Law Firms That Sublet Office Space NYC are Frequently in Financial Trouble

By Stephen Perih - January 23, 2014
Law Firms That Sublet Office Space NYC are Frequently in Financial Trouble

Law firms are in the business of selling legal services, not being a sublet office space NYC landlord. You have to question their motives.

No lawyer wakes up one day and happily states: “Today is the day I want to hear tenant complaints!”

It’s a hassle for a law firm to list, show and sublet office space NYC. It’s even more of a hassle to manage subtenants. At our billable rates, the cost of time wasted dealing with subtenant issues greatly exceeds the additional revenue generated from the rental.

sublet office space NYCFor a firm with a healthy practice, there is little incentive to get into the landlord business. The risk of being a landlord greatly outweighs the paltry additional revenue generated from renting empty offices. For a successful firm, it’s less costly to let an unused office stay empty than renting it out.

In this regard, you need to really understand a firm’s true motivations when they decide to sublet offices.

Firms who sublet office space NYC are frequently in financial trouble.

If a law firm is wasting billable attorney time on subletting office space, there’s a good chance the firm is in a precarious financial position.  Before moving in, you should find out:

  • Why does the firm have extra offices to rent in the first place?
  • Has their business taken a downturn? Has there been layoffs or practice group defections?
  • Is the firm saddled with a lease for a large space that they no longer need (or can afford to pay for)?
  • Are they “current” with their obligations to the landlord?
  • What happens if their practice turns around? Will you be asked to leave so they can use the office for new staff?

Subletting office space from a firm in financial peril is dangerous. One day, you may show up to the office ready to prep for trial, only to find a Sherriff’s eviction notice and very little time to find a new office. You wouldn’t be the first.

Four months and out

In October 2012, the New York Law Journal reported that only four months after moving in as subtenants in the office of the firm Gersten Savage LLP, the four lawyer matrimonial firm of Grant + Appelbaum was advised by Gersten that it was defaulting on its lease, it’s partners were departing and they should leave (or be evicted). Grant and another solo attorney sued in New York Supreme Court.

Apparently, Gersten suffered a defection of key partners that, together with a downturn in business for its core transactional practice, the firm was unable to maintain its overhead expenses. Notwithstanding, lawyers for Grant told reporters that Gersten “presented an ‘aura of success’ with its display of contemporary art adorning the walls of its Midtown offices; pricey Knoll and Bertoia chairs and personalized Gersten Savage cups and napkins; and its hiring of office managers and on-site IT staff.”

This example is just one of many sublease lawyers office NY horror stories. The firm was reputable and had been around for decades.

The office was impressive.

Why would the subtenants even bother to question the financial status of their future landlord?

They should have …

Want to know how to avoid horror stories like this? Download a copy of The Insiders Guide to Renting the Perfect Law Office below.

About Stephen Perih

Stephen Perih graduated Vassar College (no, it is not an all girl’s school) in 2005 before earning his JD from New York Law School. Stephen joined Law Firm Suites in 2012 as the Sales & Operations Manager. Since then, he has organized and emboldened Law Firm Suites’ community and accelerated the unique referral exchange among a rapidly growing roster of attorneys.

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