CHICAGO—The business model for most law firms is changing dramatically, and according to a new report from Colliers International, over the next few years many will seek to right-size their real estate portfolios. Except at the very top tier law firms, a flattening of demand for certain types of legal services has created the need to cut costs, and real estate presents an inviting target.

“Real estate is one of their largest fixed liabilities and it's natural to keep an eye on it,” Steve Levitas, national director of Colliers' law firm services and principal in the firm's downtown Chicago office, tells GlobeSt.com.

Corporate users have made right-sizing offices with more efficient footprints a national trend, but law offices face a much different challenge, he adds. “They are private office intensive,” and can't simply move to an open office plan. Instead, many law firms have begun considering a switch to universal office sizes for both partners and associates and using demountable wall partitions in interior areas to increase flexibility, among other changes. Law offices may frequently “use their space as a recruiting tool, but younger lawyers might not be as concerned with how big their office is.”

What has changed in the legal world is the growth of disruptive technologies. For example, powerful software has been developed that firms can use to analyze the vast amounts of data created by complex litigation, Levitas says, “rather than having teams and teams of lawyers go through it.” Clients will still pay for high-value legal services, but demand for process-related work has lessened, and will continue to depress firms' need for space.     

“But there is no silver bullet solution,” he adds. “It's a wide spectrum and the solution depends on the culture of each individual firm and what works for their employees.” In Chicago, some firms have decided to move administrative functions to cheaper space in lower-quality buildings. Others will decide it's important to keep all of their employees under one roof and still others may outsource such functions to offices in cheaper cities and states.  

Even though all firms are under this pressure and have to deal with a static pool of potential revenue, the top tier law firms seem to have a better handle on the changes. In fact, in Chicago major law firms like McDermott Will & Emery and DLA Piper LLC have already decided to anchor Hines' new trophy tower at 444 W. Lake St. For these firms, simply moving to modern office buildings with more efficient floor plates will be less disruptive to their business operations than staying put and having to restack their space.  

“The key,” Levitas says, “is that one size does not fit all.”