Do Jon Mechanic and Fried Frank Have the ‘Un-Midas’ Touch?
What role do lawyers have in advising their clients on business matters? Some might say: None.
“The client decides on the business objective, and the lawyer helps the client reach that objective, as long as it’s legal,” this line of thinking goes. “And why would you want lawyers giving business advice anyway? They have no business training — and judging from how large law firms have fared in the Great Recession, they don’t seem to be particularly good at business either.”
On the other hand, one thing we commonly hear from the in-house lawyers we speak with is that they do give a combination of legal and business advice (not surprising, given that they have one client, which they want to see prosper). And some top law firm lawyers also get involved in the business side of things; they’re dealmakers in their own right, not just the folks who “paper up” the deals dreamed up by investment bankers. E.g, H. Rodgin Cohen of Sullivan & Cromwell, who played a major role in various bank M&A deals last fall.
Fried Frank partner Jonathan Mechanic (pictured) — chair of that firm’s high-powered real estate group, with a top ranking from Chambers and Partners — is arguably the real estate world’s answer to Rodge Cohen. In the New York Observer, Dana Rubinstein began an August 2008 interview with Mechanic by citing a study declaring him to be “the best-connected and most powerful real estate lawyer in the world.”
But at least one ATL reader holds the opinion — a minority opinion, it should be noted — that Jon Mechanic’s track record isn’t so stellar.
The bill of particulars against Jon Mechanic and Fried Frank, after the jump.
From an ATL correspondent:
First off, thank you for doing such a wonderful job with AboveTheLaw. I grew up with Greedy Associates, which was filled with misinformation and inaccuracies. You have clearly contributed to the transparency in the legal community and this contribution is greatly appreciated.One of the issues that I think has gone unrecognized during the economic downtown is reporting on the attorneys that have presided over the biggest deals gone awry and essentially led their clients into financial ruin. While we all know that lawyers are typically not making business decisions, a valuable attorney can steer a client away from a disastrous deals. Moreover, an attorney should bear some responsibility for protecting the personal wealth of his/her clients.
The current biglaw landscape is filled with prominent attorneys that led the charge into downright awful deals, but no group has had a worse track record than Fried Frank’s real estate department, led by Jon Mechanic.
This tipster continues:
Jon, who loves the spotlight and has been described as a so-so attorney with a great publicist, expanded the real estate department at Fried Frank without caution during the boom, only to lop off close to half the associates in the past year.
Fried Frank layoffs, stealth and openly acknowledged, are discussed here (scroll down through the archives).
Moreover, his group has been at the helm for some of the worst real estate investments in modern history, and his client roster is filled with the poster children for overleveraged behavior. You could argue that he has risked the personal wealth of some of New York’s real estate titans by permitting his billionaire clients to sign guarantees and risk property that has been in their families for generations.Maybe it is just coincidence or bad luck, but Jon and his team at Fried Frank seem to have the “un-Midas” touch, and many of his large clients have fallen apart. Among other deals, he has been involved in the collapse of Harry Macklowe and the forced sale of the General Motors building (pictured) and most of his real estate portfolio, Tishman Speyer’s troubled purchase of Stuyvesant Town at the height of the market, the fall of Broadway Partners and the foreclosure of the John Hancock tower in Boston and the collapse of Kent Swig and his return of The Sheffield to Fortress.
This diligent reader — we love it when readers do our work for us — provided the following links:
1. Tishman Speyer / Stuyvesant Town - http://online.wsj.com/article/SB125547827547583747.html
Interestingly enough, The American Lawyer named Jonathan Mechanic their Dealmaker of the Year (Real Estate), for his involvement in the ill-fated $5.4 billion purchase of Peter Cooper Village (aka Stuyvesant Town) by a venture of Tishman Speyer Properties and a unit of BlackRock. Our reader ventured the opinion that this might be “the worst real estate deal of all time.”
2. Harry Macklowe - http://www.observer.com/2009/real-estate/macklowe-selloff-what-happened-harrys-buildings and http://therealdeal.com/newyork/articles/billy-macklowe-no-longer-the-kid.
The Macklowe real estate empire has been in free fall over the past year and a half or so. The Real Deal described Mechanic as “a longtime attorney for Harry Macklowe.”
