Waterworks: The tears start flowing early from Gristina before the first minute, when she talks about her youngest son coming to visit her in jail, where she's been for the last four months. She tells Lauer: "He cried the whole time and begged to stay with me."

Vocals: Her voice is surprisingly sweet. She sounds like Kelly McDonald in the trailers for Brave.

Omerta: The first and most crucial point comes in around 4:43, when Gristina's vaguely-noted "loyalty" is noted by Lauer without interruption—a savvy move on his part—as he speeds on to the second half of the question: Do you feel those you've been loyal to have been loyal to you? Gristina responds that she hasn't been in contact with anyone so she wouldn't know. Oh really? In a New York Post piece in which reporter Jeanne MacIntosh disclosed her prior relationship with Gristina, she told the reporter of a conversation she had with a friend tied up in the prosecution of madam Kristen Davis' case:

Asked if she knew the conversation was being recorded, she said, "No, but apparently it was."

Gristina most certainly knows who's loyal to her these days, and who isn't. To enter the idea of loyalty into the conversation would appear to acknowledge its need, but to deny it outright would've appeared silly, too. Lauer's question was smart; Gristina's response was smarter.

Powerful Men: Lauer asks if she knew anything about the powerful men the D.A. quizzed her on during the initial interrogation. The lawyers stop her from answering that and volley with Lauer. For the entirety of that question and the lawyers' answers that followed it, Gristina's face looked like this:

She didn't say a word.

Interrogation: Gristina is asked about how she was questioned. Interestingly, she explains that

Lawyers: Definitely there, definitely making sure she wouldn't comment on the accusations. Take a look at this:

Match.com's Would-Be Competitor: Matt Lauer didn't exactly have to do hard-hitting interrogating to get the lawyers to speak up. For example, when asking of the matchmaking service Gristina contends she was running:

Matt Lauer: Would this include married man looking to have someone to have dinner with?

Anna Gristina: Very much like Match.com.

Matt Lauer: Would it also include married men looking for someone to have sex with?

Ponytailed Lawyer: I think we've answered that question. 'Very much like Match.com.'

Matt Lauer: If I say to you, 'Had you ever connected a married man—or any man, for that matter—with a woman in a matchmaking service,' have you done that?

Ponytailed Lawyer: Our response would be 'You sound like the Manhattan District Attorney's office.'

If Matt Lauer sounds like the D.A. in an interview like this, someone is doing their job incorrectly. Or correctly. At this point, it's hard to tell. Also:

Matt Lauer: So you won't say to me at all whether you have been involved in running any kind of legitimate, legal dating service in the past?

Ponytailed Lawyer: Given the state's allegations in this case, we'd be fools to answer your question.

So what did they answer? Again: It's hard to tell.

The Law Enforcement Connections: At one point Lauer asks about the wiretaps the D.A. reportedly has in their possession from the five year-long sting, wherein, Gristina is heard boasting of her connections to law enforcement. The lawyer responds that if the D.A. has them, they want to hear them (as they haven't been released to the defense lawyers as evidence), explaining that they won't "try this case by innuendo." Lauer counters that he's never been heard bragging about knowing cops in the event that he were arrested. The lawyers explain that Lauer's probably said a lot of things that could be made to sound "sinister." To which we'd counter: Maybe by Scientologists?

Finally, one of her lawyers, Pete Gleason—a former NYFD fireman who took the case pro-bono, and is putting his loft up for Gristina's bail, and who contends doing so is just an act of good samaritanism—was also interviewed by Lauer. And that was a separate trip in and of itself.

Lauer's interview can be seen here:

http://www.msnbc.msn.com/id/32545640

fkamer@observer.com | @weareyourfek

The Post reported on Sunday that Manhattan lawyer James McMillan—an entertainment lawyer whose firm represents acts like the Clipse, Ron Browz, J.U.S.T.I.C.E. League, Too Short and Slim Thug, among others—was claiming that he had his watch effectively stolen by half-Jewish, half-Canadian, recently re-Bar Mitzvah'd rapper Drake.

As the story goes:

1. McMillan took his Rolex in to be cleaned by Rafaello & Co., the midtown store where he purchased it. Their client list, according to the Post, counts Alicia Keys, Jamie Foxx and Carmelo Anthony among its customers.

2. Supposedly, Rafaello & Co. owner Rafael Aranbayev loved the watch, and decided to wear it.

3. McMillan thought his watch would be returned.

4. His watch was never returned.

5. He was offered a replacement watch to hold on to instead.

6. He was told that his watch had been sold.

7. Drake says that the Rolex he wears belongs to him.

If this story doesn't make sense to you, that's because you're a sensible human being. Questions:

- Why didn't McMillan, a lawyer, report his watch missing to police the moment it went missing?

- Why didn't McMillan, a lawyer, think there was something odd when he was told the owner decided to commandeer his $30,000 Rolex Presidential, and report it to police?

Finally, why would the New York Post print this quote in their story about Drake's denial of the watch?..

A source close to Drake said he got it directly from Rolex — and “never heard of this jeweler."

..When a simple Google search would turn up not just a NY Daily News story tying Drake to the jeweler...

"When Drake came in a few months ago it was 6 in the evening. A lot of the stores were already closed, but there was foot traffic. They saw he was here and then it was crazy. I had maybe 1,000 people outside."

...but a picture of Drake, with the guys from Rafaello & Co., in front of a Rafaello & Co. background, as featured on the Rafaello & Co. blog?

That said, the single Yelp review for Rafaello & Co, if you're interested, is three stars:

Rafaello and Co reached out to me concering a review I had posted about them. Their owner has taken steps to rectify the situation and I appreciate their dedication to customer service.

