Kramer Levin’s HSF Merger Will Boost the New York Firm’s Real Estate Practice

Jay Neveloff has long wanted to create one of the nation’s most successful real estate practices at Kramer Levin, and his vision now may be realized on an even bigger scale.

Kramer Levin will officially merge with London- and Sydney-based global law firm Herbert Smith Freehills (HSF) on June 1 in a move that positions it to scale its commercial real estate business well beyond the United States. The U.S. law firm will also expand its office footprint at 1177 Avenue of the Americas in Manhattan to accommodate HSF’s roughly 50 attorneys now based in New York, most of whom are litigators. 

Neveloff, a 37-year veteran of Kramer Levin who leads its real estate practice, said in his first comments since the merger was announced last November that the combined firm, which will be known as HSF Kramer, is poised for continued growth. This comes at a time of increased competition among law firms navigating increasingly complex commercial real estate transactions amid economic uncertainty. 

Kramer Levin’s Band 1-rated U.S. real estate practice is joining forces with an HSF global real estate business that also carries Band 1 rankings in the United Kingdom and Australia. (Band 1 is the highest ranking a practice or a firm can achieve from independent legal research firm Chambers.) 

“The real estate practice at Herbert Smith is really very compatible with Kramer Levin, and we saw early on that there were overlaps in clients,” said Neveloff, who will be stepping into an expanded role as chair of real estate in the U.S. for the combined firm headquartered in New York. “I’m excited because I have relationships all over the world, and I’m starting to introduce those relationships to Herbert Smith — and they’re starting to retain them in places where we weren’t able to do anything because we didn’t have the capability.”

Overnight, the merger will create one of the top 25 law firms in the world by revenue with its U.S. operations projected to help generate around a quarter of those global profits, according to Kramer Levin. The New York City-based law firm was founded in 1968 with 14 lawyers and has grown to 340 attorneys, according to the firm. The combined HSF Kramer will comprise 2,700 lawyers that include 630 partners and 6,000 total employees across 26 offices worldwide. 

Prior to the merger, HSF had revenue of $1.3 billion for the 2023-24 financial year, while Kramer Levin reported $435.2 million for that time period, according to data from American Lawyer reported by Bloomberg Law. In addition to real estate, Kramer Levin also has highly touted practices in areas like land use, immigration law, commercial litigation, white collar crime and bankruptcy. It has offices in New York, Washington, D.C. and the San Francisco Bay Area, closing its former lone international office in Paris prior to the merger. 

After June 1, HSF Kramer will consist of 46 real estate partners, with 31 from HSF and 15 from Kramer Levin. Neveloff will lead the combined firm’s real estate practice with Dan Berman, a partner at Kramer Levin for nearly nine years, who will now be in a managing partner role.

“We are very excited about our upcoming combination with Kramer Levin,” Matthew White, managing partner for real estate in the U.K., Europe, the Middle East and Africa at Herbert Smith Freehills, said in a statement. “Our combined practice will make us the only firm with top-tier Chambers Real Estate rankings in the U.S., U.K. and Australia, three of the world’s largest real estate markets, and will open the door to many new opportunities to expand our full-service offer to our clients across all classes of real assets.” 

Both Kramer Levin and HSF’s real estate practices have played a central role in guiding revenues at their respective firms, which Neveloff said added to the many similarities the firms discovered during the merger discussions. Neveloff noted that Kramer Levin’s real estate practice in New York drives 15 percent of the law firm’s revenues, while HSF’s is in excess of 10 percent — both high numbers compared to other law firms globally. 

Adding an international presence will open more doors for Kramer Levin to expand into an increasing number of deals that are taking on a multinational structure. For HSF, it means a bigger U.S. foothold. The firm currently only has around 40 litigators in New York. 

Beyond the benefits of merging from a business perspective, Neveloff, along with Berman, could sense a cultural fit when eight HSF partners from the U.K. and Australia visited New York. The chemistry was especially evident at one of the dinners, when the restaurant had to ask the lawyers from both firms to curb their preprandial conversation and actually sit down at the table. 

“We had dinner after breakfast, after lunch, after dinner, for a consecutive period of three days, and we met with some of their clients and they met with some of our clients and we were already working as a team,” said Berman, who will be one of just six managing partners with HSF Kramer post-merger. “We were already getting to know each other and already feeling pretty comfortable around each other, which was really amazing to see.”

Neveloff and Berman are planning to hold regular meetings with the HSF U.K. and Australia real estate teams to enhance Kramer Levin’s knowledge of global issues affecting the CRE space. Their knowledge of global trends can then help clients.

One key area in which HSF will aid Kramer Levin’s real estate practice is technology, Neveloff said. HSF has developed some helpful artificial intelligence tools that are big time savers for lawyers preparing documents for deals.

“In terms of document production, we’re going to be faster and more efficient, and the clients are going to be the beneficiaries,” Neveloff said. “They are ahead of the curve and they understand the importance and the significance of AI and technology.” 

The technological capabilities of HSF should give Kramer Levin’s attorneys a competitive advantage in an increasingly competitive market for the legal industry, with big accounting firms like KPMG providing headwinds by starting their own legal practices grounded on AI and faster service. 

Teaming with a global law firm like HSF also arms Kramer Levin with comprehensive areas of experience not as easily available when smaller in scale. Neveloff said an example that underscores this is data centers, a fast-growing CRE sector Kramer Levin has been actively involved in. Now, the larger firm will be able to tap into HSF’s extensive expertise in the sector globally. 

Despite some market challenges of late, Neveloff remains bullish on CRE opportunities in New York and other U.S. gateway markets, along with the potential for more money from international investors — again, an area that will be bolstered by HSF’s global platform. 

More global investors are allocating money to CRE properties, particularly in New York, Neveloff said. They’re seeking to take advantage of lower values coming out of the COVID-19 pandemic and elevated interest rates, he added. Combining with a global law firm will aid Kramer Levin’s existing CRE client base, thanks to increased exposure to overseas investors they will come across during many planned trips to HSF’s U.K. and Australia offices, Neveloff said. 

The Kramer Levin-HSF merger is taking flight at a time when Neveloff and Berman have seen increased demand from many landlords seeking recapitalizations on maturing loans for distressed Class B office properties. As more realistic pricing levels settle in within a higher-for-longer interest rate environment, more property owners will seek opportunities to transact, with HSK Kramer playing an integral role bringing deals across the finish line, said Berman. 

“Our developer clients have continued to develop because I think the developers who have the means to do so realize this is a great opportunity to be countercyclical and to bring product online in a couple of years that will be in an environment where there’s very limited supply,” Berman said. “It’s an opportunistic moment and a lot of wealth is being created right now; and it may not be front and center, but we’ve been extremely busy.”

Andrew Coen can be reached acoen@commercialobserver.com.