3. Swig Equities: http://www.nypost.com/p/news/business/swig_is_close_to_bankruptcy_0cLY6oKfN29irBsKRglpxN
According to the Post piece, “[d]eveloper Kent Swig is close to filing personal bankruptcy because he can’t afford to pay a recent $28 million judgment on his defaulted Sheffield57 condo conversion project in Midtown.”
Our tipster continues:
Attorneys are great at jumping into the spotlight when things are going well, yet there is little that is said when they are at the forefront of fallen empires. There is no better example than Jon and Fried Frank.Mechanic is a big deal. He loves the spotlight and will do just about anything for press. As a partner at another firm once told me, “Jon [may not be] the best real estate attorney in the city, but he absolutely has the best publicist.”
He loves nothing more than to preach about how much he loves all the real estate folks (an absolute charade given what he has done to them over the past year). But the real story here is how one man is sitting at the top of the some of the worst real estate deals in history…. And Jon Mechanic has his hand in all of them.
The counterargument to all this is obvious: “Hindsight is 20-20. The economic meltdown, including the collapse of the real estate market, caught many people off guard. If you’re the top lawyer in a field that falls apart, of course you will have clients who suffer setbacks. But that’s not the fault of the lawyers, who are responsible for legal execution of their clients’ business judgments.”
Our tipster’s rebuttal to that line of reasoning:
[W]hile some could argue that it was simply bad luck on the part of Fried Frank, I’d argue that Jon and his crew have done an inadequate job of protecting their clients from uber-risky deals and financial meltdown. By comparison, have a look at some of the other real estate groups in the city that have clients that are hurting, but nothing to extent of devastation Jon’s clients have endured. Foreclosure, bankruptcy, forced retirement — these are the words used for Jon’s clients, and that is saying something.
Jonathan Mechanic and a Fried Frank spokesperson did not respond to multiple requests for comment over the past few days.
So the question remains: Is it fair to blame the lawyers for bad business outcomes? Feel free to opine in the comments, or reach out to us with other interesting examples by email.
Moguls’ Mechanic [New York Observer]
(73) 
Comments
first!!
Player hating! Mechanic is The Man.
third!!!
someone is spiteful and looking for an outlet to trash someone else, not sure about this one...
4 - This isn't a puff piece, but the information is factual.
defamation lawsuit in 3...2...1...
I'm told when interviewing potential FF associates, he proudly holds up a trade rag with his mug on the cover and says, "This is why you should want to join Fried Frank."
yeah, based on a superficial reading, it sure seems to be. This just doesn't seem right, I mean who out there does this type of research and heads straight to ATL unless it was a personal vendetta that is probably more emotionally charged vs factually charged.
Just my impression, 4
This is absurd. It's not a lawyer's job to tell his client that a deal the client wants to do is too risky FROM A BUSINESS STANDPOINT. Making that determination is up to the client. The lawyer's job is to explain the LEGAL risks a proposed deal presents, and to draft LEGAL documents that accurately set forth the LEGAL responsibilities of the parties. And nothing in this article indicates that Mechanic failed to do so.
It seems clear that your "tipster" is just trying to settle personal scores. And I know you'd sell your own grandma for a few more page-hits, Lat, but it's still pretty appalling to watch you attack somebody on such a flimsy basis.
Do you ever look in the mirror and ask yourself "what the hell have I become?" When you decided to go to law school, did you ever think your livelihood would one day depend on publicly trying to destroy people who have done you no harm?
6
Newsworthy and Truth defense in 4... 3... 2... 1...
I'm not sure that somebody who gives a disparaging opinion of another person based on publicly available information constitutes a 'tipster'. Shows lazy writing and dubious judgment on Lat's part. As for Mechanic, he is envied by almost every other lawyer in his field so he will inevitably attract detractors. He has been at the helm of the lion's share of the real estate market's mega deals over the last decade - some no doubt greatly enriching his clients, others, particularly in this challenging environment, not so much. He's also a great negotiator so don't believe all that "he's just got a great publicist" nonsense. And no, I'm not his publicist and don't work at Fried Frank.
Wow, what a hit job.
