New law firm leases tanked last year, but loyalty to the office remains
3/3/21 REUTERS LEGAL 00:01:18
Copyright (c) 2021 Thomson Reuters
Caroline Spiezio
REUTERS LEGAL
March 3, 2021
FILE PHOTO: Empty offices next to Bank of England in London, Britain March 19, 2020. REUTERS/Simon Dawson/File Photo
(Reuters) - Not surprisingly, law firms leased less space in 2020 than in 2019, as the pandemic sparked shutdowns and the industry turned to remote work.
But compared to other professionals, lawyers aren't ready to give up on office life.
A Tuesday report from commercial real estate firm Savills Inc found law firm leasing activity dropped 37% in 2020. That's notably less than the 51% decline Savills recorded for financial services companies, or the 55% drop for technology, advertising and media companies.
Law firm leasing actually increased in 2020 in San Francisco, Los Angeles and Washington, D.C., cities where leasing activity shrank overall, according to Savills. Few firms are subleasing, the report found.
Some law firms are sticking close to their pre-pandemic real estate strategies because it's been hard to remotely train associates and build culture, two requirements for retaining clients and talent, said Thomas Fulcher, the chair of Savills legal tenant practice group.
"Most of the firms are saying, 'We want you to come back,'" he said. "There'll be some flexibility. But I think that they're expecting that people really are going to come back."
Ropes & Gray is among the firms looking ahead to a return to U.S. offices. In a Feb. 25 internal memo, the firm said "permissive office usage" will continue through Labor Day, but "we anticipate that many more of you will begin returning to our offices voluntarily well in advance of September 6th.
"We think that you will find that being in the office will be a welcome change; it has been an energizing experience for many of us," firm leaders wrote in the memo, which Reuters reviewed Tuesday.
It's been nearly a year since the coronavirus pandemic sparked economic shutdowns that emptied law firm offices across the United States. Despite the shift to remote work, top firms have reported revenue and profit growth for 2020, and industry leaders, including managing partners, have said they're reconsidering their office space needs.
At least one law firm, Dentons, moved some of its offices to permanent remote work status in 2020.
Savills in its Tuesday report noted more than a dozen large law firm real estate transactions did get done last year, including Goodwin Procter renewing its office space in Manhattan and Jones Day renewing its office in Washington, D.C.
David Thomas contributed reporting.
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