So maybe they'll sort this entire thing out. Until then, we have an early entry for oddest story of the week. Also, good to know that "off-the-back-of-a-truck-market" is (possibly) alive and thriving in Manhattan once again.

fkamer@observer.com | @weareyourfek

Naturally, Gawker published that legal threat (alongside an old picture of Bill O'Reilly with topless women, of course). Entertaining as it is, we've taken the liberty of annotating the best parts of Fox's legal letter to Gawker, right here:

1. Yeah, right. Adorable! But basically a sign that says—to Gawker, at least—"DON'T FORGET TO PUBLISH." These notices hold absolutely no legal bearing, and in the event the law firm would attempt to prove malice on the part of the publisher of said legal threat letter (Gawker), all Gawker has to prove is that the letter is newsworthy. If that. Judging by the six-digit counts on each of Gawker's Fox Mole posts, one could reasonably assert that this letter is, in fact, newsworthy.

2. Ronald M. Green, Litigious Legal Machine. If Ronald M. Green sounds familiar to followers of Fox's media troubles—or the troubles of Powerful Men in Media—he is! Green's page for the firm lists (boasts?) of his association to Bill O'Reilly as legal representation. What it doesn't note: Some of the cases Green has worked on for O'Reilly, including but not limited to the sexual harassment claim a producer filed against O'Reilly, which was settled out of court before the world got to hear the evidence in the case. He also represented Cablevision/MSG chairman James L. Dolan and The Garden in a wrongful termination lawsuit filed by former Knicks executive Anucha Browne Sanders after she claiming she had been sexually harassed. A jury found in her favor to the tune of $11.5M, $3M of which came out of Dolan's pockets. Also noted on Green's bio page from his firm? A position he wrote for The New York Law Journal entitled "The Employer's 'Sue First' Strategy: In high stakes litigation, 'preemptive strike' has produced results." If you thought Fox News was calling up My Cousin Vinny from the bullpen, think again: Green is their "Lights Out" guy, and he will no doubt take this thing to some inevitable conclusion. Don't place your bets yet, though: Handicapping odds is contingent upon on what further action he has planned, if any. Then we'll open the pool.

3. Covered Bases. The funny thing about legal threats is how many copies you end up getting. New York City's bike messengers owe the litigious lawyers of their fair city a debt of gratitude for giving them, like, half their business.

4 and 5. Scare Quotes. In legal paperwork, scare quotes are often used to precede the paraphrasing of a term throughout the rest of the brief; this isn't that. This is just a funny use of scare quotes.

6. 'Likely.' As in, "we haven't yet figured out exactly what about this is illegal, but it's surely something" or "probably, so you should be scared." Pretty standard.

7. 'Should.' As in, "this isn't actually a cease and desist, though we're going to vaguely allude to some sense of obligation, whether or not there's a law against it." Pretty standard.

8. Niceties. These are always enjoyable to read; they always act as amusingly macabre punctuation points, like someone telling you to watch your shirt for blood immediately after having stabbed you in the gut.

In other words, get out the popcorn: This has nowhere to go but up.

fkamer@observer.com | @weareyourfek

Jonathan Streeter is a Upper West Side-residing 43 year-old lawyer who joined the U.S. Attorney's office in 2000. He was part of what Business Insider called the "prosecutorial dream team" who took down Big Raj last year, and delivered the opening and closing arguments for the government's case. In the Wall Street Journal's profile of him last year, he was described as "unflappable." He was also noted in the Journal profile and a New York Post profile as an avid water-skier whose father was a lifer at one of Cleveland's oldest law firms, where he was raised. He was also a prosecutor in a bunch of other high-profile trials that weren't Raj Raj's, which The Observer detailed in a profile of Mr. Streeter last March:

He has won convictions or guilty pleas for executives accused of accounting fraud, traders who cooked the books, money launderers and insurance fraudsters. He successfully argued against Manhattan attorney Marc Dreier, a con man who trafficked in fake securities. He got a conviction against former Ernst & Young partner James Gansman for insider trading, and against former Duane Reade execs Anthony Cuti and William Tennant for padding their quarterly earnings report.

And now, he'll be defending those same guys. Not the ones he sent to prison, of course. But the ones like them! FIN Alternatives notes:

Streeter is to join law firm Dechert's litigation department. He'll be an equity partner at the high-profile firm, starting next month.

Never heard of Dechert? They're an international law firm that looks more like a conglomerate. They've got 21 offices around the world. They've represented Big Tobacco on behalf of Phillip-Morris in the class action suits against the cancer-stick maker.
They've represented Big Pharma on behalf of Merck & Co. in class action lawsuits against them. To be fair, they occasionally do things like represent Guantanamo Bay detainees who maybe shouldn't be there—which, of course, like everyone else they defend—the American government hates. And of course, they do a ton of White Collar defense. They've repped Enron! This is like leaving one team for their team's rival, and being paid a bunch for it (remember, he's being made an equity partner) because you wrote your old team's playbook.

The reason this news is important and is being reported everywhere from Dealbook to the Wall Street Journal and back, isn't so much because Mr. Streeter is a great lawyer—he clearly is—or because moves like this are an uncommon occurance—they're not—but because of the subtext, which implies that everyone in this world, no matter how committed to the concept of justice they are, has a price. And Mr. Streeter, once another one of the Good Guys, and Protector Of The Interests Of The People, just cashed his in. And it was offered by the defense team of the exact stripe of people he once helped take down.

fkamer@observer.com | @weareyourfek

You get another lawyer to sue them, is how. After what Regal Real Estate is calling a "breach of its contractual duties and ethics," they're suing international law firm Crowell & Moring for damages amounting to no less than $6M, after Crowell & Moring failed to return the $3,074,734.25 they were holding in an escrow account for Regal Real Estate (which is, Regal contends, part of a total sum of around $5.5M Crowell's supposed to be holding onto for them that's missing).

