New England Biz Law Update
Until 1991, Steven S. Fischman was a successful real estate partner and member of the executive committee at Boston-based Goulston & Storrs, representing developers and owners of all types of commercial real estate.
Although the commercial real market 1991 was in a deep trough – turning many real estate lawyers into bankruptcy specialists – Steve chose to join prominent real estate developer Stephen R. Karp as a partner in New England Development (NED).
Having now weathered a number of business cycles, the company is one of the premier real estate development and management companies in the Northeast. It has approximately 25 million square feet of retail space, and owns – to name just a few properties – the CambridgeSide Galleria, the Westin Boston Waterfront Hotel and Shops, the Pinehills, Pier 4 and numerous properties on Nantucket.
Steve recently took time to chat with me about his career and the excitement and challenges of his move into business at NED.
Q. Steve, how does managing and growing a law firm differ from a real estate company?
A. My experience at Goulston was really about practicing law. But even more than that, I was really involved with my clients. As you go along, you get somewhat removed from lawyering and more involved in business decisions with your clients. Your judgment becomes more valued based on lots of transactional experience. I had been doing it for 23 years at the time I considered moving to NED.
Q. You went to NED as a partner in the business, not formally as a lawyer. Was there anything about the transition that was particularly difficult or surprising?
A. I was surprised at how much I had to learn about the math involved in real estate transactions – how you evaluate and understand the pure economics of the deal. You really have to understand the math, and that was very difficult at first.
Lawyers think they understand more than they do about a deal because the role they play is very sophisticated and complicated. They think their part is the whole deal, but as a lawyer you don’t actually deal with the pure economics. This is probably also true with lawyers involved with hedge fund and private equity deals. Basically a development project is like a theatre production. The developer is the director and everyone plays a role. All of these people are skilled, sophisticated professionals – but they are not in a position to see the whole picture.
Q. Anything else surprising about the change?
A. Working in a law firm is very different than in a company. Everyone in the law firm has similar educational backgrounds and values – you could bring a New Yorker cartoon into the firm and everyone would get it. In a business, you have very different educational levels, different levels of savior faire. There is great camaraderie in a law firm, while a company tends to be more stratified. People treat you more like the boss and the pyramid is more obvious.
Q. Did the move seem risky at the time?
A. Yes. Not only was I taking on a different role, but I came in as a partner in the business, sharing the risk. The thought of doing something like this had crossed my mind as I saw all my real estate clients amassing capital over the years. You don’t do that as a lawyer, and I thought I would like that, even though I always did well financially.
I didn’t say yes at first when Steve Karp approached me. I thought about it hard and consulted with a lot of people. There was one guy I talked to who had been a partner at Cravath Swain & Moore in New York City who left and went into business – a pretty unusual thing for a Cravath partner. He described the change to me like this: You’re sitting around a table after the deal is done and the business guys get to go home, but the lawyers stick around to take care of the documents. I thought that sounded great.
Q. Did you have any other hesitations?
A. Yes. I played an important role in many people’s lives and I was taking a risk hitching my wagon to one person. Lawyers are often lawyers because they are not huge risk takers. I had a senior, secure position. I was taking a big risk – it was 1991 – a very tough time in real estate.
Q. Any advice to others thinking of this kind of move?
A. Ask yourself if you have the stomach for the risk. Business looks easier to many lawyers than it actually is. There are aspects that are very challenging. I judge good lawyers on whether they bring all the problems they see to me. Our training is to see problems, and good lawyers solve problems. But you then have to evaluate how big the worry really is. A good business deal has lots of imperfection. Some lawyers have a hard time evaluating what issues are really important.
Q. How do you think you developed the ability to assess what’s really important?
A. When I started at Goulston, we had a lot of responsibility early on and there is so much growth in that. I think lawyers do better if they get a lot of responsibility early on. I was there at a fortunate time in the firm’s growth. I got very close to my clients and understood what went into what they did. I suffered their pain as if it was my own. I have never been in an ivory tower. I learned the essence of what they did and how to decide what was really important in a business deal. Things often turn out better or worse than you expect in business and you learn from that.
Q. Any thoughts on the changes in law practice over the 16 years since you left?
A. I am amazed at how efficient firms have gotten with technology. I am very impressed by the array of computing power the firm brings to a major deal. Lawyers have really injected technology into handling transactions and I marvel at that.
Jane Sender is president of Sender Legal Search, which specializes in high level in-house placements in New England. She can be reached at www.jslegalsearch.com.
