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Re-thinking Law Firm Real Estate
- 1. Re-thinking Real Estate: Business Matters Session | May 22, 2014 Marcia Hart, CEO Roomtag, LLC What’s Different Now and How Can Law Firms Respond?
- 2. © 2014 Roomtag LLC, all rights reserved Speaker Marcia Hart, CEO Roomtag LLC Registered Architect , Entrepreneur Harvard Graduate School of Design, M. Arch. Princeton University, A.B. Architecture © 2012-2014 Roomtag LLC, all rights reserved 2 Space requirements for lease transactions • Quantitative analysis • Human factors in design • Decision dynamics
- 3. © 2014 Roomtag LLC, all rights reserved Gain specific knowledge To communicate with management To avoid waste of opportunity 3 Purpose When? Lease terminations Leadership transitions M&A, laterals Growth, consolidation
- 4. © 2014 Roomtag LLC, all rights reserved 1. Change Drivers 2. The Efficiency Myth 3. Design Solutions 4 Three things
- 5. © 2014 Roomtag LLC, all rights reserved 5 What’s different now: Who is REO Speedwagon? Hewitt Tomlin
- 6. © 2014 Roomtag LLC, all rights reserved Technology Timeline 6 Can’t Fight This Feeling 1984 Keep on Loving You 1980 You are here. Happy 2014
- 7. © 2014 Roomtag LLC, all rights reserved Office of the 80’s 7
- 8. © 2014 Roomtag LLC, all rights reserved Change Drivers Economics • 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 © 2013 – 2014 Roomtag LLC, all rights reserved 8
- 9. © 2014 Roomtag LLC, all rights reserved a place (?) to <WORK> • Find info and support • Create work product • Deliver services • Interact mentor, learn, share © 2014 Roomtag LLC, all rights reserved 9 What is the “office”?
- 10. © 2014 Roomtag LLC, all rights reserved 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 17, 400 RSF 24,800 RSF15% savings on 10-year lease is $1.5 million
- 11. © 2014 Roomtag LLC, all rights reserved The Efficiency Myth $ Revenue per RSFRSF per attorney $40.00 per RSF 20% vacancy 1.2 leverage (assoc/partner) 1500 hrs. billed $400 per hr. realized rate $600k annual revenue per lawyer $ Revenue per RSF $ 800 $ 1,000 $ 1,200 750 600 500 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
- 12. © 2014 Roomtag LLC, all rights reserved Productivity Drivers Natural Light Social Interaction Physical Movement Personal Control 12
- 13. © 2014 Roomtag LLC, all rights reserved ALA 2013 keynote Sony productivity levers 13
- 14. © 2014 Roomtag LLC, all rights reserved 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 Experience Intelligence Connections Boutique services- communication, recruiting, retention, mentoring Time Research Documentation Administration Commodity services– technology, outsourcing, leverage, temps, LPOs less space more networking innovation Demand contraction >> Buyer’s market 14
- 15. © 2014 Roomtag LLC, all rights reserved Design Solutions 15 The Universal Office The Productive Floor
- 16. © 2014 Roomtag LLC, all rights reserved The Universal Office 16
- 17. © 2014 Roomtag LLC, all rights reserved The Universal Office 17
- 18. © 2014 Roomtag LLC, all rights reserved The Productive Floor 18
- 19. © 2014 Roomtag LLC, all rights reserved Change management measure analyze communicate space people timing $ money vacancy adjacency allocation alignment culture opportunity 1 2 3 19
- 20. © 2014 Roomtag LLC, all rights reserved Measure - occupancy highlight1 20
- 21. © 2014 Roomtag LLC, all rights reserved vacancy highlight1 21
- 22. © 2014 Roomtag LLC, all rights reserved detail views1 22
- 23. © 2014 Roomtag LLC, all rights reserved List views1 23
- 24. © 2014 Roomtag LLC, all rights reserved analyze2 24
- 25. © 2014 Roomtag LLC, all rights reserved © 2013 Roomtag LLC, all rights reserved bonus content less space more networking innovation Next Gen Layout Natural light Social interaction Physical movement Personal control 25
- 26. contact: Marcia Hart CEO marcia.hart@roomtag.com 202 302-0292 Hewitt Tomlin Marketing Associate hewitt.tomlin@roomtag.com 731 499-0533
Notas do Editor
- This webinar is for experienced legal administrators and facilities managers Who need to understand what’s happening right now that affects legal office space. It contains expert-level knowledge and concrete ideas that you can put to work today.
- Experienced administrators who need to know how to communicate effectively with management about real estate trends and realities, so they don’t blow their opportunity
- Isolate perimeter vs. interior No natural light/no community space Excess space in core Empty workstations
- Relationship between space and money is direct. % savings match % RSF reduction. 33% less space results in 33% less cost. The size of the opportunity is a function of lease rate and space reduction. However reducing space to save money may not necessarily maximize Profits Per Partner (PPP). If productivity suffers, cost savings are wiped out. What % drop in productivity would wipe out $33,000 in cost savings? -1.7% How about the flip side. What if space improvements could increase productivity? What are the potential benefits in terms of PPP Add efficiency improvements + productivity improvements = ______ potential PPP Productivity opportunity relationship is more complex.