Re-thinking Law Firm Real Estate

Re-thinking Real Estate:

Business Matters Session | May 22, 2014Marcia Hart, CEORoomtag, LLC

What’s Different Now and How Can Law Firms Respond?

© 2014 Roomtag LLC, all rights reserved

Speaker

Marcia Hart, CEO Roomtag LLC

Registered Architect , EntrepreneurHarvard Graduate School of Design, M. Arch. Princeton University, A.B. Architecture

© 2012-2014 Roomtag LLC, all rights reserved

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Space requirements for lease transactions• Quantitative analysis• Human factors in design• Decision dynamics


Gain specific knowledge

To communicate with management

To avoid waste of opportunity

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Purpose

When?Lease terminationsLeadership transitionsM&A, lateralsGrowth, consolidation


1. Change Drivers

2. The Efficiency Myth

3. Design Solutions

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Three things


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What’s different now:

Who is REO Speedwagon? Hewitt Tomlin

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Technology Timeline

Can’t Fight This Feeling1984

Keep on Loving You1980

You are here.

Happy2014

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Office of the 80’s

Traditional plan is isolating, misallocated


Change DriversEconomics

• Structural change• Sustained pressure & scrutiny on bottom line Technology

• Digital information• Mobile platform• Less physical “stuff”• Workplace = space + technology

Demographics• Boomers in minority• Upcoming workforce prizes flexibility &

technology over space

Business of law Multi-market management

• Fee structures• Project management• Staffing, workflows, reporting

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a place (?) to <WORK>

• Find info and support

• Create work product

• Deliver services

• Interact mentor, learn, share

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What is the “office”?


Efficiency: Cost Context

• Rentable Square Feet (RSF): 20,000 RSF• Occupancy: 30 – 40 attorneys• Lease rate: $50 full service• Annual lease cost: $1,000,000

Typical floor is about $1 million per year

17, 400 RSF

24,800 RSF15% savings on 10-year lease is $1.5 million


The Efficiency Myth$ Revenue per RSFRSF per attorney

$40.00 per RSF20% vacancy1.2 leverage (assoc/partner)

1500 hrs. billed$400 per hr. realized rate$600k annual revenue per lawyer

$ Revenueper RSF

$ 800

$ 1,000

$ 1,200

750600

500

benchmarks

variables

-2% productivity drop

$ Cost per Attorney

$ Cost per Partner

Impact per Partner

$36,000 $ 79,200

$28,800 $ 63,360 $ 15,840

$24,000 $ 52,800 $26,400

Impact per Partner Net Impact

$ (26,400) $ (26,400)

$ (26,400) $ (10,560)

$ (26,400) $ 0

$25k gain

wiped out by 2% productivity drop


Productivity DriversNatural Light

Social Interaction

Physical Movement

Personal Control

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ALA 2013 keynote Sony

productivity levers

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what is productivity?The rate at which services are produced: output ($ revenue) per unit of labor (hrs.)

Create more value in one hour, generate more

$ revenue per year What has value?

Law Firm Value Table

Seller Buyer (Client)

Expertise ExperienceIntelligenceConnections

Boutique services- communication, recruiting, retention, mentoring

Time ResearchDocumentationAdministration

Commodity services– technology, outsourcing, leverage, temps, LPOs

less space

more networking

innovation

Demand contraction >> Buyer’s market

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Design Solutions

The Universal Office

The Productive Floor

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The Productive Floor

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Change management

measure analyze communicatespacepeopletiming

$ money

vacancyadjacencyallocation

alignmentculture

opportunity

1 2 3Uncertainty is the enemy of change

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Measure - occupancy highlight1

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vacancy highlight1

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detail views1

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List views1

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analyze2

Quantify the opportunity

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bonus content

less space

more networking

innovation

Next Gen Layout

Natural lightSocial interaction Physical movementPersonal control

contact:

Marcia Hart [email protected] 202 302-0292

Hewitt Tomlin Marketing [email protected] 499-0533

Re-thinking Law Firm Real Estate

Law

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