Charlie Harary

The goal of this podcast, for those who are joining us, we thank
you for coming. The goal of this podcast is to have
conversations with people who have achieved a certain level of
success in various industries, to understand how they got there,
the insights that they may have in terms of what they’re doing
to allow us individually, each and every one of us, to learn and
to grow to become the people we were meant to be.

Today we’ve got an amazing show. I’m very excited. We actually
have one of the top real estate lawyers in America with us
today, a tremendous opportunity and honor. His name is Steven
Klein.

Steven Klein is the Chair, or the Co-Chair of the real estate
group in a firm called Wilke Farr. He is considered one of the
top 20 lawyers in the United States in real estate.

Recently the Law 360 reported that his department was named to
be the real estate group of the year. He has worked on billions
of dollars in transactions. His clients include names like
Goldman Sachs, [Paramount], and Collin Capital.

He’s a professor at N.Y.U. Real Estate Institute and he is
considered to be one of the most, and this is a quote by the way
from one of the professors at N.Y.U., considered to be one of
the most ‘knowledgeable transactional real estate lawyers in New
York.’

We’re going to be talking about things about how to build a law
practice, talking about real estate and where it’s going, where
he thinks it’s going.

Just trying as much as we can, as we do here in The Boardroom,
to pick apart and pick into the brain of some great, great
business leaders. It is an honor to have you and thank you, Mr.
Klein, for joining us.

Steven
Klein: Thank you, Charles.

Charlie: Let’s start from the beginning, I mean, your career began
where? Where did you
start as a lawyer?

Steven: I started practicing at the law firm of Kaye Scholer in
1986.

Charlie: What happened. I mean, was the real estate market big then?
What was your
experience back then?

Steven: When I joined the real estate market it was quite robust.
Kaye Scholer had built
up a very large department of almost 40 lawyers, mostly on the
strength of large development projects in Manhattan, such as,
World’s Financials Center, and the Times Square Development.

I would say after about three or four years, 1988, 1989, 1990
the real estate market went into a depression, work first dried
up, then started to change more toward restructuring. It was
clear to me that it was going to be very difficult to get
promoted there.

More importantly, it was clear to the head of the group at the
time that he needed to make a change.

Charlie: The head of the group Kaye Scholer is watching that the market
is changing on
him, and he’s sitting in a robust practice that you said was 40
lawyers. That’s pretty big for a real estate practice. He’s
saying to himself, “I have to make a change.”

Steven: That he has to make a change, but what he also saw, at
least what he takes credit
for seeing as opposed to just attributing it to good luck, is
that the real estate capital markets were changing from
traditional bank financing more towards Wall Street financed.

He saw the upcoming wave of re-public offerings securitized
finance and felt that being in a firm that had a stronger
corporate platform like Wilke Farr [SP] would be a better
platform for him to grow his practice.

Charlie: what happened? He just picks up and leaves?

Steven: Pretty much.

Charlie: He just, one day he comes in and picks up and says, “I’m out of
here”?

Steven: Actually one day I went into his office and said, “I took
my first call from a head
hunter. I just want you to know that, because you’ve been a
great mentor to me, and we’ve worked together very closely for a
number of years.

I don’t see a future for myself in this department; I don’t see
much of a future for the department, and its ability to promote
partners, so I’m just giving you a heads up that I need to think
about Steven Klein, because I feel I owe it to you.”

Charlie: What’s amazing, and you stated by the way, is that most people
that think about
themselves don’t tell partners when they head hunter’s calls
until the job offer is already done. This is before you had the
offer?

Steven: It’s before I even went on my first interview.

Charlie: Why did you do that? Were you worried, or was it just the right
thing to do?

Steven: I wasn’t worried; I felt that he was investing a lot in
me, and was mentoring me,
and I wouldn’t have felt comfortable going to his office every
day working on his deals, working with his clients.

Then, just blind siding him one day and telling him that I was
leaving to go to another firm. I guess I just felt it was the
right thing to do.

Charlie: What did he say?

Steven: He said to me, before I do anything drastic I should come
talk to him. I didn’t
really know what to make of that. I thought maybe he was going
to tell me that they’d make some commitment to me.

In my fifth year, that I was going to be a partner in my ninth
year, because people tend to fantasize about how well they are
liked at their own institutions.

When I tell the head hunter about that conversation she told me
that that is partner speak for I’m about to leave and I’m taking
you with me.

Charlie: Did that happen?

Steven: It happened.

Charlie: So what happens?

Steven: I went back into his office . . .

Charlie: Right.

Steven: I say, “I had the craziest conversation with my head
hunter. I told her what you
told me, and she told me that you’re about to leave Wilke Farr.”
He closes the door and proceeds to tell me he’s in serious
discussions with three firms, and he can’t tell me, of course,
which they are because it’s super, super confidential.

Charlie: Right, you need certain levels of security clearance to get to
understand these . . .

Steven: Exactly; retina verification, but at the appropriate time
he would clue me in.

Charlie: He decides to go to what is Wilke Farr, and he comes to you and
says, you’re
coming with me. And the two of you start basically a brand new
practice together.

Steven: Yes. Wilke Farr at the time only had about four real
estate lawyers that were
really just servicing the M&A and private equity practice. Wilke
wanted to try to build out a full scale real estate practice.
Even though at the time he was working with nine or ten
associates, for whatever reason he decided to choose me.

Maybe he thought I’d be the hardest working or something. The
two of us went, and I remember I was sitting in his office as he
was telling every client that he’s going to be moving to Wilke.
But don’t worry, Steve is going with me.

It was an interesting few years after we moved, because no one
is ever sure how many clients are going to move with you when
you switch firms.

You never really know how deep the personal relationship is
versus the institutional relationship. But with him, eveyr
single one of his clients moved with him.

Charlie: What was it like, you know, as I’m listening to you talk with
those who are
listening to the podcast, I want you to just identify . . .
those who are with me a lot I try to do this a lot.

