In-House Counsel, Lawyerly Lairs, Magic Circle, Money, Partner Issues, Real Estate, United Kingdom / Great Britain

Inside Straight: London Partners Can't Afford Homes . . .

In-house columnist Mark Herrmann now lives in London -- and he can't believe the real estate prices over there. Partners at major law firms in London can't afford to live in the city itself....

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I told careful readers six months ago that I would soon be moving to London. I made the move on September 1, and here’s the local news:

Senior partners at major London law firms can’t afford to live!

Well, not quite: But senior partners at many major London law firms can’t afford to live in London itself.

I recently had lunch with — prepare yourself — a senior partner at a major London law firm. When I told him where I was now living, he said that it was nice that my commute would be so short:

“Twenty years ago, the senior partners at most big law firms lived in London. But today, unless you have inherited wealth or bought your home long ago, most senior partners at London firms can’t afford to live anywhere near the City. Partner pay just won’t cover the cost.”

As an expatriate American, this startled me: I’m confident there’s no American city where senior partners at major law firms can’t afford local real estate. But in London, this has the ring of truth to it. From an American’s perspective, everything in London is nauseatingly expensive (or “quite dear,” as the locals so quaintly put it). But the cost of housing goes far beyond “nauseatingly expensive”; it’s eye-poppingly, grab-your-chest-and-drop-to-the-ground, out of sight. It leaves partner pay in the dust. Here’s what I mean . . . .

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I just rented a perfectly nice (but small) two-bedroom, two-bath apartment (or “flat,” as the locals say) in a perfectly nice building in a perfectly nice part of town. But I by no means moved into a medium-sized or large flat in the nicest building in the best part of town. I poked around online to do some research for this blog post. A similar unit in my building — a two-bedroom, two-bath, 1370-square-foot apartment — sold within the last year for GBP 2.5 million. That’s roughly USD 4 million, or $3,000 per square foot.

That’s ten times what you’ll pay for great space in Chicago and something like three times what you’ll pay for nice space in New York. I’ll call that confirmation of my misleading headline: Many senior partners at major law firms in London can’t afford to live in the city in which they work. (Okay, okay: I did some more research for you. Here’s an online source from last year saying that New York real estate averaged $1,068 per square foot in 2011, and London checked in at $1,590. So London’s gone up recently, or the unit in my building was recently upgraded, or something. But it’s still awfully expensive.)

I know what you’re thinking: If senior partners at major law firms can’t afford the cost of housing in London, then who the heck is living there?

The answer, so far as I can tell, is a combination of (1) expatriates, relocated to London for corporate reasons, with their housing subsidized by corporate programs, (2) Russian oil oligarchs, (3) Middle Eastern sheiks, and so on. Those essentially unlimited sources of wealth have apparently bid real estate prices up out of the reach of virtually all locals.

But what do I know? I just got here.

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If you’re lucky, maybe I’ll explain in some future column how one dials London from a U.S. phone. (The correct answer is not: Stare at all the damned “plus” signs and numbers in parentheses. Dial some random cross-section of the numbers you’re looking at. Get a “fast busy” signal. Try twice more, to similar effect. Curse. Call the operator at your law firm and ask the operator to connect you to the number.)

Or maybe I’ll explain how frustrating it is to have AutoCorrect software actually incorporate errors into your documents, by “correcting,” for example, “subsidize” to “subsidise,” as happened just three paragraphs ago. (This is particularly frustrating for anyone who’s written a book called The Curmudgeon’s Guide To Practicing [not ‘Practising’] Law.)

Or, if I live to tell the tale, how to cross the street without getting killed.

Of course there’s a remote chance that I’ll go back to writing about topics of interest to in-house lawyers and outside counsel who work with them. One never knows.

Mark Herrmann is the Chief Counsel – Litigation and Global Chief Compliance Officer at Aon, the world’s leading provider of risk management services, insurance and reinsurance brokerage, and human capital and management consulting. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at inhouse@abovethelaw.com.

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