Office space

Bruce Stachenfeld

“Low overhead is great!” That is one of our sayings. We recite it all the time — yes, even out loud at meetings — as it is a powerful competitive advantage for a law firm. It seems pretty obvious, but if so, why doesn’t everyone get with this concept?

There is a term informally used to describe how overhead impacts a law firm called “Implied Overhead.” The “Implied Overhead” of a law firm is the cost of everything except the lawyers divided by the number of lawyers. So if you have 50 lawyers and the cost of “everything” except the lawyers is $10,000,000, then you have implied overhead of $200,000 per lawyer.

Our Implied Overhead for last year was about $165,000. Anecdotally I believe that Implied Overhead for major law firms averages about $300,000. (I admit I don’t really have this data for sure; it is just what I have heard.) If your firm has 100 lawyers and implied overhead of $200,000 and the average for major law firms is $300,000, then you have a $100,000 per lawyer competitive advantage over your major law firm competition. Multiply that by 100 lawyers and you just made $10,000,000! And this flows right to the bottom line! If there are, say, 30 partners at this firm, then each partner just got a check for $333,333!

Yikes — did I do that math right? Was that $333,333 per partner merely by reducing the implied overhead?  I just double checked and $10,000,000 divided by 30 partners does indeed equal $333,333. That’s a sizable number, so maybe you should read the rest of my article….

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For several years, I’ve enthusiastically supported co-working as an attractive office option for solos. Working alongside others not only mitigates the isolation of solo practice but offers demonstrated financial benefits: bar studies show that lawyers in shared space earn more than lawyers who work from home or in stand-alone offices. At the same time, co-working is more affordable than traditional full-time office space or many corporate virtual office arrangements and thus enables newer or cash-strapped solos to enjoy the benefits of shared space without substantial overhead.

But this recent post by Posse CEO Rebekah Campbell, for the New York Times You’re the Boss blog of the New York Times, has made me reconsider whether co-working space is right for everyone — particularly lawyers….

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By now you’ve probably heard about Duffey v. Twentieth Century Fox Film Corp (S.D.N.Y.). The plaintiff, actor Todd Duffey, played Brian, aka the “Flair Guy” — the Chotchkie’s waiter adorned with a plethora of “flair,” or colorful, cheesy buttons — in the 1999 cult-classic movie “Office Space.” Duffey sued Twentieth Century Fox and Library Publications, alleging that the defendants improperly used his image to market a spinoff product, the Office Space Box of Flair (affiliate link).

Duffey lost. The fun, stylishly written opinion rejecting his claims has gotten lots of coverage, in outlets ranging from Quartz to Consumerist to Gawker.

But these non-legal outlets didn’t delve into the citations — where it appears that Judge J. Paul Oetken (or his clerks) buried some sly, movie-related jokes….

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Christina Gagnier

Upon some initial success as a law firm, a key question that is faced is what is the appropriate trajectory for growth. This is simply the fancy way of saying, “Do we have enough money for new things?”

New things may include real office space, an administrative assistant, or your first associate. If it is really your first “expansion” conversation, it could include items like finally getting your RingCentral account for faxing or upgrading to a paid Dropbox account. Regardless of what stage you are at in terms of your growth, it is important to pause and make sure the particular amount of growth is right for you…

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Ed. note: Please welcome our newest columnist, Gaston Kroub of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique here in New York. He’s writing about leaving a Biglaw partnership to start his own firm.

When you work in Biglaw, you are pretty much assured you will have a nice office to go to everyday. Of course, you are also expected to spend the vast majority of your waking hours in that office, particularly as an associate.

My personal Biglaw experience when it came to offices was probably the norm. When I started at Greenberg Traurig, the IP department was located just above some of Bernie Madoff’s offices in the Lipstick Building on Third Avenue in Manhattan. A few years in, we joined the rest of the firm within the MetLife (former Pan Am) Building right over Grand Central. In the summers, and after the partners I worked with relocated more frequently depending on our case load, I would spend time working out of Greenberg’s New Jersey office. While not Manhattan, that office had nice suburban views and was easily accessible off the highway. And when I lateraled to Locke Lord, I got to enjoy a very easy commute from Brooklyn to Lower Manhattan, and some beautiful views from my office of the Hudson River and New York Harbor.

Biglaw does office space right. In some respects, though, that is changing….

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Last year, I wrote about the thing that gets me yelled at almost as much as when I rail on SEO and tech hacks — when I dare to mention that practicing lawyers looking to build their practice should have an office.

Your practice may be “built.” You may be getting more calls than you can handle. You may be a low-volume lawyer that only needs/wants a couple cases a month, and your referral sources take care of that for you.

But I’m talking about the rest of the profession. The debt-laden, the hungry, the ones still trying to get to that place where they have the types of clients and cases they want.

This is not a post about the merits of having an office, it’s about when it’s time to move — to something nicer, closer to the business center of town, or closer to the courthouse you are in three days a week. If you’ve already decided that having an office is the worst thing you could ever imagine because “no one has an office anymore,” stop reading here and go yell at that law dean, or Wallerstein, or my boyfriend Elie….

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Based on the initial round of Courtship Connection dates in San Francisco, it seems the city has as much chemistry as it does technology start-ups. I hate to break it to non-Californians: not only do those on the Best Coast have great weather, but dating there seems to be a breeze.

That’s based just on the first two lawyer couples I sent out. I hope am sure San Francisco will yield some disasters yet.

I paired up our first set of twenty-somethings based on equal levels of hotness in Facebook photos, and numerous albums that involved traveling and outdoor activities.

Our “lively snowboarder” lady lawyer said she was looking for someone “quiet-er, anti-douchebag, witty, preferably handsome.” Given the opportunity to bed any legal type, living or dead, fictional or real, she chose Atticus Finch, “played by Gregory Peck, natch.” Her date says he’d be a “professor” if he weren’t a corporate lawyer. That seemed Finch-level noble. Professor Biglaw self-described as “witty” — which is what Lady Snowboard is seeking — and “sarcastic, relaxed, well-traveled.” Given the chance to bed a famous legal character, he chose “Marisa Tomei in My Cousin Vinny.” Technically, I think that means he prefers to date a non-lawyer, but things seemed to work out regardless…

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When you went to law school or started thinking about starting your own practice, did you have dreams of waking up in the morning, walking down the hall to another room in your house and sitting down to do legal work? Did you hope to bounce ideas off of the dog, or plan strategy watching Matlock re-runs at 2 p.m.?
 
I’m sorry, I just don’t get this “Do I need an office?” back and forth, in which my “future of law” friends are quick to say “You don’t need an office.”
 
No, you don’t need an office. They’re right. You also don’t need to wear clothes that make you look respectable. You don’t even have to have any idea what you’re doing. You can work from your computer in your dining room, in shorts, and find answers (some which are correct) to questions like “how to draft a will,” on the internet. Some client, somewhere, will hire you. Maybe a few.
 
As you build your practice, you can do everything small, cheap, and sloppy. Forget about being downtown or by the courthouse. Forget about having to dress like you want to be hired for important legal work. Forget about building anything of significance. Just stay home and be happy that you’re saving money every month on an office. Way to go. Hopefully you won’t take advice from business owners who know building a business takes investment….

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