I really want to identify a few principles that you’re bringing
up here that are sort of underlying the story. The most obvious
to me is this concept of just doing right by people, and you’re
doing right by people because you’re doing right by people.

I’d like to think, as I’m hearing you speak although I’m sure
you’re going to say, otherwise is that while you were definitely
. . . it seems to me that while competency is always, you know,
first and foremost in people’s lives, I think you being a person
that is able to go over and in many ways put yourself in a
compromising position financially and economically by sharing
with a partner in a group that you’re planning to actually leave
the firm.

But doing it because that’s just the right thing to do, like I
wouldn’t want to blindside him. Meanwhil,e this happens every
day of the week.

People are talking to head hunters, they’re going on interviews,
they’re getting new jobs, and they’re walking into their partner
and saying, “Oh yes, by the way, yes you were going to staff me
on this deal. Oh, I’m sorry, I’m actually moving to a firm and
my notice is in two days.”

To go in and tell somebody that way before your first interview
is just the right thing to do, and my sense is that there’s a
principle out there in which you do right by people, people do
right by you.

There’s a certain level of integrity that they can expect of
you. To me that’s sort of as clear as day.

Steven: Yes, I think we all want to believe that. I have to say
that in the last two months
four associates have walked into my office and gave me the
blindsided ‘I’m leaving to go to.’ It wasn’t really another
firm; all four of them are making lifestyle choices and are
going [in-house].

With each of the four who I worked fairly closely with, I had
wished I had known that they were thinking about leaving to
either talk to them about what issues were affecting them about
their lifestyle at Wilke, or maybe I would have staffed them
differently in terms of key clients.

I wouldn’t say it’s a common thing that happens, but I wouldn’t
have; I couldn’t have imagined doing it any other way.

Charlie: It’s amazing that, and that happens every day of the week, and
I think that for
those who are listening in here, and you say to yourself, well,
business is business and you know, personal is personal.

I’ll do good by my parents and I’ll do good by my community, but
you know, it is what it is. I’m not going to put myself at risk
financially. And I think that when you do good by people, people
do good by you.

Let’s jump in a little bit further now. Now you’re already
working here. This is really what I want to get into with you,
which is that you’re really at the cusp, which is a unique
position, which is what I want, hoping the listeners are going
to gain from here, is what it’s like to be at the beginning of a
practice?

Now I understand that you’re in a big law firm. Some people are
starting their own practices with nothing, which I’m going to
ask you about in a minute. But it doesn’t really matter.

You’re still at the beginning stages of something. What was it
like, if you can sort of articulate for us, those first few
months, a year? Was it everything you thought? Was it like 24
hours a day, I mean, what was it like?

Steven: It was clearly the most insane period in my career ever. I
had no idea what to
expect in terms of just thinking about it personally for myself.
Do I stay at Kaye Scholer, where I felt I had good will? Or do I
make the jump and start in a place that didn’t know me?

I had figured that if the partner I was leaving with hits a
double I’m probably a partner, and I’d have to hit a grand slam
at Kaye Scholer to stay. It wasn’t that difficult of a decision
to leave. I didn’t really know what to expect.

I felt it was a unique opportunity for me, and that this partner
really was going to focus on making sure that all of his clients
were moving with him, and really focusing on the business
development aspect.

I was going to be in charge of all the internal stuff;
recruiting, training, retention, mentoring, creating an
assigning system within the group–all the things for which
there was a separate partner at Kaye Scholer in charge of all of
those things.

It’s one of the things I thought was kind of cool was that fifth
associate would have a chance to sort of build a department in
my own image. All of those decisions were being made by people
who at the time were probably 20 to 30 years older than me.

I felt like I’m going to do this much more relevant way; that’s
going to be able to speak to these associates.

Charlie: Right. I’m one of them; I know how they work.

Steven: Right. the first year I was one of them. I became a ‘they’
pretty fast, even before I
was a partner.

Charlie: As soon as you walked in you were already a they.

Steven: As a sixth year I was giving out assignments to some
younger associates that I
had recruited, which doesn’t usually happen.

Charlie: Right.

Steven: That’s what we had, and we had to play with the team that
we had on the court.
At the same time that I’m trying to do that, we’re also trying
to make every single client that moved feel like there’s been no
change in the level of service.

Charlie: Right.

Steven: I’d say for the first two years I billed north of 2,500
hours easily; made I think
the first year north of 3,000, so there wasn’t a single weekend
that I remember not working past midnight.

Charlie: Now just for the audience, 3,000 hours means in layman’s terms
every night of
the week and at least one weekend day all day.

Steven: In the office Saturday night, from early Sunday morning
until Sunday night, and
every night past midnight. We had a routine, this partner and I,
that at between 2:00 a.m. and 3:00 a.m. every night, we’d go to
this deli called Stars Deli.

Get few cups of coffee and an ice cream, bring it back to the
office, and have a meeting in his office at about 3:00 a.m. to
go through which fires that were raging the most that needed to
be addressed the next day.

Charlie: Wow! So you’re talking about making this switch. You walk in
and you like,
that’s it. This is great. He hits a double; I’m going to be a
partner. Life’s going to be great; I’m in this new department.
I’ve got this visionary type partner, and then it’s oh, yes, by
the way.

These next two years all you do is work. When you were going
through it did you feel like what did I do? Or was it more like,
this is what you’ve got to do?

Steven: I think when I was going through it there was such a rush.
We kept talking about
this like we own this little candy store together.

We’re figuring out how to stock the shelves and how much should
we be expanding, where are the customers going to come from, and
pretending like we had this little business that we were growing
together.

That’s all I was thinking about. It was my entire life, and I
didn’t really have a lot of perspective or balance outside of
that. I felt like I was making a major investment for myself and
for my family, in my career at that moment, hoping that it would
change as quickly as possible, and that I’d be able to recruit
enough people to have a normal level of staffing for the level
of business that we had.

