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CHICAGO-Law firms, which are playing a large role in the Downtown office market as well as development decisions, are scaling back their space requirements while increasing tenant improvement costs by keeping up with technology. Those are among the findings in Julien J. Studley, Inc.’s national law firm benchmark survey.

With large law firms Mayer Brown Rowe & Maw, Sidley Austin Brown & Wood, Katten Muchin Zavis Rosenman as well as Bell Boyd & Lloyd either in negotiations or in the market for new space, their moves are affecting owners of existing buildings and projects needing a large anchor tenant. While two Wacker Drive projects are poised to start pending signed leases, law firms have accounted for 7 million sf of lease deals so far this year, according to the tenant rep firm.

“The bottom line is much more important to law firms than it’s ever been,” Julien J. Studley senior managing director David Gelfand tells GlobeSt.com.

As a result, firms that usually made leasing decisions based on 900 sf to 1,000 sf of space per attorney are dialing back, with 70% of firms now allocating less than 800 sf per attorney. Litigation practices are opting for the tightest quarters, Gelfand says, averaging 500 sf per attorney.

“The more efficiently firms use their space, the more profitable they become,” says Gelfand, himself an attorney.

Lease payments still run somewhere between 5% to 10% of a firm’s revenues, Gelfand says, but Studley’s report finds 70% of the firms spending less than 8% on office space. However, he tells GlobeSt.com that technology is emerging as some firm’s second-highest expense. While 60% of the firms reported spending less than 7% of revenues on information technology, Studley’s researchers opined the result may have been skewed by a down year following a decade-long technology explosion and Y2K.

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