Cushman & Wakefield’s Third-Annual Survey Examines Challenges for Law Firms, Changing Attitudes of Attorneys
NEW YORK, NY – Cushman & Wakefield today released Bright Insight: The 2015 National Legal Sector Benchmark Survey in conjunction with ALM Legal Intelligence. The report documents law firms’ changing business, operational and financial drivers as well as how firms are adapting to the multiple generations of attorneys and staff in the workplace.
Bright Insight surveyed more than 1,100 law firms and associates from domestic law firms across the United States, ranging in size from local boutique firms to AM Law 100 giants. Throughout the rest of 2016, Cushman & Wakefield will present our 2016 Bright Insight National Symposium Tour, led by Sherry Cushman, Executive Managing Director and leader of the firm’s Legal Sector Advisory Group.
According to the report, competitive fee structures continued to be the top business issue facing law firms, and 61 percent of respondents said it would be the biggest issue for the next decade. Operationally, technology continues to dramatically change the way law firms operate and serve clients, as 49 percent of respondents noted recent or impending significant capital investment in IT security. In terms of internal decision making, law firms are shifting to a more corporate approach, especially regarding real estate, and are including younger attorneys in the decision making process, though building internal consensus can be difficult due to the older generation’s decision-making position in the firm.
“Firms are beginning to re-evaluate how they operate and make significant changes to their current business model,” said Joe Stettinius, Cushman & Wakefield Chief Executive Americas. “The future of law is changing, and the firms that are able to be nimble and consistently adapt to the changing times are anticipated to be in the most competitive and profitable position for years to come.”
While only 12 percent of respondents reported tracking per equity partner/shareholder occupancy costs, firms will increasingly use this metric, especially to exhibit how long-term real estate costs are impacting profitability.
“This metric and benchmarking is relatively new and is often not information shared with partners,” Cushman said. “We anticipate that sharing this information will increase in coming years as firms focus more on overall business-driven decision making and less on individual attorneys – a shift from the ‘me” approach to the ‘we’ approach.”
For associates, key, personal factors have shifted dramatically. Associate respondents’ top four most important personal factors were work/life balance, collegial work environment, mentoring by a senior attorney and compensation, while making partner and having a private office ranked seventh and eighth, respectively.
“With Millennials taking over the highest percentage of the U.S. workforce in 2015, law firms are taking into consideration the philosophies of the younger generation as they relate to real estate and overall retention and recruiting,” Cushman said. “This is an important step as associates are increasingly involved with business development and succession planning and are influencing real estate decisions.”
Succession planning is increasingly a hot topic in the legal community. Only 15 percent of respondents said they have formal, closely coordinated succession plans in place, and 27 percent noted they have an informal plan that is not mandated. The largest percentage – 32 percent – said they do not have a succession plan at all. Additionally, 84 percent of respondents have no retirement age mandate, while the remainder have a 65- to 75-years-of-age mandate.
“With the younger generation’s views on long-term commitments to partnerships, in-house counsel departures and overall shifts in the legal sector’s business model, developing short- and long-term succession plans will be imperative for a firm’s future success,” Cushman said. “Long-term planning and involvement with the younger attorneys and associates will be critical and assist in recruiting and retention to convey to them that there is a future plan that includes their involvement.”
Looking to the future, 48 percent of respondents said that traditional partnership structures will be completely reorganized in the next decade, a 4 percent increase from last year, while 46 percent noted that that traditional partnership structures will remain the same, a 5 percent decline from last year.
Respondents expect dramatic changes in the workplace, too. A total of 63 percent said that firms will implement a firm-wide hoteling concept either with all attorneys participating (12 percent) or a limited number participating (51 percent). The combined percentage of respondents who expect a U.S. firm will go completely virtual in the next decade – eliminating some or all “bricks and mortar” – was 53 percent, up 12 percent from last year, though 13 percent said it will never be achieved. Additionally, 70 percent of respondents indicated they expect firms to implement single-size offices for both partners and associates on a firm-wide basis.
“While no one can look into a crystal ball and know exactly where the legal sector may be headed, we have begun to benchmark shifts and establish potential new trends that may significantly impact the way firms view and implement change,” Cushman said. “It will be interesting to track these trends and help clients make well-informed, strategic real estate and workplace decisions that bolster productivity, recruitment and retention and profitability.”
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
About the Legal Sector Advisory Group
Cushman & Wakefield’s Legal Sector Advisory Group is keenly focused on matching the evolution of your firm’s operations with office solutions that are in tune with your mission. Our team — more than 300 advisors strong — specializes in strategizing, creating and implementing real estate solutions that support the business of today’s dynamic law firm. Utilizing the proprietary intelligence captured in our exclusive Bright Insight - National Legal Sector Benchmark Survey report each year, coupled with our extensive experience with local, regional, national and global law firms, we possess an inside track on the industry challenges facing the legal sector — and the solutions required to help you hone your competitive advantage.
For Further Information Contact:
Executive Managing Director & Leader
Legal Sector Advisory Group
+1 202 471 3595
Corporate Public Relations Director
+1 404 682 3381