Charlie: Those people that are right now starting firms, or those people
who are right now
in a situation where they feel like they’re capped, and they’re
going off on their own, I mean, what advice would you give them
in terms of how to get started, how to build their practice, how
to build their career? Is it, you know, balance or is it going
all in?

Steven: I’m always a fan of going all in in terms of the level of
energy and effort.
Balance I would say, though, in terms of taking on expenses and
staffing, I would say definitely be conservative. That was this
partner’s view.

Like I said to him, “Why didn’t you take four people, five
people, six people? You were keeping eight or nine people busy.
You left with one, and it almost seems irresponsible.”

He’d tell me he wasn’t sure how many people were going to be
leaving, or how many clients were going to be moving with him,
and he wanted to be conservative and make sure that he was going
to be a success at this new firm at Wilke Farr.

Charlie: I’m hearing this a lot whenever we speak to people who have
started up a
company, and for those who are listening right now in terms of
your company, is that people sometimes start things up and they
right away start to delegate; they right away start to bring on
new people.

They’re right away trying to shirk the work, and it seems like
that’s really not the way to do it. The way you’ve really got to
do it is sort of roll up your sleeves and be willing to put in
your entire life at the beginning to sort of build your image,
so it’s built with a certain level of class, a certain style
that really works for the clients you’re trying to get, and
really keep the cost down.

You’re going into a fully baked large law firm, and he’s still
keeping the cost down.

Steven: Right.

Charlie: So you can imagine, people who are opening up their own law
firms, the people
who are doing their own jobs, their own careers, or even their
own real estate shops, this desire, this bringing people on so
you can start to shirk responsibility . . . it’s not really
shirking, but delegate out to have a life. That’s pretty
dangerous in the beginning.

Steven: Right. I think managing growth is definitely a challenge
and requires a balance.
And since I’ve been at Wilke, which is about 20 years, managing
growth has always been a challenge. When we were very busy we
want to make sure that we have enough [florists ?] to handle the
work and we’re hiring.

Then, say in 2008, which is I think the year that Lehman filed
for bankruptcy and work slowed down, we were looking around
saying, how are we going to keep all of these lawyers busy?

There’s always that struggle. Do we fire people right away? Do
we keep them on; try to move them into other departments to keep
them busy until the work comes back? Managing growth is clearly
a key challenge, probably for any business.

Charlie: Let me ask you this; now that we’re talking about it, for those
who are listening
to the podcast that happen to be professionals, now I don’t
think this is really lawyers. I think this is for sure lawyers,
what advice do you give people today?

Today, I think that the law world is totally changed from when
you were in this situation. I’m going to continue talking about
how that department grew, but just to take a digression here; it
seems to me that law firms aren’t what they used to be.

It seems to me that they aren’t promoting as much. It seems to
me that the amount of lawyers that are making it out there is
decreasing exponentially; students are coming out with no jobs.
People are sitting in firms where they’re just not being made
partners.

What advice do you give a young person that’s either starting
their career, or that is in the middle of their career, so
they’re not partners? They haven’t ‘made it,’ even though it’s
probably a different world now anyways as a partner.

What advice do you give people? What do people look for in
partners? What kind of career does somebody aspire to and what
kind of habits should they start to put into place today to make
sure they grow as a great lawyer?

Steven: I think that’s really a great question, as we talk about
that all the time at our firm
in terms of have the expectations of lawyers coming out of law
school now have changed from what they were 20 or 30 years ago.

It was always the case that people were talking about associate
retention, mentoring, keeping associates on long term, making
careers. Now I would say the vast majority of associates coming
out of law school probably get this question in interviews all
the time from law students.

“What’s my second job? If I come to Wilke what’s my second or
third job going to look like? How is Wilke going to help me
reach the next stage of my career?”, which is like they’re
already giving notice in the interview.

Charlie: Right. It’s amazing just . . .

Steven: Go ahead.

Charlie: I want to jump in because I want to articulate this. I’m
talking to somebody that
was scared to go on an interview without making sure everybody
knew, and now the world has shifted to, I haven’t even started
working there, and you owe me something, like, can you please
help me in my career. Like, how does the firm work for me,
versus how do I start to work for the firm?

Steven: Although they’re being totally honest. I don’t have an
issue with the question at
all. As you said, the law firm world has changed dramatically
from 30 years ago. Fewer associates are being promoted.

There are tremendous challenges to law firm profitability.
There’s partner mobility, so every firm is under intense
pressure to keep the profits per partner up, which is either
from generating new business, cost cutting, or the new
methodology which is just lowering the nominator of the number
of partners.

They’re under tremendous pressure, and there are not tons of new
partners being made at any law firm from the associate ranks.
There are many firms that are looking to hire lateral partners
with portable business. That’s a great way to grow ones gross
revenues, is by hiring a lateral partner that has portable
business.

The associates are coming and saying, “I see what’s happening.
So just tell, what am I going to get in terms of training; what
skills are going to be developed for me, what contacts are going
to be facilitated for me, and how is Wilke Farr going to help me
get the next job in my career”.

That’s a totally appropriate question. I don’t have a problem
with it. What we’re struggling with now is that what do we do in
terms of training, and effort, and mentoring. Is the mentoring
just have a very expensive summer program; train people for a
couple of years?

The first couple of years partners don’t want to pay for junior
associate training. Have them work for a couple of years and
then just try to outplace them. That’s a very different model
than all the seminars that used to take place at law firms about
associate retention and mentoring.

Charlie: Do you find that today associates are different in their
perspective? They’re not
necessarily looking for the long haul; they’re looking, they
don’t know where they’re going, they’re just happy to either
have a job or just trying to be portable themselves.

Steven: I’m not saying this in a critical way about this
generation of associates, and I also
don’t like to judge an entire generation and say that this group
of associates want different things from life.