As noted earlier, this is after one of their lawyers pulled off one of the lamest anti-heists in the history of embezzlement. Question is, Crowell & Moring—power firm that they are—employed an unquestionable screwup. Will they now take responsibility for him and return the funds, or defer and fight Regal on it? Operative words: power firm. Take a wild guess.

Through a representative, Crowell & Moring did declined to comment to the Observer on the suit, filed today. Earlier, they declined comment on Regal's threat of a suit to the Observer.

fkamer@observer.com | @weareyourfek

Looks like the legal profession just doesn't pay like it used to.

Yesterday, the story of Douglas R. Arntsen of big-ticket international law firm Crowell & Mooring broke wide.

It is, in a word, amazing:

• There's a big escrow account Crowell & Mooring uses to close transactions filled with money by the firm's client, Regal Real Estate.
• It's learned that Arntsen, a lawyer for Crowell & Mooring, is leaving for a new job.
• Money starts to disappear from the account.
• Regal Real Estate's money starts disappearing from their escrow account.
• Regal managing partner—the aptly-named William Punch—wants to know where the hell it's going.
• Punch calls Arntsen and asks him where it is.
• Arnsten breaks down and admits he stole it.

Now, this is where it gets really fun:

• On September 13, Punch and Arnsten meet at a CitiBank where Ansten hands Punch $1.8M of the money he stole.
• Then they go to a Wachovia bank, and Arnsten hands Punch another $43,000.
• The next day, a sting is set up on a street corner to grab Arnsten.
• Arnsten doesn't shop up.
• Because Arnsten went to Hong Kong.
• And now Arnsten is arrested and awaiting extradition.

Meanwhile, Regal Real Estate still wants to know where the hell their money is. Bill Punch writes in to tell the Observerthat they found another $3M missing from their account.

We have filed complaints with the Bar Association.  Manhattan ADA Gary Galperin of the Rackets Bureau is investigating.  Our main concern is Crowell Mooring hasn't accepted responsibility yet.  They have not responded to questioning if they turned it over to their insurance carrier or if they'll be stand up and reimburse [Regal Real Estate owner] Maurice Laboz.

He also noted: "I understand a certain amount of due diligence has to be done before the firm signs off on a check that size," but, he explained, nobody from Crowell & Mooring has even called landlord and Regal Real Estate owner Maurice Laboz to tell them they're investigating, "let alone say they're sorry." Not exactly the best customer service. Mr. Punch had a meeting scheduled with Crowell-Mooring this morning that they've since canceled, and have yet to serve Regal Real Estate with their insurance certificate. "Manhattan ADA Gary Galperin, of the Rackets Bureau, is only person helping us out," Punch explained. "We just want to be made whole again."

Representatives for Crowell & Mooring declined comment to the Observer.

In the event you were wondering, this is the same law firm that represented defense contracting firm Blackwater after they were involved in a shootout that resulted in a bunch of dead Iraqi civilians. They represent a few other defense contractors, too. They're awesome corporate raiders, and do a decent share of white collar crime defense.

In other words, they're exactly the kind of lawyer it sounds like Doug Arntsen needs right now.

fkamer@observer.com | @weareyourfek

We tapped the top New York City real estate practices and asked them these questions.

Leonard Boxer

Stroock & Stroock & Lavan

“With the capital markets the way they are, every deal is complicated,” said Leonard Boxer, head of the real estate practice at Stroock & Stroock & Lavan. Now entering it’s ninth decade of practice, Stroock’s real estate group counts among its clients some of the most visible figures and institutions in Big Real Estate: Silverstein Properties, Wells Fargo, Citibank, JPMorgan Chase, the Feil Organization and, what the heck, the Mets—while Mr. Boxer himself counsels the Real Estate Board of New York.

The legal landscape has changed permanently to favor attorneys with a real sense of business, he said. “Brokers are so knowledgeable; they will negotiate an L.O.I. so comprehensive … it will be, like, 100 pages.” An L.O.I. used to be a single page. “Today if a piece of property is available, there are rounds of bids. It’s almost like baseball,” Mr. Boxer said. “They don’t need just a good lawyer.”

In his role at REBNY, Mr. Boxer is also involved in all sorts of policy matters, particularly the fight in Albany this past spring over changes to rent regulations.

And despite being involved with the “most visible transaction, one we live with every day”—representing Silverstein at the World Trade Center site—Stroock remains involved in a number of lesser-known deals that have long girded its practice. For example, there was the recent sale of Liberty Towers, a 675-unit residential high-rise in Jersey City.

How did Mr. Boxer end up at Stroock, his firm since 1987? In the 1980s, while real estate transactions began to rival corporate transactions in volume, many small real estate firms were being bought up by the big guys. His boutique firm—Olnick, Boxer, Blumberg, Lane & Troy—was sought after, as was Mr. Boxer himself. But he was fiercely loyal to his people and would not budge on one matter: he wanted any buyer to take his whole firm, down to the mail room. “And, quite frankly, Stroock was the only firm that would do it.”

Raymond Sanseverino

Loeb & Loeb

“Time is the enemy of all transactions,” said Raymond Sanseverino, head of the real estate practice at Loeb & Loeb.

