Future Law

Law Firms Downsize Office Space Amid COVID-19

Before COVID-19 rocked our workplaces, law firms were making strides in reducing office space. When considering what millennials want from their employers, skyscrapers with marbled interiors and stately furnishings may not have the same allure as they once did. In contrast, younger lawyers seek working environments dedicated to collaboration and efficiency.

Law firms have noticed this shift in priorities. According to a 2019 survey by Cushman & Wakefield, many law firms are leasing smaller offices that prioritize collaborative spaces. Others have begun using hoteling systems, where employees schedule the use of a deck or a workspace preemptively, over assigned seating. Beyond just talent attraction, floor plans that value square-footage for record-keeping have become an archaic and inefficient use of space when most documents can be stored digitally.

Although real estate downsizing has been a steadily growing trend for several years, COVID-19 has been the equivalent of throwing gasoline on a small fire. Like many industries, the success of working remotely in the legal profession hasn’t gone unnoticed. In fact, it has left many law firms thinking, why do we pay so much for this office space?

Rethinking Office Space

Currently, most law firms spend 4% to 14% of revenue on office space. In light of positive experiences with remote working, many have begun downsizing or are planning to soon. According to a Cushman & Wakefield poll of over 900 participants from U.S. and global firms, only 20% expect no pandemic-related changes to their firm’s real estate portfolio, with the remainder expecting some reduction in office space.

This trend isn’t unique to the legal profession. Nationwide leases for office spaces of 30,000 square feet or greater dropped 70% in the first five months of 2020 compared to the same period in 2019, according to Nancy Muscatello, a managing consultant at CoStar Advisory Services.

Historically speaking, legal professionals have been slow to adopt changes that other industries are eager to embrace. However, this is changing as a result of the pandemic. “It’s going to be uber-speed now,” said Sherry Cushman, vice-chair of real estate services at Cushman & Wakefield. “There’s going to be a lot of exploration, and I think there are going to be some firms that are going to be incredibly progressive and set the stage for what the future of law may look like.”

Technology Supports The Shift

Real estate downsizing and permanent remote work options may not be possible without the adoption of technology firm-wide. Law firms that leverage technology beyond web calls to practice-management processes may reap the benefits, according to the Commission on Professionalism’s Chief Counsel Mark Palmer.

“If this accelerated tech adoption trend holds, consumers will see those [legal services] providers who best position themselves to answer why and how their service solves problems as better than their competitors,” Palmer wrote in a recent blog post. According to Clio’s 2020 Legal Trends Report, building a demonstrated value delivery position starts with deploying cloud-based, client-facing technologies, Palmer wrote, specifically, online payments, client portals, and client intake and consumer relationship management (CRM) software.

Deploying software may also be good for the bottom line. Clio found that firms using online payments, client portals, and client intake and CRM software technologies collected $19,541 more revenue per lawyer in 2019 and are projected to collect $37,622 more revenue per lawyer in 2020.

The Costs of Working Remotely

While there are many benefits to a remote work environment, some experts say there are also hidden costs. Lindsey Lyman, a clinical assistant professor at the University of Chicago Booth School of Business, says organizations that work remotely risk losing efficiency that’s gained from in-person interactions, minimize relationship-building opportunities, and may see negative impacts on employee emotional and physical health.

“Feeling a sense of belonging by being in a room with people who are giving you feedback and physical energy, that are working hand in hand with you and each other, is something that you cannot replicate by sitting in an office by yourself at your home, looking at your colleagues through a screen,” Lyman said.

The pandemic has undeniably altered the way we live and work. With new technology entering the landscape every day, remote work may continue to become more desirable, efficient, and effective. It’s too soon to say what offices of the future will ultimately look like, but they likely won’t be the same.

Has your law firm discussed plans to downsize its office space? Share in the comments below.

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