taking advantage of the falling prices in the commercial real estate market to secure cheaper leases, while others are seeking out subleases for unused space.

An Akin Gump spokeswoman says negotiations with McKool on the new space began in mid-May and the sublet started on July 31.

Crain's reports that the rent being paid by McKool is lower than the $100 per square foot asked of Akin Gump.

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