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    Boutique Law Firms: 4 Solutions to Vexing Real Estate Issues That Keep Partners Up at Night

    By Jon Zuckerman and Robert Goodman, Colliers International

    We’ve been representing law firms in their search for office space for many years, and we’ve seen how a near-term lease expiration can become an inflection point for small and medium-sized law firms. Sometimes, it forces partners to confront their individual financial commitments and even the future of the firm.

    Traditionally, these smaller firms would rarely see the need to market themselves through the aesthetics and design of their office space. Lower billable rates and niche expertise were often enough to draw in new clients, while their more intimate and entrepreneurial culture helped to attract young attorneys who viewed boutiques as offering a better lifestyle with a more predictable path to becoming partner.

    However, while larger law firms have been reducing their overhead for over a decade by taking less (but more efficient) space to stay competitive, support employee health and enhance performance, we believe that the time has come for boutique firms to follow suit.

    According to Jennifer Mannier, Senior Strategist at the global architecture and design firm M Moser Associates, “lawyers entering the workforce want to work in spaces that look more like consulting firms than traditional law firms.” Seeing a gradual move away from “space as status”, Mannier suggests that firms invest more in “we spaces” rather than me spaces”, with a greater focus on social and collaboration spaces, performance, and overall employee experience.

    Given this fast-evolving nature of work, here are four suggestions you need to consider as a partner in your boutique law firm when thinking about your office space:

    1. Are we allowing enough time to plan?

    Starting at least 18 months before your lease expires, you and your partners should meet and discuss ideas for the adaptation of the firm’s business model, and how your forthcoming occupancy decision and strategy are an opportunity to address a progression toward those goals.

    If you’re a more established firm with older partners, client succession is obviously critical. If the decision is to move to a new space, younger, mid-level and older generational partners must reach a compromise on funding future capital to move, compensating senior partners for their books of business, goodwill, etc.

    2. Should We Stay or Should We Go?

    The only way to answer this question is to methodically explore all alternatives in the open market.

    If your inclination is to stay, it is still critical that you conspicuously identify plausible alternatives (your landlord must be made aware you are looking elsewhere) to create leverage. Landlords do not want to lose tenancies, but they understand that inertia prompts most tenants to renew and will exploit lazy tenants by offering below-market concessions and charging above-market rent. Make your landlord compete for your tenancy.

    If you feel your current office cannot adequately meet your firm’s future needs and vision, we recommend identifying several “built-to-suit” alternatives with the landlord who is footing the bill to design and construct your new space. While the firm will likely still be out-of-pocket for the costs of furnishing and providing technological infrastructure to any new space, it will still be much less than if you had to bear the cost of construction as well.

    3. Can we do more with less?

    It’s important for law firm partners to realize that it is indeed possible to provide top-level service in a smaller space.

    We recently represented a small firm (about 20 lawyers) that occupied 16,000 square feet of space on Madison Avenue that was both inefficient and tired, but with an expansive outdoor balcony. The partners believed it would be impossible to find space with similar outdoor access at the same price nearby, so their strong proclivity was to stay despite our own belief that they only required about 10,000 square feet of space.

    We went out to the market and were able to identify a 10,000-square-foot full floor a few blocks away that comfortably accommodated the same headcount, with room for growth. We reduced their annual rent cost by 30% and, with the deft insight of M Moser Associates that we brought to the table very early in the process, were able to create a “state-of-the-art” workspace funded by the landlord.

    New M Moser-designed workplace for a recent law firm

    New M Moser-designed workplace for a recent law firm

    If you allow enough lead time ahead of your lease expiration, engage a trusted real estate advisor and space designer and keep communication open among the partners well in advance of your lease expiration, you can place your boutique law firm in the best position to balance operating costs and capital needs. This will create an opportunity to enhance the firm’s brand to help attract/retain talent and present well to your valued clients.

    4. What is the optimal working environment?

    Your goal should be to provide high-performance space for your entire team that enhances productivity and presents well to clients. Flexible/high-tech workplace strategies are required to stay competitive with other firms, which is why your space must accommodate a more mobile workforce that will concurrently appeal to young attorneys. It’s important that you recognize the growing desire/need for collaborative spaces that promote team/project-based work.

    A strong focus on investing in emerging technologies can help reduce cost, increase efficiency and improve the quality of your services. This also includes investing in emerging technologies that can help reduce cost, increase efficiency and improve the quality of your services. The latter can be achieved by incorporating critical elements of WELL into the design of the workspace to enable lawyers to concentrate longer and do their best work. For instance, ergonomic seating arrangements, maintaining alertness and the ability to breathe clean air within an environment that supports their circadian rhythm can improve staff productivity, thus facilitating a direct return on investment for billable time.

    Your new legal workplace should reflect the agility of the technology your people utilize, such as those that support physical and digital innovation. In the end, creating workplaces where employees can choose from a variety of work settings can optimize space, cater to individual work styles and attract the legal workforce of the future.

    Jon Zuckerman, Esq. Executive Managing Director, Colliers International

    Robert Goodman, Executive Managing Director, Colliers International