Nelson Mullins Sees Manhattan Middle Market Opportunity

Earlier this week, Nelson Mullins Riley & Scarborough announced its arrival to the Big Apple: For its launch in Manhattan, the 500-lawyer firm with deep roots in the South recruited former JP Morgan Chase Bank executive director Steve Hantz.

Contrary to news reports stating the Manhattan office will launch with a 20-lawyer team, it will be Hantz, his associate Gillian Deutch and two other lawyers. Michael E. Hollingsworth II, who serves on Nelson Mullins’ executive committee and plans to commute from Atlanta, will act as the office managing partner.

In an interview, Hollingsworth called New York “a huge hole” for the firm. Founded in 1899 in Columbia, South Carolina, Nelson Mullins has expanded into Nashville, and Jacksonville, Florida in recent years and Atlanta is now its largest office with more than 100 lawyers. Manhattan marks its 15th office.

There’s a lot of work in New York for mid-market firms like Nelson Mullins, Hollingsworth said, adding that Hantz and Deutch have a practice focused on the commercial mortgage-backed securities market, and its lawyers help loan originators draft the term sheets and structure their loans. Below is a lightly edited transcript of our interview with Hollingsworth.

[caption id="attachment_2655" align="alignleft” width="130"][Image “Michael E. Hollingsworth II” (src=https://bol.bna.com/wp-content/uploads/2015/06/Hollingsworth_Michael.jpg)]Michael E. Hollingsworth II[/caption]

Big Law Business: So Nelson Mullins will not have 20 lawyers in its Manhattan office?

Hollingsworth : A lot of the articles seemed to say that. It’s not correct. Steve Hantz is joining a 20-plus lawyer [real estate capital markets] practice group. Most of the lawyers are not in NY. He and Gillian Deutch are joining and they practice in what’s called CMBS, commercial mortgage back securities. The market has been hot for a few years now, coming out of the recession. It’s basically a subset of real estate finance. We basically are bundling loans and then securitizing a bunch of commercial mortgage loans.

We open on Monday in temporary space located on 48^thand Madison. We will find more permanent space as the picture becomes clearer as to how many attorneys we’ll be. We will be adding to the practice primarily in corporate M&A securities and real estate.

Big Law Business: Why did opening in New York appeal to the firm?

Hollingsworth: We’re an east coast platform primarily — Boston to Florida. And New York was a huge hole for us. We finally decided about 12 months ago that we were going to open here. We vetted a lot of groups. We’re in material discussions with a lot of groups in the city. We’re here already. Our thesis is if we can be here more often ... it will allow us to be more involved in the client relationships.

The place where we sit in the market is a little different. We’re not coming in here to compete with Skadden Arps. People hire us for a little different reasons. We think we can bring our value proposition into the market and service some of the clients who are a little downstream. Our ‘all in’ project cost is substantially less than the big New York firms. Our overhead is less. That is the value proposition. We’re not coming in here to compete with firms we have no business competing with. We’ve seen how that works out.

Big Law Business: Did the recession create any opportunities?

Hollingsworth : I think what the recession did was make clients pay more attention to the cost side. I think that the really high-end projects that require a lot of lawyers to be staffed on them will still go to the Am Law 50 firms. But there’s a whole class of work that goes to firms that are just large enough.We’re in that range, we’re 500 lawyers. They’re a little more on the commodity spectrum than a super premium project or piece of litigation. There’s a lot more of that work being sent to firms that are between 200 and 600 lawyers because they can staff the projects with senior lawyers and still have an ‘all in’ project costs that is less than an Am Law 50 firm.

Big Law Business: Do you have a target size for the New York office?

Hollingsworth: By the end of the year, the picture will be clearer. We don’t have a number in mind. At a minimum we want to be 20 to 25 lawyers and at a maximum we want to be in the 50 to 75 range.