LAW firms are looking to their real estate to cut operating costs and increase efficiency as the legal sector undergoes major changes, according to a new report from Jones Lang LaSalle.
Incorporating greater flexibility in the workplace is one key plank in this approach, says the report, titled The Legal Sector Workplace: Change is Coming?
The report investigates how law firms can adapt their workspaces to reduce occupancy costs in the face of the great changes that have affected the sector over the past two years. These included mergers and acquisitions, the arrival of international firms, and the entry of fixed fees against the backdrop of the post-GFC economy.
Michael Greene, JLL's director, tenant representation, said some companies had adopted flexible work practices. These included the use of larger, flexible floor plates, increasing mobility of the workforce and smaller individual offices.
Flexible work environments also supported collaborative working. ''Where large offices were once the norm, shared, collaborative spaces are becoming more commonplace in the legal sector as they allow for ad hoc group discussions and the exchange of ideas,'' he said.
Mr Greene said flexible work practices would become more important over the next two years when Sydney and Melbourne would have much space expiring. Firms would face competition for space. ''Whilst there is limited new supply, take-up in the market has not been as strong as expected,'' he said.
The report found that Melbourne law firms were spending proportionately less on rent as a percentage of total revenue than counterparts in Sydney and Brisbane where rents were typically higher. The average law firm in Melbourne spent 5 per cent of its revenue on real estate costs, compared with 6.2 per cent in Sydney.
Mr Greene said relocations gave firms the chance to improve efficiency. Optimising their property portfolios was one way.
''Property costs are usually quite variable. Although rents are fixed in a lease, there is a lot that tenants can do to reduce their property costs in other ways,'' he said.
For example, most major law firms occupied A-grade buildings in CBD cores. Legal staff had to be in these offices, but back-office operations could often be housed in cheaper locations outside the CBD.
Mr Greene said many businesses were favouring modular furniture. . ''Modular furniture can be set up in a variety of configurations to meet changing needs, and can also be moved to a new location easily.''
Technology was a useful tool allowing tenants to have a more mobile workforce. These included laptop computers, tablets, hand-held devices, social networking, intranets, voice-over IP, and quality audiovisual capabilities.
''In addition, electronic document storage and retrieval reduces the need for physical storage space,'' he said.