Law Office Management
Jun. 2, 2014
Moving the Office
A realtor offers advice on whether a law office should relocate or renovate.
Law firms often are courted by building owners to anchor a new development. This may seem prestigious, but it often translates into the highest per-square-foot rent in the marketplace. That's why it's always important to analyze the feasibility of remodeling present space instead of moving. Relocation may well cost considerably more than simply expanding or modifying the existing floor plan. A full assessment may show that renovations can meet future needs, but there is a downside to consider: Will the firm's lawyers and staff have to work off-site during the actual renovation? Practicing law in a construction zone can be difficult. 2 - Budget prudently.
Some people mistakenly believe that a growing rent bill is the sign of a growing company. But many firms actually need less space than they currently occupy. A smaller footprint may translate into lower rent, which can significantly improve the firm's bottom line. After moving into the newest "Class A" space, law firms often proceed to build out a spectacular environment worthy of Architectural Digest, complete with high-end finishes and custom built-ins. This effort to project success may backfire, however, if a client is offended by the firm's display of opulence. It is not at all uncommon for clients to interpret an increase in billing rates as a demand that they pay for the office upgrade. 3 - Update assumptions.
Historically, law firms have recognized an attorney's career advancement with adjustments in office space. As lawyers move up the ladder, their work space becomes larger, until they finally achieve an oversized corner office. A savvy real estate broker will be able to help the firm find other ways to appropriately organize the site plan to recognize individual achievement. Indeed, law firms across the country are shrinking the per-attorney footprint and shedding office space formerly dedicated to the library or file room. Individual offices are smaller, and firms often adopt a standard office size for all partners. Dedicated conference rooms of varying sizes also can be utilized by the entire range of staff. The concept of "hoteling" is gaining traction in the legal arena, as firms realize that many of the individual offices sit vacant during the day for a variety of reasons. The idea is that firm attorneys who visit the office intermittently can "reserve" a vacant room as needed (sometimes only for a few hours, but maybe for several days). In recent years, this phenomenon has become even more prevalent thanks to improvements in technology and workplace organization (in particular, the advent of new mobile tools, cloud computing, and trends in job sharing). 4 - Hedge the risks.
Economic factors can be volatile, so any law firm considering a new office lease should consider three vulnerabilities: Changes to the building's infrastructure or ownership that could affect occupancy; Global market events that trickle through to real estate and affect the rents that tenants pay; and Potential fluctuations in the firm's profitability. Before signing, the firm must clearly understand its ability (or lack thereof) to expand or contract space over the term of the lease. This is especially important if the firm is considering any commitment of more than five years. In today's legal industry, it is not uncommon for a firm to experience rapid growth or, conversely, a decline in the number of partners or practice groups. This can be particularly true for midsize firms (defined as between 25 and 250 attorneys, according to one ABA survey). If a firm's profile is in flux, it may find that it needs more or less space - sometimes on very short notice. For this reason, such firms must push for as much flexibility as they can get in a lease, with layers of options to expand, contract, and terminate. 5 - Serve the staff.
In most firms, the attorneys and their support team are likely to work long hours. To the extent that office space is viewed, in part, as a recruitment or retention tool, it makes sense to consider the commuting habits of present and prospective employees. The location must be convenient for all personnel - partners, associates, paralegals, and office assistants. This consideration cannot be overstated for firms that profess to emphasize work-life balance as a core value. 6 - Remember the clients.
Thoughtful law firms make sure their offices are comfortable and convenient for clients, too. Give thought to amenities that clients can take advantage of - such as conference rooms with cutting-edge connectivity, and internal spaces to host industry mixers. (Wilson Sonsini Goodrich & Rosati did just this in 2012, when it launched an office in a brick industrial building in San Francisco's SOMA district, a popular area for tech startups. With exposed lighting, long communal tables, and a setup that encourages start-ups to visit regularly and hold meet-ups in the space, the firm caters to the culture and values of its potential clientele.) 7 - Avoid conflicts.
As every lawyer knows, ethical rules about avoiding conflicts of interest mean that no one can properly serve two masters; and this applies equally to real estate brokers. It is essential to retain a broker who is completely independent of the building landlord. Even if prospective broker agencies indicate that they maintain a "wall" between their tenant and landlord divisions, they may not always have your best interests at heart. No client would allow its counsel to simultaneously represent the other side of a negotiation (much less a litigation opponent). The same consideration applies in real estate. It takes proper planning and strategy, but relocation can infuse a law firm with newfound energy and enthusiasm. Better yet, it can improve the performance and morale of attorneys and support staff - and, ultimately, help the bottom line. Howard Ecker is the founder of Howard Ecker + Company, a Chicago-based real estate firm that represents tenants nationwide.
Kari Santos
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