But, for a number of factors that I see, that I would say that
because this generation of associates in many cases have
families that are wealthier let’s say than my generation of
associates grew up with.

They have choices to jump off the train and opt out, let’s say,
for an in-house job earlier in life where they feel they’ll make
a nice living and they’ll do good, rewarding work.

Being a partner in a big firm is not a number one priority for
them. Number two, because as we’ve been talking about, because
the law firm world has been changing.

I think that they have managed their expectation downwards
appropriately in terms of their chances of making partner and
that change is also how much of an effort and a commitment they
want to put into their job.

Charlie: Is that affecting their ability to be lawyers? Are you looking
at a class now
whereas of ten years ago people coming in and just wanted to be
partner so badly that they were willing to do anything and as a
result they are better lawyers.

Or, is today lawyers just shifted and so the quality of the
young lawyers that are rising to the ranks, and of course there
are exceptions, and of course we’re not trying to generalize in
any negative purposes.

Just trying, I guess, to provide instruction for young people
that are listening, that are trying to figure themselves out. Is
it the wrong approach? I mean, should they walk into a firm and
say, “Let me put my head down wherever I am and just pick it up.

Whatever the number is, three years, four years, and for that
period of time it’s as if I want to be a partner and I’m willing
really to go all in, because only when I go all in on something
will I be able to gain a certain level of expertise that if I’m
already out the door, I just won’t do it.”

Like you can’t hit a jump shot at the end of the game if you
don’t think you’re the guy that can hit the jump shot at the end
of the game, because you won’t be in the gym early enough.

You won’t shoot the extra ten shots, like you’re never going to
reach the pinnacle of your own personal growth if you don’t see
yourself as the best that you can be.

Steven: Yes, I would say to someone, let’s say, coming out of law
school, even if you’re
100% certain that the last thing you want to do is be a partner
in a big firm, one of my associates just left who was excellent.
I was very, very surprised, because we had worked very closely.
I said to him, ” I don’t say this lightly, and you know that
I’ve always been very straight with you, you have a very good
chance to be a partner in this law firm. You’ve done great work;
everyone loves you.

You’re liked by the real estate group, you’re liked by the
corporate group, you’re liked by the bankruptcy group. Are you
sure that you want to jump off the train at this point and take
an in-house job?” He said to me, “I thought about this a lot;
I’ve discussed it with my wife, and I just don’t want your
life.”

He was very honest, and he said, “I don’t want your life; I want
more balance in my life.” To someone coming out of law school I
would say, similar to what you said, make the absolute maximum
effort because, a) you never know where it’s going to go in a
law firm, even if you’re 100% certain; b) you’ll get staffed on
the best deal.

You’ll get the best training, and you’ll get the best mentoring
if you are at least creating the perception that you are all in.
I think if you come in and you’re looking mostly to just protect
your nights and weekends.

And figuring out, “How do I get out of the office as quickly as
possible?” You’re going to have a mediocre experience, mediocre
training, and I think people sense that pretty quickly. I would
be less inclined to mentor and place you at the time that you
want to leave the law firm.

Charlie: It’s amazing you’re hitting on something that I think we hear a
lot in different
environments, but I really see this happening a lot and I think
you’re hitting it as well, which is, people are always . . . I’m
not saying everybody, but there are those that are always
looking to the next step, and whenever push comes to shove and
things get hard the initial reaction to people is what a second.

Can I get out of it; can I back door it? Can I not work as hard
or does it really matter? It doesn’t really matter? Do I really
need this? I really don’t need this, and you know what, when
there’s a constant fear of going all in on something and really
pushing it to that next level.

When you’re in an environment like the current modern day law
firm where the chances of being partner is slim, and not only
that, the life of partner has changed. Even maybe in the older
days, when you had already made it to partner there’s a certain
less of a workload.

Today, I think partners are working just as hard as associates.
The world has changed. With all of that, when you walk into a
firm or you walk into a job, and this applies to anybody, your
initial perspective is do I need to?

Do I really need to do this, because if I’m not going to be here
in five years, like why would I go and do this at night?

I think what I’m hearing from you, and I think this is
applicable in every industry, is that by that attitude does two
things: 1) you lose the opportunity to be put in an environments
where you’re testing your skills to the highest level today, and
2) you’re not growing to your potential.

Your potential is to be the best you can be for those two or
three years, no matter what the opportunity is, and who know
what it will be tomorrow. And I think that’s critical in every
environment.

Steven: I think, as you know, I’m fan of basketball, and in
basketball like in any industry
I think you need to drive towards excellence–even if you don’t
think you’re going to stay in that particular industry.

If you’re not pushing yourself, then you’re selling yourself
short, and not just then but in just in terms of your own
personal and professional development in terms of what you’re
capable of doing.

I had one associate probably eight or nine years ago, I remember
calling him into my office. We had worked together for two
years; he was just starting his third year. I suggested to him
that he start bringing a painter’s hat to the office.

He asked me why. I told him that he’s treating his job like he’s
a house painter; that he comes in, he knows he needs to prime
three walls, and when he’s done he goes home.

Charlie: Right.

Steven: I understood it. He had a family; he had commitments
outside of work, and I
totally understood it. Everyone wants to spend time with their
family and doing things that they enjoy other than work. He was
doing it, and he wasn’t faking it well enough.

Not only was he not faking it well enough, but he wasn’t really
making an effort to learn the industry that he was practicing
in, to understand what are keeping the clients up at night, what
direction is the industry going in, reading whatever draft he
was submitting for the 14th time to make sure it’s absolutely
well organized and perfect, and doesn’t have any typos.

He took it to heart; he told me I was 100% correct, and then six
months later he quit and he took an in-house job.

Charlie: Right.

Steven: It was the right thing for him.

