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Culture vs. Cost: Law Firms Are Taking Diverging Approaches to Real Estate in the New Normal

By Dylan Jackson for The American Lawyer

Much of the pandemic is replete with examples of firms and experts proclaiming that the office of the past will stay in the past. And while many firms such as Perkins Coie, Snell & Wilmer and Nixon Peabody are reducing space as more attorneys shift to working remotely, plenty of law firms are reaffirming their commitment to their office space and, in some cases, even expanding.

Fried Frank, for example, has recommitted to its 400,000-square-foot Manhattan office at 1 New York Plaza. Greenberg Traurig gave up a floor in its new four-story office in One Vanderbilt in New York, while also announcing that it is expanding its Westchester County office and plans to open “one or two” more offices in Long Island.

Others firms, such as Lowenstein Sandler and midsized Florida firm Weiss Serota Helfman Cole & Bierman, are even adding more space.

Lowenstein Sandler is tacking on an extra 25,000 square feet to its previously 100,000-square-foot footprint in its Midtown Manhattan office. Lowenstein Sandler managing partner Gary Wingens told last month that securing extra space now with rents cheaper than they were pre-pandemic saved money for the growing firm.

But that does not mean the look and feel of the office won’t change. The firm is expanding dining, fitness and concierge amenities in an effort to transform the office into a “destination” for attorneys and staff.

It’s also worth noting that real estate in New York’s financial center is again on the rise. According to the CBRE Group, companies leased roughly 5.9 million square feet in Manhattan during the third quarter of this year, a 70% increase over the second quarter.

“It’s a major divergence, we’re seeing firms shrink and grow in various markets,” said Jeffrey Welch, executive vice president of the CBRE Group. 

At the heart of any firm’s plan to expand or contract real estate, Welch added, is a tension between the significant savings that come from reducing any law firm’s second-biggest expense, real estate, and the worry that too much reduction will tear at the fabric of a firm’s culture and make them more liable to lose attorneys in today’s hot lateral market.

“The cost-savings are not free. There will be cultural impacts when you [reduce space]. If you’re less connected to your firms and colleagues, you’ll be more at risk to lateral movement to other firms,” Welch added. 

But those who are steadfast in reducing space don’t see it as a binary choice. In Perkins Coie’s opinion, firms can still make their office a “destination” while shrinking square footage.

The firm has so far reduced its office space by about 30% in Denver, Palo Alto and Chicago while also pulling a floor in its flagship Seattle office as part of a push to reduce the firm’s real estate footprint.

Perkins Coie’s chief of business operations, Tammy Baldwin, said the firm’s offices will feature hoteling—where attorneys and staff can dock in any workstation—though she stresses that those who do want a permanent office will be given one. The firm intends to invest in a better client experience and use some of the space to create prayer rooms and “mother’s” rooms.

“And so, for all of our offices, we are focusing more on front-of-house amenities and making sure the client experience is memorable. Let’s make it a destination; let’s make it feel good,” Baldwin said. 

This cost- and space-saving plan began before the pandemic, but the industrywide shift to remote work gave the effort a boost, she said. And as leases expire among the firm’s 17 other offices, Perkins Coie will look for other opportunities, although that doesn’t necessarily mean reducing square footage.

“It doesn’t mean we have less space, but we will have less unused space,” Baldwin said, noting that a firm of its size could always secure more space if need be. “It’s thinking differently about how you use the space and what you need the space for.”