Friday, October 17, 2014
Real estate practices feeling the aftermath of slow recessionary hiring
Now that business has picked up, firms try to patch holes in ranks made during downturn
By Alexandra Schwappach
Daily Journal Staff Writer
When partners at Nossaman LLP set out two years ago to hire a handful of experienced real estate associates, they were confronted with a shallow pool of candidates to choose from. Like many firms, Nossaman was meeting face-to-face with a consequence of the downturn – a significant shortage of talent.
Slow hiring during the recession – when the real estate sector was hit particularly hard – meant many young lawyers who couldn’t find work in that area went into other practices. Now that real estate is booming again, there’s a noticeable dearth of available associates with seven to 10 years of experience.
“During [the recession] real estate as a practice area was so slow that anyone who had an interest in it was forced to look elsewhere,” said Justin X. Thompson, a real estate partner at Manatt, Phelps & Phillips LLP.
They went into litigation, corporate or bankruptcy, and some even tread into the public sphere to find work, he said. Firms that hired real estate attorneys before the downturn sometimes redirected them into other groups that were more robust.
“When the market slowed down, real estate associates didn’t get the experience they would have otherwise obtained,” Nossaman’s recruiting manager Christine McWilliams said. “I think it requires looking at hiring through a new lens and figuring out how to leverage other transactional experience into real estate work.”
For Nossaman, finding the right talent required casting a wider net, asking more detailed questions of candidates, and considering applicants with varied experience or nonlinear backgrounds. The firm’s real estate group added three associates in the past two years, but the more careful hiring process took almost twice as long as it might have before the recession, McWilliams said.
“Our most recent hire took us about six months to complete,” she said. “In the prerecession era you could fill that position in three months or less.”
L.A.-based legal recruiter Sandy Lechtick said his company has roughly a dozen law firms that want to expand their real estate practices, both in development and land use as well as in the finance and banking side of real estate.
“The demand for midlevel to senior real estate associates is high,” he said, “but we are having a hard time finding them for our clients.”
Firms looking for real estate associates with seven to 10 years of experience want candidates with more than just a skill set, Lechtick said. They want to see revenue-producing skills and existing clientele.
“That’s where there’s a hole in the lineup,” he said.
Cox, Castle & Nicholson LLP partner David W. Wensley said hiring for real estate practices during this recovery period requires more patience, significantly more training, and perhaps even some client frustration with actual versus expected experience level.
One of his most recent hires has been doing a mix of real estate, litigation, bankruptcy and other work, Wensley said. He also hired a first-year out of UCLA School of Law in lieu of an associate with more high-level experience.
“We now have the solid real estate workflow to now inundate our first-year with quality real estate work so he will be well trained and highly valuable very quickly,” he said.
That potential to get experience fast is the silver lining of this talent slump, said Philip N. Feder, chair of Paul Hastings LLP’s global real estate practice. The scarcity of more senior associates allowed for younger associates to take on more significant matters when the economy started to turn around – matters they might not have had the opportunity to take on before the recession.
“It’s been a crash course in real estate for the young associates who have embraced the opportunity and have done a fantastic job,” Feder said.
At the start of the recovery, Feder said, his firm was overwhelmed with large transactions typically handled by more senior associates. But with few available, much of that work went to young lawyers with only two or three years of training.
“Over the last three years the work has been so incredibly busy that it’s given those associates who we’ve brought on in the meantime more experience,” Feder said.
Paul Hastings real estate attorney Sam Alavi said he was amazed at how much work he was able to take on at the firm when he was hired out of law school in 2011.
“I was really surprised with the amount of responsibly that junior associates were getting,” he said. “I would guess that wouldn’t be the case before the recession.”
Many of Alavi’s matters were staffed with just him and a senior partner, he said. Earlier this summer he and Feder closed a $260 million loan for an Orange County property. Last fall, the duo represented a buyer purchasing a six-acre parcel of land in downtown L.A.
Alavi said it was great to work one-on-one with a leading partner on those deals.
“You get a lot of work done really quickly just by virtue of the volume of business and lack of other attorneys available,” he said.
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