Charlie: Right. I think as I’m hearing you speak I can hear people
saying, but what about
if I want a balanced life? What about if I don’t want to work so
hard? I think what you’re saying here is that, you know, the
ability, there need to be moments of your life where you
recognize and understand that you have an opportunity to grow at
a certain level.

When you’re in those environments you’ve just got to grow. The
same with law school, I think. And I think it’s the same thing
in every industry. There are moments where you really can’t get
out of it unless you put it in.

Really, unless you put in the work at that level you can’t
really know how far and how much you could know and how great
you can be.

Steven: Yes, 100% I think. The clients that I have that are in-
house attorneys, many of
them just have the attitude that they show up at whatever time
they’re supposed to show up, they work for the number of hours
they’re supposed to work, they do an honest day’s work for an
honest day’s pay, and they leave.

In a big law firm setting, this is not Wilke real estate, this
is really any large firm, the attitude is really it’s about
client service and doing anything and everything possible to
service the client on their timeframe.

That means cancel plans; it could mean late nights, it could
mean weekends. It’s not about fixed hours. There’s a tradeoff
for that, of course, but when you’re in that environment if
you’re not working it and trying to take advantage of it to its
fullest I think you’re missing out on what it makes available to
you.

Charlie: What do you consider to be the greatest quality of an
associate? If you can pick
any quality that somebody has, and I know that the sense is an
associate’s, especially in the law world, in the banking world,
in the finance world there’s this like heavy emphasis on smarts.

There’s like a sense of who is most brilliant, and the concept
of like the people that really understand things quickly or the
ones that are going to make it. If you had to pick, you know,
one trait in your associate, what would be your number one
trait?

Steven: Caring; that they care deeply about their job, about their
work products, about
the industry that they’re practicing in, just basically caring.
I would say more often than not the ones with the highest IQs
are not necessarily the most successful.

It doesn’t mean that if you’re bright you won’t be successful.
Of course being bright is a huge advantage, like they say you
can’t coach height. But I haven’t found that it’s the most
important characteristic at all.

Being a great real estate lawyer doesn’t require you to be
brilliant. We’re not curing cancer. In my group, in basically my
clients are making deals, we’re writing it down on a piece of
paper.

Charlie: I’m sure it’s a lot more complex than you make it, but yes.

Steven: For the rates that we charge it’s a little bit more
complex than that, but that’s
basically what we’re doing. That doesn’t require you to be a
rocket scientist, but it does require you to care.

Charlie: Right, and I think that’s important in life. I think that the
people who actually
believe that they’re providing others a service, and they really
care about the people they’re providing it to, I think
ultimately they’re going to provide the best service, like you
said earlier.

I want to make sure it gets highlighted, that when you’re
working in an job where you’re industry is providing someone
else a service once you get to a level where you actually care
about what the service recipient cares about.

Like if you can really care about what they care about, your
level of value I think goes up exponentially, because you stop
looking at them as an object of what’s going to pay your salary,
or said better, what’s going to let your partners be happy that
they’ll continue paying your salary?

You start looking at them as real people that you’re trying to
help, and whether that help is medicine, or the help is in law.
At the end of the day, people are in need of the various help
that they’re in need of and they go to professionals for that.
You take yourself seriously, and you really try to understand
what they’re thinking.

I think a lot of people don’t know this; I think a lot of young
lawyers and young professionals in other industries don’t fully
appreciate that to become great at what they do, they have to
stop trying to only please their partner.

They have to start to look at their client and ask themselves,
if I were the client what would I want. What would I not want,
and what bothers me? That, I think, is unique.

If you do that, then you’re acting like a partner, meaning you
know, I can see people saying, “Well, I want the partner to be
happy so I can become partner.” If you want the client to be
happy then you’re effectively becoming almost like a partner.

Steven: Right, but for the associate coming out of law school,
their main client is the
associate or the partner that they’re working for. As they move
up the chain they’re going to have multiple clients.

They’ll have more senior associates, they’ll have partners in
other groups, and they’ll have the actual clients that are
actually paying the bills.

At least from what I’ve seen in my own experience, the partners
that are the most successful in terms of developing business are
the ones that really recognize that they’re in a service
business.

It’s really about how the client is perceiving the service, how
it’s delivered, how much it costs, the quality, and also how
much you view the personal success of the client at the
institution as part of the overall service that you’re
providing.

I get hired by an institution, so my client is the institution;
but that institution has managing directors, VPs, associates
that I’m interacting with, and they want to feel like their
clients also; not that the only thing that matters is how their
institution is being served.

Charlie: What advice would you give law students coming out today? Right
now, I see
this all the time; there are more students than there are jobs.
There are associates that are leaving; there are partners that
are leaving the law firm world.

What advice do you give somebody that’s saying to you, I just
came out of law school, or I just left my law firm, or I was
downsized, whatever it is; I’m either on my own.

What advice do you give them in terms of maybe starting their
own practice, or trying to join a firm. What advice can you give
them to sort of move past what they thought would be a career
path into this new world of the new world of law?

Steven: To try to just get started?

Charlie: Yes.

Steven: I would tell them, if necessary, work for free. I think
it’s critical to always be
growing, always be learning, and be around people and
opportunities that will lead to for-pay great career
opportunities.

Take an internship, volunteer in industries that you want to
work in. But work for free if that’s the only opportunity
available to you.

Charlie: It’s better to get the experience to deliver the service than
to just sort of go off on
your own.

Steven: The experience and the exposure, because from being in an
office environment,
very, very typically for pay opportunities will become
available.

Charlie: And if you’re starting a new practice yourself, what advice
would you give the
few lawyers that are going out and saying, you know, we worked
at this firm. We worked in this environment; we want to start a
new practice. What would you say to them?

Steven: There are so many components to that. There’s the getting
clients, and for that
it’s just turn over every single stone. As we discussed earlier,
I would say be conservative initially in terms of your expense
and cost structure.