This paragraph is very flattering:
"Fried Frank partner Jonathan Mechanic (pictured) — chair of that firm’s high-powered real estate group, with a top ranking from Chambers and Partners — is arguably the real estate world’s answer to Rodge Cohen. In the New York Observer, Dana Rubinstein began an August 2008 interview with Mechanic by citing a study declaring him to be 'the best-connected and most powerful real estate lawyer in the world.'"
This is bullshit!!! Let's trash Galleon's attorneys for his insider trading. Or, how about Bear Stearns' outside counsel for allowing it to be sold to JPM for $10 a share; or how about Gore's counsel for losing the 2000 election.
Who is coming up with all of this crap and junk and feeding it to nubile associates with nothing better to do than run with it with copy, paste and forward?
I am all for the first amendment, but these posts are akin to drive by shootings and the work of legal paparazzi.
Enough already!!
The post acknowledges the contrary arguments. See paragraph #2 and paragraph #4.
I still want to see the Kash beaver shot from Facebook.
15=Lat. Pathetic
I can't believe you guys published this.
This is ludicrous. It's not the lawyer's job to decide which risks to take, only to inform about known risks.
Dear Elie,
Let me start off by saying what a great website this is. Also, you are attractive and very, very smart.
Enclosed please find a seemingly neutral and supposedly well-researched hit piece on my enemy.
Please feel free to post it on your fine publication.
Kthanxbai
2 most recent posts are by Lat...is Elie finally gonzo?
This guy bears an uncanny resemblance to Artie Fufkin, the adorable little ranker who was responsible for the worst record promotion campaign I had ever seen. I think we sold a hundred copies of Smell the Glove in the Midwest that summer.
Maybe he pulled a Don Draper, got hired at Fried Frank, and brought his music promotion skills to Biglaw.
http://www.spinaltapfan.com/atozed/TAP00191.HTM
I am a part-time real estate agent. Every home I sold since 2005 is under water. I guess I also have an "un-midas" touch, or maybe it is because I LIVE IN FLORIDA.
I concur. This piece is a bit of a shark jumper for ATL. It is not newsworthy. My guess is that this guy can tout a success or three for each of these dogs. Whose clients didn't make bad deals during this time period. To hang the bad decisions on this attorney is nothing more than a hit job. What gives Lat? Respond to your critics.
Comment removed by moderator.
ATL from gossip to crap
Suck my ass, Mystal, you obese, race bating, WALRUS!
14, how do you know what the tipster looks like?
25. OMG. How long before you get the "comment removed by moderator" designation. Well done.
Q: How many ATL commenters does it take to change a light bulb?
A: 51--one to change the bulb, 20 to post bigoted comments, 20 more to complain about how bad Elie and Lat suck, and 10 AutoAdmit crossover douchebags to make random comments in their indecipherable pidgin English.
30:
It's 101. You forgot to mention the 50 tired shtick comments that accompany every post.
30=geek
25 - NSFW warning please!!!!!
25 - NSFW warning please!!!!!
serioulsy. not cool, 25.
33-35 - That person has been spamming the ATL comments relentlessly. Just DO NOT CLICK on anything with an "imageshack" link.
I wish I'd had the interview experience described by #7. I was interviewed by a DC tax associate at Fried Frank who told me she f****ing hated working there. You can imagine how awkward that was. I spent the rest of the interview trying to convince her that I still believed it was a nice place to work.
Perhaps #7's experience dates back to the time when the market was strong enough that law firms had to pretend that it was a nice place to work.
When I interviewed at Fried Frank years ago, neither Jon Mechanic, nor anyone else with a 'stache, waved a magazine around and said "this is why you want to work at FF."
It COULD be a "hit piece."
Or it COULD be accurate information that leads to questions about whether leading legal publications pass PR fluff as legitimate "news stories" concerning members of our profession.
YOU the reader, using the critical thinking you received in law school can weigh the facts and DECIDE FOR YOURSELF...
hahahaha.
Number 6 is right. This slander against the Greedy Associates will not stand!
"This is absurd. It's not a lawyer's job to tell his client that a deal the client wants to do is too risky FROM A BUSINESS STANDPOINT"
That's part of the problem. Attorneys have become lapdogs for banks, hedgefunds, pe shops etc. They let themselves be used to protect said institutions but never stand up to their clients when they think that the client may be endangering themselves and/or shareholders. Biglaw firms compete so much for work that they have become enablers rather than effective counsel.
