Law Firms Show Efforts to Reduce Real Estate Expenses
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Many law firms are implementing methods used by corporations to cut corners on their real estate expenses.

Summary: As rental rates increase, many law firms are exploring ways to cut their real estate expenses.

Although many law firms have significantly improved their business since the recession, many still have a desire to increase their efficiency when it comes to real estate, the American Lawyer reports.


The 2015 North America Outlook Report, published by Colliers International’s Law Firm Services Group, concluded that firms have used many tactics that were traditionally used by corporations to meet their real estate goals. These goals include collaborative spaces, offshoring, nearshoring, and universal office sizes.

New York firms have outperformed others elsewhere in the United States. 

Real estate makes up anywhere from 7 to 10 percent of the total expenses of law firms. Therefore, these rooms see real estate as a way to cut expenses, according to Steve Levitas, the national director of law firm services for Colliers International.

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Levitas said, “Years ago, firms would carry excess space for mergers and attracting laterals, [whereas] now it is being managed a lot more tightly with excess space being shed,” Levitas also predicts that law firms will watch this expense closely in the near future.

Are you surprised that law firms are still trying to cut expenses?

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According to the report, AmLaw 100 and 200 firms have cut their space usage by 15 to 32 percent. As an example, 15 feet by 15 feet partner offices and 10 feet by 15 feet offices for associates are being downsized to 10 feet by 15 feet or 10 feet by 12 feet offices. Offices have dropped from roughly 1,000 square feet to 650 square feet or less.

California is considering a free legal work requirement for new attorneys.

The report additionally concluded that New York and San Francisco were the most expensive places to rent office space in 2014.

New York witnessed Class A rents climb 11 percent over the last year. Its rates are currently at $76.75 per square foot. Many firms have consolidated their office spaces. In San Francisco, Class A rents shot up 17.4 percent to $72.44 per square foot. Construction costs are also a major consideration for law firms, “as elevated demand has led to record construction costs and a preference to renew in place.”

Other markets have also seem commercial rental rates increase. Chicago’s increased by 6.6 percent to $40.02 per square foot, and Washington, D.C.’s rental rates are currently $55.99 per square foot, up 5.5 percent.

Law school tuition is also climbing. 

According to Levitas, many firms are using outside space to perform functions such as accounting, contract attorney work, and marketing.

Source: American Lawyer

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