His practice of 50 attorneys stands apart for its responsiveness, according to Mr. Sanseverino. For instance, earlier this year, Loeb & Loeb negotiated more than 400,000 square feet at 120 Park Avenue for Bloomberg in only 12 days, after competing parties began vying for the space.

Loeb & Loeb also repped JPMorgan Chase as sublandlord in their vacating of 445,000 square feet at 245 Park; perfumer Coty in a huge lease at the Empire State Building; and the landlord at 875 Third Avenue in its 110,000-square-foot lease to Cerberus Capital.

Loeb & Loeb is also no stranger to unconventional requirements. They oversaw the Chinese state news agency Xinhua’s move to 2 Times Square, which required the State Department’s approval among myriad logistical challenges. But it all worked out smoothly in the end, with Xinhua leasing some quintessentially capitalistic real estate. “They’ll have a view of the ball dropping,” Mr. Sanseverino said.

“We know the market,” he added in explaining the practice’s approach in general. “We’re in it everyday.”

Aside from pricing, he advises clients on what provisions are realistic to ask for. These days, for instance, nondisturbance agreements are much easier to obtain and tenants are seeing more money for capital improvements. Mr. Sanseverino also believes in cool-headed negotiation. “These parties have to live together for 10, 15 years. There is never a need to scorch the earth.”

Richard Sussman and Michael Lefkowitz

Rosenberg & Estis

Representing huge developers in huge deals is not normally the work of a smaller firm. But for Rosenberg & Estis, a firm of 50 attorneys dedicated entirely to real estate, it has become not uncommon.

The firm has represented clients like the Durst and Brodsky organizations in large, complex deals, including, for Durst, the carefully watched 1 World Trade Center negotiation, as well as in quainter ones, like the CUNY School of Social Work lease at 118th and Third Avenue.

Among Rosenberg & Estis’s achievements this year was also the closure (finally!) of the financing for the no-longer-so-new Bank of America Tower at 1 Bryant Park. “It was a Herculean deal,” Mr. Sussman said. He said they essentially created an “integrated financial instrument” involving C.M.B.S.’s and Liberty Bonds. “This had never been done before, as I understand it.”

Rosenberg & Estis was also behind commercial debt fund RCG Longview, which was making predevelopment loans on sites like 180 Avenue of the Americas, at a time when more traditional lenders were keeping their distance. Enabling lenders like RCG greases the wheels of the commercial industry as a whole, according to Mr. Lefkowitz. “They have the advantage of being more nimble.”

So what is Rosenberg & Estis giving its clients beyond mere due diligence? “We actively work to structure everything. An economic situation which is not ‘vanilla’ requires a lot of work,” Mr. Sussman said. For instance, after the Durst Organization won the stake bid at 1 World Trade, “there was still a lot of dealmaking to be done,” said Mr. Lefkowitz. In the CUNY deal, the firm ended up using reversionary interest among other less orthodox tools. “We work with them from the earliest moment, especially with the off the market deals,” Mr. Sussman said.

Jay Neveloff

Kramer, Levin, Naftalis & Frankel

Mega-firm Kramer, Levin, Naftalis & Frankel closed tons of high-profile real estate transactions in 2011, including the sale of the upper portion of the old New York Times Building to Blackstone and the sale of St. Vincent’s to Rudin Management.

The year also has seen lots of stalled deals being recapitalized and lots of medium-size clients returning to the market, according to Jay Neveloff, head of Kramer Levin’s real estate practice. He says clients are more inclined to go to their attorney to make sure they have an accurate read on the market and that he is happy to oblige. “The top lawyers in the city are performing broader functions. You really get involved in the business of your clients.”

Kramer Levin boasts New York City’s largest land-use practice, with attorneys who have worked for the Department of City Planning, the Landmarks Preservation Commission and the Parks Department. Currently, they represent Columbia University in its ongoing land-use negotiations in Harlem.

In the end, perhaps Kramer Levin’s size is its strongest asset for clients. “I have the ability, if I have clients who want to meet an owner, or make a joint venture, go to a bank,” Mr. Neveloff said, “I have the ability to open those doors. Or, if I don’t, I have someone in my office who can do that.”

Joseph Shenker

Sullivan & Cromwell

Did you know that real estate securitization structures were created by adapting commercial paper financing structures originally used for nuclear plants? Neither did The Commercial Observer, but this is the sort of knowledge one is treated to in conversation with Joseph Shenker, chairman of the real estate practice at Sullivan & Cromwell.

“We do high-end, sophisticated deals,” he said. “This justifies our fee structure.”

Sullivan & Cromwell has been behind some of the highest-profile debt restructurings of the last year, including at 280 Park Avenue, 1 Park Avenue, Independence Plaza in Tribeca, 230 Park Avenue and 666 Fifth Avenue. And with many properties in the city requiring some financial, uh, adjustments, they have lots to do. “When they are buying a complicated piece of mezz debt, they have all these questions,” Mr. Shenker explained. “[We] provide one-stop shopping.”

On 230 Park, for instance, the sale involved a deleveraging of the capital structure. “It amounted to Invesco putting in equity and paying down the total debt, a somewhat typical transaction” Tony Colletta, the lead counsel on the deal, said. On 280 Park, SL Green and Vornado pooled their acquired debt and added equity. It was “a complex and delicate transaction,” said Arthur Adler, another partner at Sullivan & Cromwell, who handled the deal.

The real estate cycle seems to provide such seemingly endless maneuvering for law firms. “The nice thing about New York real estate is you see the same buildings again and again,” Mr. Shenker said.

