Generally law firms have been able to reduce the portion of their budget they spend on real estate. According to a Citi Private Bank survey of 156 law firms, occupancy costs accounted for 12.1% of total expenses in 2015, a figure that has declined by an average of almost 1% every year since 2010.

The portion of revenue that firms allocate for real estate has declined by an average of 1.2% during that time, to 7.2% in 2015. Meanwhile, firms in the bank's sample group reduced their square footage per lawyer by 0.2% each year between 2010 and 2015, though cost per square foot rose an average of 1.6% annually.

Matthew Barlow, executive vice president at the commercial real estate brokerage Savills Studley, estimates that firms spend between $30,000 and $90,000 per lawyer on base rent. The wide range is a result of the fact that there is great disparity between rent costs and square footage per lawyer.

But while firms try to shave money off their spaces, they have also recognized that they can use their offices to attract talent. The number of law school students dropped to 37,058 last year from 52,488 five years earlier, so competition for the best hires has grown. Firms want offices that associates will want to work in, whether because of the rooftop deck, the child care center or the bright workspace.

“People want modern desirable space to remain competitive from a recruiting and retention standpoint,” says Matthew Barlow, executive vice president at the commercial real estate brokerage Savills Studley. “In order to create that space, it requires a lot of capital. In order to justify the spending of that capital, you've got to get efficient.”

This is a portion of an article originally written by GlobeSt.com sister publication, ALM's American Lawyer. To read the original full story, with further details on law firms downsizing office space, click here.

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Law Firms Look to Reduce Budget Spent on Real Estate

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