While all the second year associates weigh in with their valued expertise on the proper role of an attorney, please note that the few clients mentioned in this idiotic hatchet job are some of the biggest, most successful, most powerful real estate organizations around. How long do you think it would have taken them to replace Mechanic if he did what this "tipster" is suggesting and advised against these deals? Does anyone who's been in the actual world for more than 20 minutes have any doubt that Tischman Speyer would have said, "You know what Mr. Lawyer, you're right! This perfectly legal transaction that we want to put billions into is just too darn risky. Even though we are real estate titans who could buy and sell you over and over, we will take your advice and let this one pass. Thank you for telling us how to do our business that we learned from our grandaddy and have been doing all our lives and made a fortune from." Are you kidding me? If this tipster has a clue, he/she knows that this is not how the world works. So he/she either is clueless or is knowingly saying stupid things to smear Mechanic.
2 = Mechanic's publicist
41 - +1
31: The number would actually be 106. There would be at least five people posting FIRST!!!
--30
That is one magnificent mustache.
I shaved my balls for this?
The bad business track record of his biggest clients can't be pinned on him. It does suggest that he is stuck with the dregs of the client barrel. Good partners at top firms can't always pick out the business winners, but they tend to be good at sniffing out the losers. At most, this suggests Mechanic was stuck taking on the problem clients no one else wanted.
glad to see a few others questioning the value of an anonymous author who blasts a guy for a few botched deals.
48, these aren't "problem clients." Those were/are big shooters when it comes to commercial real estate. RE partners at "top firms" would have been falling all over themselves to get work from some of these companies back in the day.
That said, if you look down Mechanic's deal list, the purported debt structure on some of those acquisitions was just ridiculous. But it is never something a lawyer would question a client about. They are big boys. They know how debt works.
Lat, I believe that pic is of S&C's building across the street, not One New York Plaza where FF is located.
This is really beneath this blog, and that's saying something. The man is a real estate lawyer in 2009--of course some of his clients have taken hits.
Nothing in any of those links indicates that any of the trouble some of his clients are now facing is a result of his legal work. The worst that can be said is that his legal work failed to shield his clients from the worst real estate market in eighty years, which is not exactly damning, to put it mildly.
A more subtle irony exists in restructuring, where Weil gets praised for taking its huge clients through long, expensive bankruptcies, while, for example, Davis Polk quietly restructures Ford out of court, helping them right the ship so thoroughly that they could announce earnings of $1 billion today, and most people on this site probably don't even know DPW has a bankruptcy group.
Can someone please post an article like this about Jeff Lenobel at Schulte Roth? The dude burried his clients, fired half of his associates, and then bought a multi million dollar condo.
Wait, this isn't about Mike and the Mechanics?
54 - take a nice deep breath. ATL is going to let every laid off associate do a post on the "mean, old, rich" partner they used to work for.
Let's do Wachtell next.
We can start with AOL-Time Warner, weigh in on Huntsman-Hexion and round it out with BoA-Merrill.
So the real estate lawyer is supossed to check the businesspeople's work? And if he disagrees with the businesspeople on a business decision, I guess he is supossed to take over the deal and kill it?
Is lender's counsel to run their own competing credit checks on borrowers? Perhaps the exec comp lawyers should do their own interviews of executives?
This is the stupidest fucking excuse for a story I have seen in a while.
umm Stuy Town and Peter Cooper Village are affiliated, but not the same place...could that change thoughts about that WSJ article?
Wow- this is an "article"? Really? Pathetic.
So if I'm a laid of associate in the future, will you run an attack piece on the head of whatever practice group kicked me to the curb?
I promise i'll do you're work for you and send a bunch of links. Links are the same thing as research right?
WTF Lat, I expect some effort from you. Total trash.
how could you let one your wealthy clients personally guarantee a deal? that is malpractice. plain and simple.
Any way you look at it, interesting story. So many huge clients taking a dive is newsworthy. Fried Frank deserves whatever comes to them. Mechanic takes home millions and cans his associates to maintain his over-the-top lifestyle. Like so many other partners in biglaw, pathetic and disgusting.