I would say give it an absolute maximum effort, and stay with it
for awhile, because it’s very, very hard to develop clients and
lasting relationships.

It requires, well, this partner that I left with told me, and I
try to follow this advice, “Try to do at least 100
pitches/presentations in the course of a year. If you get one or
two good clients out of it it was a good year.”

Charlie: Wow! Let’s slow that down for a second. Try to do 100 pitches
over the year–if
you get one or two. That seems like a very low success rate.

Steven: Not every pitch means a formal pitch, or a 50-page book,
but reaching out to
someone, talking to them about what they’re doing, how they’re
business is going, who they’re using as counsel.

See if there’s an opportunity, and maybe talk to them about an
idea that you have that might be interesting to them trying to
connect, maybe a deal with someone who has capital or something
like that. Try to do 100 and try to end up with one or two good
clients out of that.

Charlie: What I’m hearing from you, and I think you’re saying it very
clearly, but I want
to make sure it’s clear; that law, like a lot of industries, is
really not about how smart you are, and even your connections.

I think it’s about how much you care, and how much you’re
willing to work. And even at the upper echelons of the top
firms, of course you have to be smart, of course you have to be
well knowledged, and of course you’re not going to be able to
sit.

I know you personally deal with extremely complex matters, and
that’s why companies like Goldman Sachs and Paramount are coming
to you for your advice. I know that you’re being humble by
saying that you’re not curing cancer, and it’s not really hard.

Meanwhile, you’re working on some of the most complex
transactions right how around the real estate industry, which is
why so many organizations are speaking so highly of you.

What I’m getting from you and I want people to understand is
that there are no shortcuts. And the opportunity to build a law
practice, the opportunity to grow a practice really requires
fundamentals. You’re putting in your time; you’re not expecting
everybody to follow whatever you say.

It’s recognizing that you’re percentages are 1, 2, 3, 4, 5% of
the rate of return in clients in terms of what you’re pushing,
and realizing that you sat at a big, huge law firm at the turn
of the market with a partner and you know, nine associates.

With all of that and all of your support and all of the things
that you had it took you two years at the minimum to even come
out of the 3,000 hours a year mark. You really just went all in.

I think that’s really important. I think knowing when to go all
in is critical, and I think people are scared that if they
worked too hard they’ll always work too hard.

They don’t realize that if you’re in an opportunity there’s a
window, you’ve got to go all out on the window.

Maybe now you’re working hard, but now your ability to take a
vacation or to not work every weekend is different than 20 years
ago, when someone said to you, “Hey, you want to come join my
practice?” You knew that there was an opportunity here, and you
have to go all in for the next two or three years to make that
happen.

Steven: Right, there are a lot of law students in the young
associates that from time to
time will call me for advice and will say, is working in a big
law firm really the right job for me? Am I going to achieve that
balance in my life and everything that I want to accomplish?

I try to explain to them pretty much what you’re saying, which
is that there will be periods in your career that your life is
going to feel like it’s out of balance.

As long as you’re focused on what you’re trying to achieve long
term, whether it’s going to be at the firm that you’re going to
or at your second or third or fourth job, and that you’re
investing to achieve ultimate balance.

That’s not a bad thing, and it’s going to be hard, almost
impossible I would say, to achieve perfect balance in every
single year of a person’s career. I think that’s a misperception
that a lot of young students have when they’re thinking about is
a big firm right for me.

Charlie: Yes, I think that’s extremely important. I think people don’t
appreciate enough,
and those who are listening in, we’re here with Steven Klein,
Chairman of the Real Estate Group Wilke Farr talking about law,
talking about how to grow in your careers.

I think the point that we just brought up here, which is
critically important, is the ability to recognize that there are
moments you have to go all in. I see this a lot with sports,
like there are moments where the game is on and I know you like
to relax, but the clock is ticking.

You’re going to relax–you’re going to have an off season. I
think when you live in a world where it’s less clear, you don’t
appreciate that. Life has seasons, and there are seasons that
are times to relax when you’re in the off season, and there are
seasons when it’s time to go all in.

You’re in either the preseason or the playoffs. And I think the
ability to not assume that when you’re in an intense moment that
it’s the rest of your life, and to allow yourself to go a little
bit out of balance and to go all in the way you did, when you
first moved over.

I think it’s critical for everyone’s career, and there are
people out there that are struggling that are saying, listen,
I’ve got to set up my own firm because I don’t have other
choices, or I’m coming out of school and I’ve got debt, and I
have to now to work for free, and then double up and do this and
do that?

The answer is “yes”; there are moments in your life that if you
take the time and you work really, really hard it’ll pay
dividends. I think that is a lesson that people need to
understand and appreciate. Just because you’re working really
hard now doesn’t mean it will always be this way.

Sometimes I think going all in now will allow you to pull back
later on in life, because you’ll be able to create something
that just a sort of normalized life can never really create.

Steven: That’s true, but I think sometimes you see a hesitation to
go all in because people
feel that whatever industry, medicine, banking, law, that the
rules of the game have changed. It’s harder to be successful
starting out in those industries today than it was, say, 20 or
30 years ago.

I think people are managing their expectations and saying, “If I
go all in I might fail, if I don’t go all in and I say I want to
have balance, then I’m definitely going to be successful,
because I never set myself up for a huge success.”

Charlie: And that’s wrong.

Steven: I think that’s very wrong.

Charlie: Right.

Steven: I think people are selling themselves short, and I try
very strongly when I’m
asked to try to talk people out of that mentality. When someone
says, “Why should I go to a big law firm and kill myself for
four or five years when I have no chance of making partner?”

I try to explain to them all of the benefits of going to a big
law firm; the training, the contacts . . .

Charlie: Being the best you can be.

Steven: Absolutely, by pushing yourself.

Charlie: Where do you think, just to add, we have a few minutes left.
Where is the market
moving?

