30% Down But Not Out: Law Firms Look To Shrink But Not Eliminate High-End Offices

Central business districts counting on big law firms to fill their office high-rises could get a rude awakening in the future as more attorneys opt to work from home, spurring firms to cut square footage requirements as much as 30%, real estate brokers say.

"The average office size per attorney for a firm for a long time was close to 1K SF per attorney, and over the last decade, that number has been shrinking," said Ryan Hoopes, a director with Cushman & Wakefield's Tenant Advisory Group. "Even before the pandemic, it was anticipated that number was going to get down close to 500 SF or less per attorney. So the idea of the law firm space becoming even more flexible and more agile was something that was happening before the pandemic."

CoStar Group data shows 56 law firms, representing a total of 565K SF, have leases expiring in Downtown and Uptown Dallas between now and the end of 2023. That leaves office landlords in uncertain territory where they could lose a large block of long-standing tenants or at least see significantly reduced square footage demands.

"Law firm clients are starting to set policies, and most will allow some percentage of work-from-home," Perkins & Will Principal, Corporate Interiors, Anne Kniffen said in a statement to Bisnow. "Some firms are using this to reduce square footage if they are in leasing discussions, and others are considering reducing their existing footprint."

Hoopes said law firm square footage could shrink anywhere from 10% to 30% as more legal staff push for hybrid-office models that allow more work-from-home opportunities.

"Before the pandemic, you pretty much had the expectation that every attorney was coming into the office five days a week [on] a regular work schedule," Hoopes said. "Now, you are having firms that are moving more toward an agile structure where perhaps you are not coming in every single day."

Instead, Hoopes said today's lawyers and their support staff want to come in a few days a week. In some cases, firms are opening satellite offices in suburban communities to accommodate employees living far away from the firm's main office downtown.

This doesn't mean law firms will completely exit Uptown and Downtown Dallas, Hoopes said. These two submarkets still have what law firms desire when it comes to attracting clients and younger attorneys. 

"We will still continue to see a flight to quality with law firms," Hoopes said. "Class-A trophy buildings are still a strategic weapon that law firms have in the war for talent. Recruitment is still the No. 1 focus of many law firms; recruiting and retaining high-end lawyer talent and office buildings will continue to be a strategic weapon for them to do that. However, what landlords are going to realize is that the footprint is going to be smaller."

The answer to how law firms will lease and allocate space in the future is entirely dependent on the needs of each firm and will take some time to figure out, Gensler Principal, Design Manager and Studio Director Cherrie Wysong said. 

Design teams at Gensler are working with law firms that have more attorneys and support staff wanting to work from home in the wake of the coronavirus outbreak. Wysong has one law client building out flex offices on each floor for attorneys and staff who decide to work remotely.

"If someone wants to work from home the majority of the week, they do not get a dedicated workspace," Wysong said. "But when they do come into the office, there is an office they can work in. It is outfitted exactly like any other attorney's office. The only difference is they have to take all of their own stuff home with them at the end of each day."

Wysong has witnessed another approach taking shape within law firms where one person works Monday-Wednesday-Friday in-office and a second staffer works Tuesday and Thursday. These employees share the same workspace to preserve space usage.

"If someone wants to come in and where they typically work at a shared desk is occupied, there will be some flex zones on the corners of the building that will have different types of furniture set up," Wysong said. 

This uncertain future for law firms and landlords may appear game-changing, but it closely mirrors the lifestyles of solo practitioners like Simmons Legal PLLC Managing Member Camisha L. Simmons.

Simmons has worked in big law, but she went out on her own several years ago to offer legal services in New York and Dallas. In DFW, she leased a WorkSuites flexible office location and quickly realized the only thing a lawyer or paralegal needs in today's environment is a computer and internet access. 

"Everything is digital so you don't need all of the extra storage space or the file cabinets in the room," Simmons said. "Way back when everything was paper-intensive, but they already did away with the need for storage since all of the paper has become digital."

At WorkSuites, she has an office and a conference room available whenever she needs it, but she doesn't have to pay as much in monthly rent and has more flexibility when compared to attorneys who pay for longer fixed-lease terms. 

Simmons said attorneys, particularly those trying to cater to younger workforces, will have to seriously analyze how and where attorneys will work going forward.

"If they are going to try to reduce operating expenses, [firms] are going to get creative in terms of saying, 'maybe we don't need all of these people physically in the office space,'" she said. 

While Simmons doesn't see it happening overnight, particularly at the larger firms, she does warn that like it or not, the legal industry is changing the way it operates even if it becomes 100% safe to go back to work.

"What may drive the transition and the evolving of the industry is the use of artificial intelligence, machine learning and the embracing of technology," Simmons said. "The use of AI or artificial intelligence, whether for contract review or something else, may reduce the need for some support staff and some younger attorneys."

If landlords are holding out and hoping some law firms will increase their square footage as they add amenities or build in social distancing, they may be lying to themselves about the state of the industry long-term. 

"I think it depends on the client, but I wouldn't say they are using more [space]," Wysong said when asked if square footage increases are possible. "They are either using around the same or they are reducing it."