Jonathan Mechanic

Fried Frank

In teaching his real estate transactions class at Harvard Law, Jonathan Mechanic uses the Lipstick Building as a case study. Not only has he been involved in nearly every aspect of the building’s purchase, lease and debt repackaging—he repped Tishman Speyer in their original purchase; oversaw the lease to major tenant Latham & Watkins; repped Tishman Speyer in the next sale and then the Royal Bank of Canada in the building’s recent prepackaged bankruptcy—his conference room window looks out over it. The building, having had what Mr. Mechanic calls a “truncated life cycle,” represents the extremes of New York City real estate, and helps his students learn what he considers the most important lesson of real estate law: “To be a good lawyer you need to understand the business.”

The night before he spoke with The Commercial Observer, Mr. Mechanic, oft referred to as the most powerful real estate lawyer in the world, just happened to run into Frank Gehry and Bruce Ratner grabbing a drink at the Greenwich Hotel—for Mr. Mechanic, a typical evening in the business.

Mr. Mechanic has worked for Fried Frank since 1978, save for a five-year run as general counsel for developer Howard Ronson. This year alone has seen Fried Frank work on deals that are not just significant for their size but for the impact they will have on the city. Mr. Mechanic repped Condé Nast in its move to 1 World Trade Center, in “a total collaborative effort,” among the Durst Organization, the publisher and the Port Authority. Just recently, Fried Frank was involved in the Whitney’s move downtown; the recently finished 8 Spruce Street, designed by Mr. Gehry and developed by Mr. Rather; and Google’s purchase of 111 Eighth Avenue.

And what of the near future? Mr. Mechanic says to look for redevelopment of the South Street Seaport, lots of deals at the Hudson Yards and a vibrant market for retail and office space near the World Trade Center.

Neil Rock

Skadden Arps

No list of top real estate practices would be complete without the inclusion of Skadden, Arps, Slate, Meagher and Flom.

Among their notable transactions of late? There was SL Green’s debt restructuring at 280 Park Avenue; the Helmsley Charitable Trust’s sale of the Helmsley Hotel for $314 million; and, of course, the 20-year lease for Wilmer, Cutler, Pickering, Hale and Dorr LLP’s new space at 7 World Trade Center. That lease was the first to use Mayor Bloomberg’s new “green lease language,” which lets tenants and owners share the cost of energy efficiency upgrades.

Neil Rock, head of Skadden Arps’s real estate practice, is the type of real estate attorney whose projects alter the very landscape of the city. He represents the Empire State Development Corporation, the state’s economic development arm, in connection with Atlantic Yards and the New York Convention Center Development Corporation regarding the Jacob Javits Center and of the High Line. Little surprise, then, that Forbes calls Skadden Arps “Wall Street’s most powerful” law firm. The real estate, practice, appears to be no slouch either.

Bill McInerney and Steve Herman

Cadwalader Wickersham & Taft LLP

Bill McInerney heads a real estate practice that is not at all shy about its aptitude on the financial side of real estate deals. “We can originate the asset, but also have the expertise to exit the asset” in various ways, including the private market, Mr. McInerney said. “As the market rebounds, we are in a position to take advantage.”

Together with Steve Herman, head of the bank finance practice, Mr. McInerney sees a bright next couple of years. Not only did Cadwalader not slash its staff as so many firms did post-Lehman, they specialize in the types of deals that will be most in demand in the coming years. “There is $100 billion in debt that is overleveraged,” Mr. Herman said. So the real estate industry will be seeing “restructuring for years to come.” Their “soup to nuts,” practice, as Mr. McInerney calls it, deals end to end with origination, securitization and sale of real estate debt, as in the recent case of the Extended Stay Hotels portfolio.

Cadwalader was the firm most active in commercial mortgage back securities … you know, back before the CMBS crash in 2009. “I’ve lived through multiple cycles in this industry,” Mr. Herman said. And he believes anyone overly upset by the current debacle is simply revealing how young they are. “Last downturn, there were many more bankruptcies and contested foreclosures. Since then, we’ve developed structures to mitigate that, and they’ve had the desired effect.”

Martin Miner

Holland Knight

If you have a hotel to sell, or some money to invest in the hospitality industry, say, Holland Knight might be a nice fit.

The firm has worked with Marriott, Starwood and BD Hotels, as well as on the sales of boutique hotels. They have also repped big clients in commercial leases, construction and development, including the Empire State Development Corporation, Clarion Partners and Jetblue (in its recent office move to Long Island City).

Martin Miner, head of the real estate practice, has over 30 years of experience in the field. Asked what he offers clients nowadays, he answered without hesitation: “Great personalities.” And The Commercial Observer can attest to Mr. Miner’s charm. In a world of cold, calculated financial maneuvers, a warm personality goes a long way.

Mr. Miner has in the past lent his charm to a class on real estate transactions at Columbia’s business school. “I try to tell them that the market doesn’t always go up,” he said of his students. “I try to tell them that in today’s real estate world, corporate law and real estate law are very close. You need to have both to be accomplished today.”

Ron Sernau and David Weinberger

Proskauer Rose

This real estate duo pride themselves on teamwork and on the individual expertise each brings to the table. Sound cliché? So be it, according to David Weinberger. With him on the lender’s side and Ron Sernau on the borrower’s, their firm has worked on some massive deals in the last year—repping Vornado (a frequent client) at 1 Park Avenue; CBRE Investors in its purchase of 1540 Broadway; Harbor Group at 4 New York Plaza; and their own firm in their recent move to 11 Times Square, where Mr. Sernau analogizes his firm to “the shoemaker’s children, with holes in their shoes.”

