2023 Bright Insight: The 2023 National Legal Sector Benchmark Survey Results

The overall office space market has been weak since the middle of 2022. Across the 90 U.S. markets tracked by Cushman & Wakefield Research, overall absorption was -59 million square feet (msf) for the three quarters ending in Q1 2023. Overall leasing is also down 16% YoY on a four-quarter rolling basis. That said, legal sector leasing activity has been quite strong. As noted in the recent Cushman & Wakefield 2023 Legal Sector Trends report , 2022 law firm leasing hit nearly 15 msf and was higher than the pre-pandemic high in 2019. Activity remained strong in Q1 2023 with over 3.6 msf of total law firm leasing. This data is supported by commentary directly from law firm leaders, of whom 69% indicate they have lease transactions—either renewing, extending an existing lease or moving intra market—in 2022. Leasing activity was even more common among larger firms, with 84% of Global 100/Am Law 100 firms having completed an office lease transaction last year .

Many law firms have taken advantage of the current environment and flurry of legal sector leasing activity to upgrade their space—often moving into brand new buildings—and downsizing the amount of space per attorney. The increase in remote work has certainly accelerated this trend, but downsizing had been going on well before the pandemic initiated the increase in attorneys and staff working from home. For example, 2019 Bright Insight Benchmark Survey respondents had indicated a 9% YoY decrease in average square-footage-per attorney ratios. Over the past year and a half, law firms have reduced those ratios to a greater degree, decreasing overall square footage by 13% on average. The declines in space-per-attorney have been even larger in high-cost gateway markets and for the largest firms . 9 Am Law 50 firms have recently reduced their average square footage by 20% nationally and by 25% in the six U.S. gateway markets. 10 Still, larger firms do spend a larger portion of revenue on real estate spend due to the size of their portfolios,

their presence in high-cost markets around the U.S. and the globe, and the relatively high quality of office space even by legal sector standards. The average law firm spent 10.5% of 2022 gross annual revenue on real estate. Firms with fewer than 100 attorneys spent considerably less than that while firms with 251+ attorneys averaged 11.5% of gross revenue. What percentage of your firm’s gross annual revenue was spent on real estate last year?

11.4% 11.7% 11.8%

All Firms, 10.5%

10.5%

8.2%

6.1%

Under 50 attorneys

51 to 100

101 to 250

251 to 500

501 to 1,000

1,001+ attorneys

Source: Cushman & Wakefield Research

9 Some of the strategies law firms are exploring to accommodate more efficient space allocations are explored in the Workplace Changes section of the report. 10 Gateway markets include Boston, Chicago, Los Angeles, New York, San Francisco and Washington, DC.

THE 2023 NATIONAL LEGAL SECTOR BENCHMARK SURVEY RESULTS | 13