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How Should Law Firms Look At Their Real Estate Costs

How Should Law Firms Look At Their Real Estate Costs 2

A great work environment is key to achieving high productivity for lawyers. Yet a study from a major UK real estate consultancy has found that law firms (at least in the UK) are lagging behind other professionals in achieving great locations and a top environment.

Duncan Weston, the Managing Partner at CMS Cameron McKenna wrote in the Lawyer that firms needed to juggle real estate costs with achieving a top environment for their lawyers. In other words they need to balance the economics of growing a firm with the need to achieve a good environment for staff and partners.

From The Lawyer:

Balancing the economics of growing a City law firm to keep pace with rising global markets against a backdrop of expensive office rents is a conundrum facing many managing partners. Real estate spend is, after all, the biggest cost to law firms after salaries.

Recent research by real estate company CBRE found that law firms lagged behind accountancy and management consultancy firms in achieving efficiencies in space management strategies. Put simply, they are able to fit more staff members (averaging 1.25 per desk compared with one person per desk in the legal sector) in a smaller office space.

The report found that this differential is set to rise further with accountancy and management consultancy firms set to increase to 1.79 people per desk by 2019, but law firms expected to remain at one desk per person. This is despite the growing trend for law firms to move to more efficient open-plan offices, outsource back-office functions or move them to less expensive locations.

Of course, accountants and management consultants tend to spend more time working in-house with clients than lawyers who, as a profession, are inherently more desk bound. But this does not mean that serious operational efficiencies cannot be achieved even at the current space ratios. In the long run, more innovative real estate strategies can not only generate substantial cost savings but also become a catalyst for significant organisational change.

At CMS Cameron McKenna, we moved into a new London headquarters this month, which has 30 per cent less office space yet still allows us to increase fee earner capacity by 20 per cent. By combining technology with a collaborative sector-driven environment for all staff, lawyers are able to share knowledge and ideas with colleagues and devise more flexible and innovative ways of servicing clients.

As the CBRE report confirms, such strategies bring significant savings. Out of a sample of 60 leading firms in the report’s sample, the top 11 to 25 have been the most active in this respect, cutting rent per fee earner costs by 9 per cent to £19,600 per annum (as compared with £22,400 per annum last year.)

Source: The Lawyer

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