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

05 L E G A L S E C TO R O F F I C E R E A L E S TAT E T R E N D S

• Optimized floor plans that favor efficiency are of particular interest to law firms with the 500-600 sf per attorney average expected to decrease going forward . There are a number of factors that go into the decision-making process around how much space individual law firms end up taking in any given office. A particular law practice’s needs may dictate different attorney-to-staff ratios, client-centric space needs, technology implementations, and storage needs. Individual buildings’ floorplate depths will impact how space should be laid out and potentially put caps on efficiencies to be gained. Space availabilities in a given market—and the relative costs of space—can impact target densities. Firms looking to expand their real estate portfolio are broadly exploring secondary markets to do so.

• Despite widespread weakness in the office market, legal sector leasing activity in 2022 reached its highest level since 2016 which has carried forward to a very strong first quarter in 2023. Eight-four percent of Global 100/Am Law 200 firms transacted in 2022, opting to renew their lease, extend existing terms, or move within the market. • Given their presence in many high cost markets and the size of their real estate portfolios, larger firms show a tendency to spend a larger percentage of their revenue on real estate. The average spend on real estate as a portion of revenue across all firms is 10.5% ; firms larger than 1,000 attorneys had the highest average spend at 11.8%.

• Firm strategy and policy will greatly impact space layouts, so it is important for companies to answer critical questions before beginning the space search process : • What type of work culture is the office attempting to create? • What are the expectations for in-office attendance for partners, associates and staff? • Will staff be pooled within individual offices or even officed separately in lower-cost submarkets or markets? • Relative normalcy regarding lease terms in the legal sector has returned after a short-lived shock from the pandemic. Prior to pandemic onset, term lengths averaged about six and a half years and dropped to five years during the first year of the pandemic before returning to seven years in 2022. • Should there be space built to regularly host (and ostensibly impress) clients?

TAKEAWAYS

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