With expertise on both sides of a transaction, Mr. Sernau sees Proskauer attorneys as “a part of the brokerage process,” not simply as legal advisers. That involves risk, of course, but risk is part of the inherent beauty of real estate for Mr. Sernau. For example, Proskauer recently represented Harry Macklowe in his return to the real estate stage: the purchase of 150 East 72nd street, which closed in June. “He has the chutzpah to put down his money when the rest of us are running away,” Mr. Sernau said.

What sets Proskauer apart in Mr. Weinberger’s view is how business is never proprietary at his firm. Regardless of who brings in business—he or she, and yes, approximately half Proskauer’s partners are women!—the person with the best qualifications works on a deal. “We get the best talent for the task,” Mr. Weinberger said.

Kenneth Fisher

Cozen O’Connor

When it comes to experience navigating the myriad interconnections that run this town, it’s hard to beat 10 years on the City Council. One meets the right people and gets to know how things really work. Kenneth Fisher of Cozen O’Connor, who specializes in real estate development, zoning and land-use matters, brings just that political capital to the table.

He is the man to call when dealing with any of the many labyrinthine city commissions, panels and approval processes that are part of every bigger Gotham real estate deal, even, somehow, the as-of-right ones.

No stranger to controversy, as he has represented clients like landlord the Pinnacle Group, The Real Deal once called Mr. Fisher “the go-to-guy for real estate clients embroiled in contentious projects.”

Mr. Fisher, who has analogized real estate in New York City to oil in Saudi Arabia, has retained his focus on public real estate policy since his move back to private practice. He is a founding chair of the board of directors of the Governors Island Alliance, a nonprofit redeveloping that public space, on whose board he continues to serve, and represents a number of nonprofits in their legal negotiations.

gvoien@observer.com

The Commercial Observer: Summarize the type of real estate assignments Greenberg Traurig has been tasked with in New York City over the past six months to a year.

Mr. Ivanhoe: It’s been sort of interesting because, obviously, we went through a very significant downturn in the real estate market associated with the financial crises in 2008; and into the second half of 2008 and 2009 and most of 2010, our activity was way down.

What’s interesting to me, from my perspective, is I see that the market is recovering very differently in different parts of the country, and I see all that very specifically in our real estate practice. So, for example, here in New York we’re very busy—we’re working at close to capacity for probably the first time since 2007. But that’s very good, but unusual.

But that’s not true throughout all of our other offices, so there’s really a significant bifurcation of how the market is recovering; and it’s very much reflected in our workflow throughout our firm. And places like New York, Washington and some of the California offices, and maybe Chicago, are recovering much better than some of the other offices, and that’s reflective of the markets.

It’s surprising to hear you say that during the downturn, activity at Greenberg Traurig slowed. I would imagine that even during a downturn—and, perhaps, especially during a downturn—real estate developers and building owners need legal assistance.

It’s interesting, everyone thinks that. There’s some truth to it—I mean, we didn’t slow down as much as some of our clients did in many instances.

But here’s what happens: I’ve been around through several of these down cycles—I guess this is the third one I’ve been through—and what typically happens is from the time when the problem starts it probably takes at least a year for significant movement in even getting into restructurings and workouts and things of that nature. Usually, you’re just in total gridlock for a year on 95 percent of what’s going on; and that was very true this time.

The downturn started, in the capital markets, in June of 2008, and everybody thought, ‘Oh, well, wait until Labor Day. Things will get better.’ And, of course, they got much worse. Lehman blew up, and then people said, ‘Well, wait ’til the beginning of the year.’ And while that was happening—even though people were getting more and more fearful, and the car was getting close to going off the cliff—there was very little going on from a legal perspective. There were some exceptions to that, but, by and large, lenders weren’t taking action even where loans were going into default. Borrowers were just sitting there and kind of hoping and waiting to see what happened.

So there was really very little going on—probably until, at least, the beginning of 2010, on any kind of serious restructurings.

Even if it was only a drip, what kind of work were you taking on in early 2010?

Back then, at the beginning of 2010, we spent a lot of time and devoted a lot of manpower to the representation of one of the two bidders in an extended-stay hotel bankruptcy.

And probably for the last part of 2009 and much of 2010, a lot of what we were doing was in the restructurings, whether it was inside or outside of bankruptcy, of real estate assets and overleveraged real estate transactions. And that work picked up as time went on.

We also were very involved in representing Barclays Bank in their takeover of the Crescent portfolio from Morgan Stanley, the former Crescent REIT, which Morgan Stanley did a private transaction for, and then defaulted. They couldn’t pay off the Barclays loan that allowed them to buy it.

From a legal standpoint, what kind of real estate trends have you seen since 2010?

One trend that’s really very obvious is that, when work started to pick up last year, it was mostly the kind of work I’m describing. I’ll broadly describe it as distressed or restructuring work. We represented many buyers of F.D.I.C. portfolios of loan pools from failed financial institutions.

But the nature of the work has not only increased, it’s changed from that kind of work that’s purely distressed to more traditional transactions—buying, selling, financing and a more positive kind of restructuring, where the borrower and the lender kind of finally agree on valuation, and there’s a capital shortage, and there’s a new capital provider that steps into the breach and helps recapitalize an otherwise underwater transaction. We’ve been doing those.

With that said, have mezzanine and commercial mortgage-backed securities options made returns as useful financing tools in Greenberg Traurig’s tool chest?

Yes—well, much more C.M.B.S. than mezzanine; mezzanine is just starting. You know, it’s interesting. In 2007, C.M.B.S. had its all-time high of over $230 billion of issuance, and then it went down to virtually zero for a couple of years. This year, they’re predicting $50 billion. Whether it will hit that or not we’ll see, but it seems to be more or less on track for that.