I know that you’re in real estate. You had a moment in your
career where the partner that you left with said, “Hey, wait a
second. There’s a little bit of a shift, and if we move into
this industry with a platform that was different, we’d have more
opportunities.”

Where do you think the next five years is taking us in the real
estate law, or in law in general, so that the listeners can say,
can gain access to the perch that you’re sitting on, as to where
the opportunities are in the next five years?

Steven: Real estate and law I think are two different questions.
We’ll start with real
estate. Even real estate is like every sector, every market will
have a different story, I’m sure.

If you interviewed the leaders in the office market in
Manhattan, they’ll have a different view of that, the leader of
the office market in the secondary or tertiary market, and
that’s true whether it’s office, retail, hotel, gaming,
healthcare, industrial.

Very generally, I would say there’s a lot of capital that’s been
raised for prime real estate. And I think everyone thought after
2008 when values fell, call it roughly 50%, this is the time to
raise money and buy. Let’s just dump it and make a ton of money.

I myself was thinking even at the time that, because I remember
talking to a friend of mine around the time that I left Kaye
Scholer, which was the last crash before the one in 2008, that
the next time the market collapses we should go off on our own
and raise money.

We’re smarter than our clients, and if all we had was capita,l
we’d just buy a lot of stuff, hold it for a few years, sell it,
and retire. It sounds so simple.

Charlie: Right.

Steven: I’m working on a deal now. I think the company is called
George Comfort and
Sons is the owner of a worldwide plaza. They bought it a couple
of years, I think after 2008 for about $650 million.

It’s going to trade to someone for well north of $1 billion in
just a few years. They didn’t do all that much to the building,
and there aren’t enough billable hours in a century to make that
kind of money.

I think everyone thinks that. I’ll just go into real estate, the
values are low. I’ll buy and hold it. Then I’ll sell it and make
a lot of money. There was a ton of money raised for those types
of transactions.

The properties that are attractive, in particular the foreign
investors let’s say in New York, San Francisco, Washington,
D.C., get bid up like crazy. I worked on one deal as the seller
of a property in Manhattan.

We signed up 70 confidentiality agreements and got in 40 bids.
Everyone that starts playing in that process say, “It’s worth
“X”, and then they’re getting called by the broker saying,
you’re not going to make best in final, unless you go up to “X”-
plus another 20%. They say, “That’s crazy; no one can make money
like that.”

I think [Shatree ?] just bought the Sony Building for north of
$1 billion. We had a client who was bidding on it. I think
everyone who lost is convinced that he overpaid, but I’m sure he
thinks that he has a great opportunity and he’s going to change
the retail or do residential.

He’s going to make a gazillion dollars and how do you lose money
buying real estate on Madison and Fifty-fifth. Very generally,
I’d say there’s a ton of money lined up on the sidelines to buy
prime real estate, but, it’s very hard to get the yields that
people thought they were going to be able to deliver for their
investors.

That appetite for transactions is now spreading out to secondary
markets and also people’s return thresholds are now being
lowered to mid-teens, because otherwise they won’t be able to
put out any capital

Charlie: You think that’s sort of where the market is moving towards
now?

Steven: Mid-teen deals? Yes, I think it’s very hard. I could
always find something off
market, but there’s also a much greater hesitancy to deal off
market deals. Special servicers won’t do off-market deals. They
don’t want to get sued by bond holders.

Banks don’t want to do it because they don’t want to look
stupid. Why is it ever a bad idea to just hire a broker and sign
up 70 comp fees and get 40 bids.

Why is that going to achieve a better result than just when
someone calls you up and says,” I’ll buy this property from you
for ‘X’?” How could that possibly be better than an auction
mentality?

Charlie: Where do you think the world is going for law firms in general?
Do you think
that in the next five years we’re going to be having lawyers
continually trying to push up the ranks?

Law firms you think that the law firms are going to get
stronger, or are they going to sort of break up and have more of
an entrepreneurial environment with all these small shops
creating . . . or do you think the market’s going to drive more
lawyers in general, and people are just going to stop going to
law school?

Steven: There’s always going to be a need for lawyers, because
someone has to write the
deals down on a piece of paper, or go to court and help resolve
the disputes. There will always be lawyers, but I think that law
firms are more in a survival of the fittest mode where there’s
such a competition for talent and clients.

Clients, in terms of client loyalty, is much less than I’ve ever
seen it. I don’t mean myself personally, I just mean generally
in the market. It’s very hard to feel that a client is
institutionalized and isn’t going anywhere.

Partner loyalty to the partner’s, his or her own law firm, is
also vastly diminished from what it was.

I think once the American lawyers started publishing profits-per-
partne,r it’s made it very, very hard for mid-size or mid-
performing firms to compete and to retain their best performers.

If you have someone that has a $10 million practice at a top
let’s say 50 or 60 firm, it’s very hard for him to resist the
phone call from the head hunter that says, “Why don’t you go to
a top ten firm, and increase your salary by over $1 million a
year? Better platform. Your clients will move with you”.

When you have a few of those moves at a law firm, the law firm
could collapse pretty quickly.

Charlie: Right.

Steven: I’m not even being critical of Dewey’s method financing or
anything; I’m just
only focusing now really on just what happens when a few key
partners leave. That’s really the firm’s capital.

Many, many companies have cash assets on their balance sheet.
The law firm’s capital walks out of the door every single day,
and if you have a few key partners leaving a law firm it’s a
totally different law firm, and within a year the firm could
easily cease to exist.

Charlie: Do you think there is space for small entrepreneurial shops
that are starting to
open right now? These fees, the billables by these top law firms
are only going to increase as they try to match the demands of
the . . .

Steven: There’s definitely a space, but I think what I see in the
big firms is that
everyone’s competing for the same work.

Charlie: They’re just going to go down.

