Law Firms

Second BigLaw firm litigates over rent on unoccupied offices during COVID-19 pandemic

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Simpson Thacher & Bartlett has filed a lawsuit contending that it is entitled to return of rent on unoccupied New York City offices during the COVID-19 pandemic.

The breach of contract suit, filed Monday in state court in New York, seeks $8 million in damages, reports. The suit also seeks a declaratory judgment that the law firm is entitled to rent abatement while the pandemic continues or government mandates continue.

According to the suit, Simpson Thacher’s lease has a “relatively unique clause” in the lease for its offices at 425 Lexington Ave.

The clause entitles Simpson Thacher to rent abatement when the law firm can’t use its offices for 60 days because of “force majeure” events, the suit says. That includes circumstances in which the government preempts the tenant’s right to use the space in connection with a national or other public emergency, according to the suit.

The lease allows rent abatement for space that is unusable and unoccupied for a period in excess of 60 days, the suit says.

Simpson Thacher vacated its New York offices as of March 22. Even though New York County began allowing 50% occupancy June 22, “substantial other social distancing and hygiene restrictions” remained in place that left Simpson Thacher “unable to continue the reasonable operation of its business,” the suit says.

The rent abatement clause reads:

“If tenant shall be unable to use, and shall have vacated, the premises or any substantial portion thereof (i.e., more than 6,000 contiguous usable square feet) for at least … (b) sixty (60) consecutive days if a result of force majeure (provided such force majeure has not been caused by tenant’s negligence or improper acts) and tenant is unable to continue the reasonable operation of its business, then tenant (as its sole remedy) shall be entitled to a rent abatement with respect to all rent allocable to such portion of the premises which is unusable and unoccupied for the period in excess of the aforesaid number of days until such time as the premises or the applicable portion thereof shall be again usable or shall be occupied by tenant.”

Force majeure is partly defined as “fire, casualty, any strike, lockout or other labor trouble, governmental preemption of priorities or other controls in connection with a national or other public emergency or shortages of fuel, supplies or labor resulting therefrom, or any other cause, whether similar or dissimilar, beyond landlord’s or tenant’s reasonable control.”

Simpson Thacher gave this statement: “While we typically do not comment on litigation, we can confirm that we have filed a claim for rent abatement against our NY landlord to preserve our rights under a provision in our lease agreement and have continued to pay rent while reserving our rights.”

Simpson Thacher is the second large law firm in the news for a COVID-19 rent dispute. Jenner & Block has said in response to a lawsuit that it is entitled to an $840,000-plus credit for overpayment on its Chicago lease.

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