Our eagle-eyed readers may have taken note of recent press reports of the memo issued by Eric Grossman, chief legal officer of Morgan Stanley directing that its outside law firms representing the company return to the office to improve client service. According to dispatches, the memo suggested that firms continuing to work on a remote basis risked their relationship with the company.
What’s going on here? Since when do clients care where their attorneys work, as long as the job is done effectively and their attorneys show up in court and at other appointments on time and on point. As an aside, these major law firms have been enjoying record profits due to increased activity in the merger and acquisition and technology space, among others. They can also enjoy savings from the creative use of their office space and reduced travel.
Further, everyone knows that major law firms have offices all over the United States and the world. This requires cooperation between those offices on major cases, and that cooperation has been the case for decades prior to the pandemic. As a result, these firms are used to working in multiple locations.
Grossman declined to comment on the memo. However, Morgan Stanley’s CEO James Gorman said on an earnings call that the best mentoring comes from watching others in the workplace. He was quoted as saying that “I don’t think you can do that sitting at home by yourself,” and there was “a limit to how far, as good as the Zoom technology is, how far that can take you.” Morgan Stanley will be returning to the office after Labor Day.
Bloomberg Law reported that Richard Rosenbaum, executive chairman of Greenberg Traurig, said that “we received Mr. Grossman’s memo and deeply appreciate our long-term relationship with Morgan Stanley” and other “similarly inclined” clients. Rosenbaum further stated that “Eric and several others have shown the courage and leadership to speak out during these times, and are uniquely positioned to influence the profession”.
May I respectfully suggest that another major factor may also be at work here which is even more important than the quality of legal training? Anyone that has seen the sparsely populated downtowns of major cities such as San Francisco (notwithstanding Friday’s New York Times article, as we were there a week ago conducting our own independent field research), Boston, Chicago and New York knows that the commercial office property market is in jeopardy, even if apartment dwellers are coming back to enjoy the pleasures of city life.
Since office lease terms can be as long as 10 to 15 years, the risk to property owners is that as leases come due, tenants may be reluctant to renew them by taking the same amount of space for extended durations. We have discussed this issue extensively in our correspondence regarding the significance of remote work and the new hybrid plans springing up at many companies.
Obviously, a significant drop in office leasing threatens the entire ecosystem: lending, securitization, equity ownership and real estate investment trusts, all of which are pillars of the real estate industry. This is a market well in excess of a trillion dollars and a backbone of our economy. Small wonder that one of the bulwarks of the system is trying to nip this budding problem in the bud, so to speak.
Indeed, Goldman Sachs and J.P. Morgan Chase have also focused on the importance of mentorship, learning by watching and “hustle” as justifications to return to the office. This is certainly the case, but methinks there is much more at stake than an apprenticeship and occupational training. All major businesses including law firms have an important role to play in order to avoid a potential crisis down the road. Mr. Grossman is doing his part to avert that crisis.
So that’s the way I see it. More importantly, what do our friends and clients think, and in particular attorneys who might receive a similar notice from a major client? Please let us know.