Law Firms Opt for Smaller Offices
October 7, 2016 | by Robert Carr | National Real Estate Investor
Whereas the technology sector has been in growth mode over the past 10 years, financial services and law firms, the office growth drivers of decades past, have been the losers. While technology and management consulting sectors have both experienced growth of more than 40 percent between July 2007 and July 2016, financial services and law firms each show an almost 5 percent decline in headcount, according to a new study by real estate services firm Savills Studley. Legal hiring, in particular, has been stagnant.
All is not bleak for law firms, however, as revenue gains increased from 3.3 percent in early 2015 to 4.4 percent in early 2016, according to a report on the top legal companies by Citi Private Bank’s law firm group. The analysis traced the rise to increases in billing, not more demand for services. Pressure to eliminate hourly fee arrangements in place of fixed costs and continued merger activity have kept growth down at law firms, according to the Savills study. The report includes a list of almost 60 mergers/acquisitions in the legal industry in just this year.
As a result, more law firms are joining the current trend in shrinking personal workspaces, even for partners, according to Heidi Learner, chief economist at Savills Studley. While new Millennial associates are more likely to accept offices of about 150 sq. ft., Learner says even the mid-level and top partners are opting for a better bottom line over having room for a couch and coffee table in 300 to 500 sq. ft. offices.
