slash.law

Home > Law practice > Office space


Introduction

Office space concerns are the most basic starting point in establishing a law firm. Without office space, you're either out of business or you're going to be stuck in your "home office." Guess what? Clients don't want to meet you at your home or at Starbucks to talk about their case. There is no substitute for an actual office with a door that closes so the client can feel like they are having a private conversation about their most sensitive business or personal matters. But it can't just be any office. The client wants to see that their attorney is successful, stable, and doesn't need the money. How best to project this image and be authentic about it?

Sublease vs. master lease

An attractive option for many attorneys starting their own law firm is to rent space in another firm's office. Firms are always losing or gaining people through attrition, lateral moves, terminations, layoffs, retirements, and/or voluntary departures. Thus, they have empty offices that are losing them money, and often they want to fill the offices with at least renters, if not profitable employees.

The top concern for subleasing is that you have to get along with the firm you are renting space from. Going into a new space without knowing anything about the master tenant is suicide. The one-in-a-million opportunity that I had was to start off as a contract attorney for the firm I ended up renting space from. When the contract arrangement concluded after six months, I offered to rent one of the available offices and the firm said yes. We get along great, and it's a great arrangement to this day.

In terms of rent payments, you're basically at the mercy of the master tenant. This can be good or bad. I am very lucky to have favorable payment terms in the sublease agreement because the firm I rent space from doesn't really need the money. Thus, I have flexibility. However, a subtenant on a commercial lease has essentially no rights. If there is any breach of the sublease, the subtenant can be thrown out almost immediately. And if you get thrown out due to non-payment of rent, you're out of business and unlikely to find another subtenant opportunity, not to mention a regular leasing opportunity. Rule of thumb: always pay the rent on time and give the master tenant no excuse to end the arrangement.

Signage is a concern with a subtenant arrangement. You really want to get a sign at reception that has your name on it, otherwise no one will know how to find you. Telling people "we share space with XYZ law firm" is a workaround, but it's not ideal because it makes you look less stable not having a sign.

Conference room use is a concern with a subtenant arrangement. You need to spell out in the sublease how often and for how long you can use conference rooms. Personally, I'm an advocate of a certain number of hours being included in the base rent, with additional use subject to an hourly fee. I think that strikes the right balance between use and over-use. One benefit of a sublease is the ability to use the larger firm's conference rooms. However, the downside is having to reserve the rooms instead of being able to use them on an entirely ad hoc basis.

A standard commercial lease

Prepare to get screwed, seriously. Because there is no easier way to blow $100,000 than an unfavorable commercial lease. I would recommend engaging a reputable tenant representative who specializes in placing attorneys in office space, such as CBRE. They are in tune with all the relevant information and space, including places other firms have recently moved, deals that recently closed, current opportunities to save money, and more. You're effectively paying for their services out of fees charged to the property owner that get added onto your lease, but the cost savings over a five or ten year period amply justify the expense.

Quality of space

It should be nice, but not so nice that it makes clients think you are wasting their money. It's hard striking the right balance because a large AAA corporate law firm is going to have ridiculously nice facilities, and those are definitely impressive. You want to focus on the perception of value; the space should look like you got a good deal on a nice office instead of a killer deal on a dump. I've worked at plenty of dumps over the years, and it's not good for developing clients. The current long walk back from reception to my office, which lets clients get a feel for the office suite as they pass many bookshelves of legal books, is unintentional but nevertheless effective.


Last updated: July 6, 2018

© 2018 Andrew G. Watters

top