Thought Leader Presented by Colliers

Law Firms Implementing Hybrid Work More Aggressively

Law firms embracing the new era of flexibility are going shorter on office space and longer on lease terms, according to a new report.

While law firms have long been considered one of the more conservative and traditional business sectors, recent activity suggests they are embracing the new era of hybrid work. According to their recent report, Colliers Law Firm Services Group expects only one out of every five attorneys to return to the office full-time. The other 80% will be woven into some sort of hybrid model moving forward.  The shape this will take is still evolving, but looks set to take place.

Still, this growing move toward a distributed work model comes with optimism as lawyers are returning to the office at a higher rate than other business types. Law firm office occupancy is at 62% of pre-Covid levels versus 49% overall. The survey found that some firms are continuing to evaluate their space requirements while the hybrid model takes hold, but are seeing some positive signals as their plans move forward.

Space is a Magnet

“The other trend that is prevalent is law firms’ willingness to redesign their space and gain marked efficiencies from adopting universal offices and incorporating more flexible shared spaces with greater technology [and utility] throughout,” said Daniel Arends, Colliers principal and EVP. “Firms are trying to make their spaces magnets to attract their attorneys back into the office and enhance mentoring and collaboration.”

Daniel Arends, Principal and EVP, Colliers

Instead of laboring through a retrofit of existing space to accommodate the flex-remote approach and the growing trend toward universal offices, law firms are increasingly relocating to the newest office buildings with the greatest amenities, according to Arends. Of the last three new buildings to open in Chicago’s Central Business District, more than 28% of the combined almost 4.25 million square feet has been absorbed by law firms, including Kirkland & Ellis, Jones Day and Morgan Lewis.

“Law firms over the last several years have increasingly become some of the most attractive targets for new buildings,” Arends said.

Approximately two-thirds of law firms are expected to reduce their space needs, whether renewing or relocating. As they do this, flexibility is key so that firms can repurpose or demise their space easier and more economically.

While space needs are shrinking, long-term leases remain popular. The percentage of law firms willing to commit to lease terms of 10 years or longer increased from 83% to 90% over the past year, according to Stephen Newbold, Colliers national director of Office Research.

Stephen Newbold, National Director of Office Research, Colliers

Compelling Evidence

In 2021, the Am Law 100, an annual ranking of the 100 top-grossing US law firms, experienced a 14.8% increase in revenue and demand for legal services increased by 3.7%, a 10-year high. In 2022, the top 100 firms saw direct expenses increase by 10.1% while demand actually went down by 0.1%.

According to Arends, this has caused law firms to become more proactive over the last six months in defining and implementing their hybrid work models coupled with downsizing their office footprints in order to improve their bottom line.

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