LSAG Legal Briefs - Vol 2

the next 10 years?” some of the responses included: • Non-legal, corporate ownership of law firms with attorneys as salaried employees • Firms will have less face-to- face meetings with clients • Increased implementation of AI technologies • Depositions and hearings compensation structures • Fully cloud-based applications that allow employees to work from anywhere • Relaxing the standard law office expectations • Shared support of research teams • Moving attorneys into client offices • More online “cookie cutter” documents • Fewer lawyers in private practice • Elimination of secretarial support and paper files entirely • Boutique firms aligning forming to create “mission impossible” teams • Blending legal and non-legal services to lower price point become virtual to decrease carbon footprint and costs • "Eat what you kill”

downsizing — including a reduction in warehousing growth space — will take place in coming years. Six years of statistics support the idea that continued densification of legal sector real estate is not just a trend, but a reality. Single-Size & Shared Offices Eighty-two percent of the firm respondents stated that firms will implement single-size offices in the next decade. This percentage is up from 70% in just

offices, and creating a more collaborative work environment. On the business and financial side, we have also seen shifts in business development training and compensation changes to reward new business generation – both at the partner and associate level. Law firms are also adapting to the younger generation and the specific desires of the millennials, including changing the way they recruit and retain talent from the first interview

TOP AREAS OF IMPACT:

69%

Fixed-fee structures

56%

Attorneys (young and old) leaving the industry

51%

In-house counsel

34%

Global competition

32%

Boutique firm growth

15%

US Government

11%

Other

5%

Global governments

to becoming an associate. All of the above information is relevant and critical - and changing at lightning speed forcing firms to adapt quickly in order to remain competitive.

three years. When asked, “Will a firm implement shared offices by two or more associates?”, the response rate also increased dramatically from 35% to 53%. These two statistics had the most significant changes in one year of all of the future trend responses. Out-Of-The Box Future Trends When asked “What out-of-the- box trend do you think may surface in the legal sector in

BRIGHT INSIGHT The2019NationalLegalSector BenchmarkSurveyResults

THEFINEPRINT The 2019NationalLegalSectorBenchmarkSurveywas confidential,with respondents self-identifying if theirfirmheld anAmLaw 100or 200orGlobal 100 ranking,or if respondentswere anational, regional,orone-off localfirm thatwasnotononeof the ranking lists.Respondents ranged fromfirmswith under 20 attorneys toglobalmegafirms.

RESPONSECOMPOSITION: extensive experienceworkingwith local, regional,national, andglobal lawfirmshasuniquelypositionedus toguide you through complicated decisionmaking required in today’s fast-paced lawfirm environment. We are committed toprovidingour legal sector clients ithup-to- the-minute intellectual capital, thought leadership around industry challenges, and the solutions required tohelpfirms achieve attorney consensus to effect change. LocalFirm 11% Northwest LEGALSECTORADVISORYGROUP Cushman&Wakefield’sglobalLegalSectorAdvisoryGroup consistsofmore than350 advisors that specialize in strategizing, creating, and implementing real estate solutions that support thebusinessof today’s legal sector.Our and Primary regionof respondents:

BUSINESSDRIVERS

ParticipationSnapshot:

RESPONSECOMPOSITION:

24% 34% 20% 22% 50% 23% 11% 16%

LocalFirm

Inpartnershipwith

ISSUES IMPACTINGBUSINESS COMPETITION This year’s surveyhad a significant swap in thenumberone and two positions as it relates to afirm’s “greatest issue impactingbusiness competition.” In eachof theprior years’ survey results, competitive fee structures ranked as thenumberone issue and recruitment and retention ranked asnumber two.This year, and for thefirst time, recruitment and retention took thenumberone spot. Challenges related to recruitment and retentionhavebeengrowing at a fasterpaceover thepastfive years in comparison toother issues.This shift isbelieved tohaveoccurreddue to the continuedgrowthofmillennial lawyers ages 23 to38, attorneys retiringor leaving for in-house counselpositions, and attorneysbeing terminateddue 15% Southeast Midwest 22%

