How Law Firms Can Remain Competitive with Their Real Estate
Strategies for More Efficient Office Space to Adapt to the New Paradigm in Legal Services
Amid an extended industry decline, law firms today are struggling to overcome a flurry of market factors that continue to drive down revenues and profits. Battered from all sides, the legal industry is weighed down by declining demand, intense competition from old and new sources, commoditization of legal services, pricing pressures, widespread overcapacity, and increasing attrition.
As a result, law firms can no longer depend on revenue increases of three to four percent each year. In fact, firm leaders are generally pessimistic about their ability to grow profitably and are struggling to transition their firms to a new, more efficient future.
In response, a focused drive to decrease operating costs is heating up. Savvy firm leaders are looking to reduce one of their largest operating expenses: real estate. Second only to payroll for most firms, occupancy costs can reach as high as 10 percent of revenues. With this in mind, commercial real estate represents a significant opportunity to help struggling law firms regain their footing and reshape themselves to better suit the new legal marketplace.
Law firms still have the most usable square feet per office of any industry and continue to use primarily private offices, while other sectors are more on-line with changing industry standards.