Offices

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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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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“Where do I sit?” seems like an important question. Especially for second-graders on the first day of school. Or for zit-spocked high schoolers angling to spend some class time in the proximity of their crushes. And just like second-graders or hormonal high schoolers, Biglaw partners are known to obsess about their office locations. For example, I have seen partners I used to work for studying the floor plan like a treasure map, for uncomfortably long periods of time.

Surely they were mentally imagining their names transposed over a corner office, or next door to the big conference room, or for the real aspirants, within touching distance of the managing partner’s office. While this behavior is strange when taken to the extreme, it highlights an important reality of Biglaw.

Where you sit, matters….

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* Man brings knife to a gun fight with NYPD. I think we all know how that ended. [Huffington Post]

* The House has brought a civil compliant against Eric Holder. In other news, it’s an election year! [Blog of the Legal Times]

* Ah, the never-ending quest for the perfect suit for the female attorney. All of the jokes I have right now are sexist. So I won’t make one. But I’m thinking it. [Corporette]

* Golf, even mini-golf, remains an excellent way to network. [Asbury Park Press]

* It looks like the Oak Creek shootings are going to go down as a hate crime. I care less about why the shooter did it and more that he’s punished. [CNN]

* Stop-and-Frisk doesn’t so much work. [DNAinfo]

* Don’t forget to submit your awesome office for our Lawyerly Lairs contest. [Above the Law]