There are a lot of new originators that have entered the arena, and some of the old ones who pretty much terminated the business are gearing up again, so it’s very interesting. We’re getting a lot more active in that area. We’re representing a few lenders who are originators in their conduits again, which is the kind of work we hadn’t done in years.

And, obviously, on the borrower side there’s a lot more financing. But the nature of that is, so far, quite different.

How has the nature of that work changed since the downturn?

The sizes of those loans, if they’re actually going to be securitized, are much smaller than they were back in the day, after the 2007 period.

Among real estate observers and people in the know, your name is regularly spoken in the same sentence as another real estate attorney, Jonathan Mechanic. From what I understand, the two of you have a friendly relationship. Are you also competitors?

He’s much more photogenic than I am. But, yeah, what you said pretty much sums it all up. I would say that we’re friends, and we also definitely respect each other very much—but there’s certainly a competitive aspect of it as well. How couldn’t there be?

jsederstrom@observer.com

But what, one must wonder, does the verdict mean for the future of the "mosaic theory" defense? This, after all, was what Rajaratnam's defense team argued that the hedge fund manager was doing: examining the nuances of already-public information and then making trades based on his research. But rather than rendering a verdict on the research method, attorneys say the jury's decision only emphasizes that what Rajaratnam did was not the mosaic method.

"Once you're in possession of material non-public information the mosaic theory no longer applies," said David Siegal, a former federal prosecutor who is now a partner in the white collar criminal defense practice group at Haynes and Boone. "In his case there was evidence about impending mergers, top-line financial information being exchanged days before earnings reports, and advance notice of Warren Buffett's multi-billion dollar deal to rescue Goldman Sachs."

Rajaratnam appeared to have crossed the line, in other words, from collecting cobwebs of rumors to illegal mining of weighty corporate secrets.

"You can imagine an analyst who meets with the same CFO each quarter and makes this phone call for six straight years for every quarter," said Steven Feldman, lead white collar defense attorney at Herrick, Feinstein and a former assistant U.S. attorney in the Southern District. "One time he gets the same spiel but with slightly different language and slightly different intonation.  Combining that insight with other pieces of research the analyst gathered - that would be the real mosaic theory."

Mr. Feldman said he expects the appeal battle will prove just as important as the district court trial: whereas in the latter Mr. Rajaratnam's defense team had to argue the facts of the case, now it will likely argue about the legality of the evidence.

"If he wins the argument that the wire tap was illegal that could be a big game changer," said Mr. Feldman. "Then they would throw out all the key evidence. They would throw out the trial verdict. The prosecution's case would be decimated. By going to trial, Raj preserved the right to make an appeal to the Second Circuit. If he had pleaded guilty, he would have lost that opportunity."

Elliott Lutzker, a former attorney with the SEC division of enforcement who is now a partner in the corporate and securities group at Davidoff, Malito & Hutcher, thinks it's improbable that the wire taps would get thrown out. "The fact that the wire taps haven't been used other than very infrequently doesn't make them improper," he said, adding that what's good enough for the mob is good enough for Wall Street's bad guys. "A court has to authorize them and there was reasonable cause to authorize them."

Mr. Lutzker concluded that with Rajaratnam's verdict "the chickens had come home to roost."

"In the jurors' mind the public just wants to see some people go to jail," said Mr. Lutzker. "So you can expect very long sentences with no leniency."

We met her last Friday at a West Village coffee shop filled with well-heeled bohemians sipping mid-morning lattes. The wistful Southern brunette rested one elbow on the table, a delicate engagement ring catching the sunlight. "I thought that at least if I was going to be changing diapers at the age of 28, it would be my own kids'."

She graduated with a degree in history from a Virginia college and thought about becoming a teacher, but her dad pushed both of his daughters to get law degrees, advising them that a J.D. is always good to have.

Two generations of liberal arts majors have followed the same advice, pouring themselves by the thousands into the corporate-law grinder that began with admission to a three-year program, hopefully top-tier, and ended seven or eight years later with a partnership at a top New York firm or a soft landing as an in-house counsel.

Never mind the gargantuan law-school debt and the gruesome hours, the deadening due diligence and shameless rainmaking. You were in six-figure land from the word go, assured by your late 30s of a two-bedroom co-op, a summer share in the Hamptons and good private schools for the children. Pay your dues. Collect the hours. Wait your turn. It would come. It had for so many others for decades in New York.

Not so for the babies of the '80s, coming of legal age during the greatest upheaval of the profession in memory. The last predictable path to prosperity in New York City is gone, as dead as traditional investment banking.

When our young J.D. arrived here from the University of South Carolina law school during the brutal economic freeze, she found a job at "the sketchiest firm ever," made up of lawyers fired or left unemployed when their firms went under during the recession. She knew the end was coming because one week they told her: "We can't pay you anymore."

Her experience isn't typical, she noted, because she wasn't especially passionate about being a lawyer. Now she nannies part-time in Tribeca. Her fiancé, who went to a more highly regarded law school, found a job at a prestigious midtown firm and survived the most recent round of layoffs.

Like other bright young New Yorkers with two sets of letters after their names, they're getting by, just not in the ways they thought they would be. Our young J.D. sometimes walks by the cluster of downtown Manhattan courthouses on her nannying rounds. "I see the lawyers with their binders and I think, 'I could be doing that.'"

Lawyers in New York City are handmaidens to the masters of the universe. "We're just the minions who paper up the deals for the millionaire hedge fund people," said David Lat, a Yale Law School grad and founding editor of the Above the Law blog, describing the mentality. "You can be a partner at Skadden, and still be a piker in this town." 