Steven: The reason why I have to try to do 100 pitches a year is
that there are very few
clients that exist in the world that want to pay $1,000 an hour
to talk to their lawyer.

Charlie: Right.

Steven: None of those clients currently is without a lawyer. When
I’m trying to pitch
somebody, I’m trying to get them to leave someone that they
already have who is probably excellent, and convince them that
it makes sense for them to switch to use Wilke, or to work with
me.

That’s why I’m saying it requires 100 of those to get one or
two. There is clearly a space, I think, for small law firms
because there’s a lot of work that doesn’t require $1,000 an
hour lawyers working on.

there are models of firms that are successful doing middle level
work and charging middle level rates. The firms that are
struggling, I think, are the ones that are still shooting for
the A-level work, don’t have the A-level talent and are finding
themselves with their work drying up.

Charlie: I’ve got to tell you, this was an amazing time, and the
insights that you shared I
think are extremely valuable, and I’d like to really thank you
for coming in and talking with us.

I am sure that there are a lot of people that are going to be
now a little bit more informed and enlightened.

We thank you for the time, and more importantly we thank you for
really the reminders, as to really the fundamentals of how to
grow as a person, and as a lawyer.

I think that’s something that’s extremely valuable in every
single generation, and especially now. Thank you.

Steven: My pleasure; thank you.

Charlie: We’re wrapping up the show here, and for those who have joined
us and listened
to this, you know that you got a real treat here. Steven Klein
is really one of the greatest lawyers out there today in the
real estate industry, and as you can hear from the interview.

As they say, a true and essential Minch [SP]. I want to just
wrap up some of the lessons that we learned, some lessons you
can take away from, and hopefully grow from this, because that’s
the goal of “The Boardroom”, to give you insight to people who
are sitting at perches that we may not be sitting at.

First and foremost, I really want to identify what it means to
be good to people, and that we live in a world where life is
long. when you’re good to people, then people are good to you.

There’s no question in my mind, the reason why that partner, or
at least one of the reasons why that partner chose Steven to
start a practice is because he was the type of guy that before
he walked into an interview would feel uncomfortable not letting
his partner know.

For those of you who are working in firms, you understand that
by doing that you pretty much put yourself at financial risk.
When you’re the type of person that just couldn’t imagine any
other way, you attract opportunities that people around you want
to give you because of your integrity.

That’s really the first lesson, of living your life and your
career the way you want to live your life everywhere.

Then we go to the next thing. He starts his career; he moves
over to the big firm, and remember, he didn’t start it alone. He
went with the partner to the large law firm, and yet usually
this law firm, this is the time whereas a 60th associate you
should have been way down here. I run this place, but not then.

They were conservative. They said let’s work ourselves, and to
literally go in there and recognize and understand that there
are moments in your life where you have to go all in. It’s not
always going to be this way, but you can’t really expect from
the world.

You can’t really get up there and say, I want. If you’re not
willing to say, I’m willing, and his ability to really work
every single night until 2:00 a.m. and every single weekend for
a few years to launch that practice group is what launched the
practice group.

For those of you out there saying, I don’t know which way to go,
or I’m having a hard time growing, ask yourself, how much effort
are you putting in? Are you really there until the late hours?

I’m not saying this is how your life should be. I’m not saying
don’t have balance, don’t see your family, don’t connect with
something deeper than that. I’m saying you have to recognize the
seasons of your life and there are times in your life where you
need to go all in to be successful.

I think recognizing that when they first walked in allowed the
Wilke Farr Real Estate Group to be launched, and to allow them
to go from two people, and he had a couple of associates around
them, to being like I said, Law 360 named them as the Real
Estate Group of the Year, and there are a lot of amazing law
firms.

As we continue talking a few things became really, really
apparent. Most importantly is this misconception that we have
that the people that make it are people who are born with it.
That is not true.

People that make it are the people that are born with it,
because making it is a lot of what you do with what you have. I
ask him point blank, because this is the question. What’s the
number one trait you’re looking for in an associate?

Without even batting an eye he said, ‘Caring.’ If you care you
become great, and this is critically important for us. When you
do something in life, blow your people away, whether it be your
clients or your partners. If you’re not willing to blow them
away, don’t expect.

I think one thing that came out that I want to make sure is
clear is that we think that when we walk into an environments
that we’re trying to figure out ten steps ahead. And when the
going gets tough it’s like, well, do I really need to.

In ten steps from now, it’s not going really matter. By doing
that you lose everything that’s standing in front of you right
now. If you’re in a school, or you’re in a job, or you’re
anywhere in life where you have an opportunity to grow yourself,
by not going all in right now.

Yes, you can put four years of your life and they can fire you.
Fine, but you don’t appreciate that those four years of going
all in is going to make you the YOU that you can walk around
with, that can be the lawyer expecting.

I pushed him and I said, “What happens if you can’t find a job?”
He said to me, “Work for free.” I asked him “Why?”, and he said,
B”ecause you’ve got to get that level. You’ve got to have the
contacts. You’ve got to have the knowledge. You can’t just fake
it”.

That’s critical. Wherever you are in your life right now
listening to this show, wherever you are in your career,
recognize that what’s in front of your may be the opportunity
that you need to launch yourself to a level that you don’t even
see coming your way years later if you go all in now.

Most importantly, and I think this is where we ended, which is
the ability, which is how he started, which is the ability to
take a step back every once in a while and see where the world
is going. You’ve got to see where things are moving, you’ve got
to be able to swim to the places that you think there is
opportunity.

The way he ended that last sentence, the last question was, “The
big law firms demand big hours. They demand “A” level of work.
There are smaller firms that are making a lot of money, but it’s
the people that are working in the smaller law firm hours and
expertise, that are demanding the high level of work, those
spaces, that’s where you’re getting blown out.”

See where you are; own your space, putting your effort. If you
care enough you’ll make it. and that applies to lawyers, and
that applies to everyone in the world.