Background

 

In 1992 ML&B had six years remaining on its lease. Early planning was critical as ML&B had a number of difficult issues to deal with and the size of their occupancy required considerable planning. We were hired to represent them on a number of assignments, some related to their Philadelphia lease, but others involving leases in other cities.

 

Assignment I, Expansion

 

We began by preparing a long term facilities strategy for the firm. We were advised that the firm was exercising an expansion option for two additional floors, but that we would not be involved. We continued to hear of difficulties with the expansion, and asked if we could be of help. ML&B then asked us to review the situation to see if we had any suggestions. We reviewed the lease provision and the space. Since the expansion was at a market rent, we counseled the firm that the rate should be about half of the rent sought by the landlord. In the negotiations that followed, we were substantially successful, achieving rents that were 52% of the amount originally sought, and we did this without endangering ML&B’s long term relationship with the landlord.

 

Assignment II, Redecoration Allowance

 

The lease provided for new carpeting in the tenth year. The allowance offered by the landlord was short of the amount the lease called for and, following negotiations, we were successful in substantially increasing the amount of the allowance.

 

Assignment III, Lease Audit

 

As we delved into the lease more completely, we became aware of some anomalies with respect to the firm’s billing. The firm authorized us to pursue these areas for resolution. We were denied information by the building’s management claiming lost records (which were subsequently found). The differences in each of three different areas incrementally were small and difficult to analyze. We constructed a computer model of the building’s operations and, when we entered the data supplied by ML&B’s bills discovered, because of the size of its occupancy, a significant overbilling from inception. At this time, the building was in financial trouble and the mortgagee took possession. ML&B was successful in reaching a cash settlement for a significant portion of the overbilling that was not barred by the three year statute of limitations.

 

Assignment IV, Tax Reassessment

 

We compared One Logan Square’s tax rate to those of surrounding buildings and concluded that, given the City’s approach to assessments, the rate was too high. We pressed the landlord and it appealed the rate. ML&B achieved a significant reduction resulting in a substantial refund. The refund from the City’s Business Use & Occupancy Tax, which is tied to the real estate tax, resulted in another refund equal to about half of the first. Of course, these savings were continuing for the duration of their term.

 

Assignment V, Operating Cost Reduction

 

Our review showed that operating costs for the building, when compared with buildings of similar age and configuration, were substantially inflated. We obtained the full, detailed budget for the previous two years and reviewed each category of operating expense. We identified over a dozen categories where costs appeared too high, and induced the management to place these areas out for bidding. As a result of our efforts, operating costs for the building dropped from $7.88 per square foot to $7.31 per square foot to $6.46 per square foot. At that point the mortgagee took possession and appointed a new management company.

 

Assignment VI, Tenant Representation

 

We were originally hired by ML&B to work with them on their new Philadelphia headquarters. With the lease expiring in six years, the time was right to consider new construction, significant rehabilitation or moving to existing space. We evaluated the tax impact of suburban and Center City locations, and then focused on Center City alternatives. We recommended architectural firms for ML&B to interview and conducted the interviews before the full committee. We then prepared the design firm agreement.

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For each promising alternative, we worked with the selected design firm to perform a test-fit to determine the amount of square footage needed to fulfill the program, both current and projected. We worked with ML&B and the design firm to research nationally the results of cutting edge law firm design. Finding very little (most opted for the traditional layout), we worked with them to explore new ideas in law firm layout, examining the future role of each component of the firm.

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Assignment VII, Princeton

 

ML&B asked us to represent them in opening a Princeton, NJ office. We brought the project in on time and under budget.

 

Assignment VIII, Pittsburgh

 

ML&B opened a Pittsburgh office and asked our assistance. We located the building and negotiated a temporary office lease until the permanent space was ready.

 

Assignment IX, Miami

 

ML&B’s office in Miami had a number of years yet to run, but local management asked about extending the term. We consulted with ML&B on the economics of the extension, contrasting the costs with the likely results of waiting for the lease to expire and exercising the renewal option.

 

Assignment X, Arbitration

 

ML&B’s lease contained a renewal option, with the rate based on the current fair market value. They could not agree with the landlord on the value and proceeded to arbitration. A two day arbitration hearing was held and ML&B asked us to be the lead expert witnesses along with their appraiser.