But in the past 25 years, as investment banking became high-stakes gambling, law remained a civilized pursuit. By unspoken agreement, grads from good schools would make partner within seven or eight years, or the firm would make sure they landed a job at a midsize shop or as an in-house counsel for a respectable corporation.

"That social contract has changed," said Steven Molo, a former litigation partner at Wall Street firm Shearman & Sterling, who left to start a litigation boutique. Now, he said, the thinking of a young associate is to stay for a few years and "make as much money as you can in the short term."

The sacred apprenticeship model broke down in the past decade, as law firms swelled with dozens more associates. The average number of lawyers at a major New York firm nearly doubled, from 233 to 455, between 1984 and 2008, according to data provided by William Henderson, a professor of law at the University of Indiana. The number of equity partners, meanwhile, only creeped upward, from 72 to 99. Meanwhile, at the top 50 largest American law firms, average annual profits for partners grew five times between 1984 and 2006, from $309,000 per partner to $1.5 million. A very lucky few indeed make partner these days.

But the armies of young hopefuls were sustained by steadily rising six-figure salaries straight out of school, paid for by hours billed to the booming finance industry (starting salaries for first-year associates would reach $160,000 during the recent boom). As long as corporations and banks raked in billions, no one questioned legal bills in the millions. Now they're starting to ask: "Do I really need to pay an Ivy League grad in a prestigious midtown office to check my contract for commas?"

New York law firms are in a painful contraction, firing people in large numbers for the first time. More than 15,000 people, including nearly 6,000 attorneys, were laid off from major U.S. firms between January 2008 and November 2010, according to the grimly fascinating Web site Law Shucks.

Meanwhile, overall U.S. law schools have kept growing-at least until this year, when applications dropped by 11.5 percent, according the Law School Admission Council.

A 3L in the middle of his class at N.Y.U. said the career services office told him that more than 50 of the roughly 300 people in his year seeking private-firm jobs were still looking for work only months before graduation. "I think they have to look at themselves," he said of the school, "And say, 'We can't keep letting in this many people and charging them $50,000 a year when we can't guarantee them jobs anymore.'"

The school declined to comment, and it's worth noting that more students are likely to find jobs in the months leading up to and after graduation. "I don't think J. Edgar Hoover could nail down solid numbers on this," said another N.Y.U. law student, who graduated in 2010 and estimated that 20 of her friends didn't have secure jobs (though some have found work since).

She's bounced from working in a congressman's office to an internship at a nonprofit, with a stipend from the law school that expires next month. "I turned down a scholarship" at a less prestigious school, she said. "Everyone said, 'Don't worry; you'll pay it back in four years.'"

Stephen Younger, president of the New York State Bar Association, calls this crop of young associates "the lost generation."

The Observer got an early glimpse of the association's 112-page report on the future of the profession. "We are an advocate for the profession," Mr. Younger said, "but we have to sound a wake-up call for our members."

The report cites several cataclysmic shifts: swelling numbers of first-year associates; technology that can do what young lawyers once did; outsourcing of legal work (often to India); and clients' demand for more accountable billing.

Other senior lawyers blame it on the kids these days, who want cushy salaries but aren't willing to work 75-hour weeks. "So it failed their expectations of narcissism and entitlement," said Scott Greenfield, a local defense attorney, who has a blog called Simple Justice. "All these low-self-esteemed tea cups want $160,000 jobs laid at their feet and don't want to have to come into work. Now the promise of a wonderful life isn't being fulfilled."

When Mr. Greenfield graduated from New York Law School in 1982, he said the job market wasn't great, but he apprenticed himself to a senior attorney. In his field, criminal defense, he said there's still plenty of demand for young lawyers in small firms and solo practices. But: "They want the big-buck practice," he said. "They don't want to do what they call 'shit law.'"

For those who flee the city in search of better career prospects and maybe a few hours a week of free time, the path is hardly easier. "Typically, you got recruited; you were taken
care of," said a 27-year-old second-year associate at a firm in Stamford, Conn., who's already been sent out to networking events to pass around his business card to potential clients. "They wouldn't start pressuring you to get clients until your sixth or seventh year down the road. Now they're saying, 'Why aren't you getting clients?'"

Or as a 2008 N.Y.U. grad, who moved back to Alabama after he lost his job at a New York firm, said of the alternatives: "It's like telling someone to go be on an Arena Football League practice squad. You get beat up like a football player, but it's not the same job."

Experts, including the bar association in some cases, have called on firms to reevaluate hourly billing and reduce the number of first-year associates; meanwhile, law schools need to let in fewer students and give them a more honest picture of the job market.

But getting born winners to take stock of the losses isn't easy.

"I don't know that if we were to flick a switch and the economy were to pick up whether we would see any lessons applied there," said Mr. Molo, the former partner at a huge Wall Street firm. "People would still be hiring 140 associates."

He recently formed a boutique litigation firm, MoloLamken, which has grown to 13 lawyers and in 2010 argued three cases before the Supreme Court-and won each of them. With its model of flexible billing and significant mentoring, his firm could be a model, but he's not convinced others will follow.

"Many people would view what we did in the short term as an economically irrational act," he said. With partners at major law firms making in the seven figures, he said, "what holds a lot of people back is just inertia."

The army of young cannibals, raised on whole wheat bread and pop psychology, has other plans. "If I could work 60 hours a week and get weekends off, I never would have left," said a 28-year-old who spent a few years at one of the city's top handful of firms but recently left to work for a hedge fund. "I know people who have had three kids and have never been at the birthday of any of their kids." 

lkusisto@observer.com