FF is not the firm it once was and it sounds like that goes for the RE dept as well.
ATL- Your news source for poor analysis by anonymous tipsters.
Lat,
You will honestly be going to hell for all the pain and suffering you have caused with your gossip site. You are no better than Perez Hilton.
Elie, you really must have made it into Harvard based on a clerical error or something. How in the hell does this have anything to do with whether Jon Mechanic is a good lawyer? When the fuck did it become the lawyer's job to double check the business points of the deal?
Even if it was his job, the entire real estate sector tanked. By your logic, every real estate lawyer and probably most finance lawyers are incompetent. It would be one thing if today was a slow news day and you were just pulling articles out of your ass for the sake of posting something. But today you had the Sidley guy torch the remains of the unidentified 9/11 victims AND Cravath's bonuses were announced. With material like that, you still post this? WTF?!?!?!
can't argue with facts. this guy seems like a pretty crappy lawyer and i doubt that smart clients will go back to him or FF generally.
As pointed out earlier, real estate LAWYERS are not supposed to evaluate the BUSINESS aspects of the deal for the client but the LEGAL risks involved. If one of Mechanic's clients overpays for a crappy property that is not his fault. I heard Mechanic speak in my real estate deals class and he was a boring and pompous individual -- however, that does not mean he is not a good lawyer and most of these criticisms are absurd.
With apologies to Jimmy Dean (for you yoing'uns who are unfamiliar with the song, see http://en.wikipedia.org/wiki/Big_Bad_John):
Big Jon
Big Jon
Every morning at the Fried Frank office, you could see him arrive.
He stood 5 foot 6, weighed 185.
Kind of broad at the shoulders, fat at the hip.
And everybody knew you didn't give no lip to Big Jon.
Big Jon
Big Jon
Big Bad Jon
Big Jon
Nobody seemed to know where Jon called home
He just ran around town and never stayed alone.
His publicist said quite a bit, and he wasn’t quiet or shy
And if you spoke at all, you'd just said “hi” to Big Jon.
Somebody said he came from Stuyvesant Town,
Where he got into a fight and brought the Tishmans down.
And a crash and a blow from a huge right hand,
sent a real estate empire to the promised land.
Big Jon
Big Jon
Big bad Jon
Big Jon
Then came the day at the height of the boom,
when funding died up and associates started crying doom.
Owners were praying, and hearts beat fast
and everybody thought they had breathed their last
- ‘cept Jon.
Through the dust and the smoke of this man made hell,
walked a giant of a man that the developers knew well.
Grabbed a sagging capital stack and gave out with a groan,
and like a giant oak tree he just stood there alone, Big Jon
Big Jon
Big Jon
Big Bad Jon
Big Jon
And with all of his strength, he gave a mighty shove.
Then Ken Swig yelled out, 'there’s no light up above!'.
And 20 equity partners scrambled from a 'would be' grave
now there’s only one left down there to save, Big Jon.
With jacks and timbers, they started back down,
then came that rumble way down in the ground.
And as smoke and gas belched out of that foundation pit,
everybody knew it was the end of the line for Big Jon.
Big Jon
Big Jon
Big Bad Jon
Big Jon
Now they never reopened that worthless pit,
they just placed a marble stand in front of it.
These few words are written on that stand,
'At the bottom of this hole, lies one Hell of a man, ‘Big Jon'
Big Jon
Big Jon
Big Bad Jon
Big Jon.
A few observations:
1. If I am correctly understanding the premise of this post, then it must be the case that every real estate lawyer in America has a "not so stellar" record over the last two years. Duh.
2. Most real estate lawyers are merely, to borrow a quote I heard a few years back, "monkey fucking scribes." They typically don't get to have much input into the particulars of the business deal. It's not their money, after all.
2. It truly is a magnificent mustache.
65-
You must be unable to fucking read.
Think and read before you post.
-Not Elie
JM may be an intelligent real estate lawyer but his personality is greatly lacking. He is highly egotistical and in love with himself and a bastard to those who are not his clients or peers. Many would enjoy seeing him suffer either professionally, financially or personally.
Lenobel is a very fair guy - he will lie to all people alike.
Lenobel is a very fair guy - he will lie to all people alike.