Because real estate is law firms' second-biggest expense after personnel, the merger of two firms can mean dealing with immense property concerns. Experts say managing expectations and being creative with space are the best ways to make sure the transition goes smoothly.
The legal industry has seen a few significant mergers in recent months, including the recently disclosed deals between Bingham McCutchen LLP and Morgan Lewis & Bockius LLP and Locke Lord LLP and Edwards Wildman Palmer LLP.
When these deals make news, it's usually because of their size and synergies, but experts say that behind the scenes, much of the negotiations have to do with real estate. Here are three property-related considerations to take into account when combining firms...
Consider Immediate, Mid- and Long-Term Space Needs
When deciding how to split up existing space, how to distribute attorneys and staff and whether to take on new leases, experts say it's important to plan thoughtfully for every stage of the process...
It's also important to remember that the firms' makeup may not look the same as before the merger once the deal is complete, according to Tom Fulcher of Savills Studley.
“You have to try to understand what the firms will look like after [the merger],” Fulcher said. “If you have 100 attorneys in one place and 100 in another, you may not have a 200-person firm; some practice groups may get conflicted out or ... [not be] compatible.”
Combining offices or moving into new space provides a unique opportunity to rethink how the firm is physically set up. Many firms are modernizing their offices and leaning toward more collaborative, efficient designs, and Fulcher said post-merger may be a good time to think about doing this.3 Tips For Handling Your Real Estate In A Firm Merger
Related StoriesShifts Along Sixth Avenue
Washington, DC Office Sector Report (Q2 2014)