tounderperformance. In addition, the youngergenerationof attorneyshas a different setofpriorities than theolder generation,which isdirectly impacting theirdecisionmakingwhen facedwith selecting afirm to join and remainwith for the long term.Please referenceour AssociatesSectiononpage 16 formore detailed informationon the specific statistics fromourNationalAssociate Survey. Roundingout the topfive issues impactingbusiness competition are IT security (26%),high laboroverhead (20%), and conflicts (increasing from 10% to 14%). As it relates to real estate specifically and the impact it ishavingon afirm’s business competition, respondents “fill- in-the-blank” issues include those listed to the right. RegionalFirm NationalFirm GlobalFirm Less thanSixOffices 6-10Offices 11-15Offices More than 15Offices

Toomuch space

21% Northeast

High vacancy rates

U.S.OFFICECOMPOSITION:

24% 34% 20% 22% 50% 23% 11% 16%

Escalating rents

RegionalFirm

15% Southwest

NationalFirm ABOUTCUSHMAN&WAKEFIELD Cushman&Wakefield (NYSE:CWK) is a leadingglobal real estate servicesfirm thatdelivers exceptional value for real estateoccupiers andowners.Cushman& Wakefield is among the largest real estate services firmswith approximately51,000 employees in400 GlobalFirm U.S.OFFICECOMPOSITION:

16% Mid- Atlantic

Ine ciento ce space

High realestate maintenance costs

Less thanSixOffices

6-10Offices offices and 70 countries. In 2018, thefirmhad revenueof$8.2billion across core servicesof property, facilities andprojectmanagement, tenant advisory, leasing, capitalmarkets, valuation, andothr services.To learn more, visitwww.cushmanwakefield.com or follow@CushWakeonTwitter. 11-15Offices More than 15Offices

Poor lease terms

Real Estate Strategy and Per-Attorney Occupancy Seventy-eight percent of

Respondents ranking:

Survey respondentsweredemograpically similar to the 2018 survey with a slight increaseofparticiaion from theAmLaw 100 and 200 firms and an even response from local, regional,natonal, andglobal firms.We alsoexperienced an increaseofparticipation in theNortheast andMidwestmarketswhen requesting theprimary (headquarter) locationof thefirm.

Artificial Intelligencegrowth

Impending recession

Current issues related tobusiness competition: Respondents chosemultipleoptions

27% AMLaw 100

Right-sizing theentireportfolio and same sizeo ces

15% AMLaw200

Numberofoffices in theU.S. (perfirm):

4%

10% 9% 8% 2%

Global 100

Debt

Increased collaborative space

Non-Labor Overhead tooHigh 54% Other

LessThan 6Oces

50%

Back-loaded lease – nowhave above-market rents

6-10 Oces Cushman&Wakefield’sLegalSector AdvisoryGrouphasbeennamed #1 inTenantRepresentationby TheNationalLaw Journal for the pastfive years. 1

For thefirst time, recruitment and retention took the #1 spot 23% 11%

Globalization

The 2019NationalLegalSectorBenchmarkSurveyResults

RealEstate Issue

Breaking intonewmarkets

11-15 Oces

12% 11%

Internal Consensus

Limited rainmakers in thefirm

Other

16%

MoreThan 15Oces

14%

Conflicts

Alternative legal serviceproviders

20%

LaborOverhead tooHigh

respondents stated that more firms will “achieve a below-500-square- feet-per-attorney ratio in the next decade,” up from 70% last year. In addition, significant rightsizing and

Constantexpansion andmoving location

26%

4

LegalSectorAdvisoryGroup | ADVISINGFOREXCELLENCE

ITSecurity

54%

CompetitiveFee Structures

Out-of-pocket capital costs to improvee ciencies

63%

Recruitment &Retention

Other

5

The 2019NationalLegalSectorBenchmarkSurveyResults

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To request a copy of the full Bright Insight report, please click here.

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