Closing a law office can signal trouble or low demand in a particular market, but industry watchers say it’s increasingly just a sign of the times, as firms seek to minimize costs and take advantage of the increased flexibility technology provides.
“Most firms that have satellite offices close to main offices are evaluating whether it makes sense to keep them or not,” said Robert Nourian of recruiting firm Coleman Nourian. “It’s much more about how you distinguish yourself, what you’re providing … that drives more of who is getting work than just having an office in a particular city.”
There was a time when opening additional offices showed that a law firm was thriving, Nourian said. But now, expanding into second-tier cities or suburbs is less of a priority.
Ballard Spahr provided an example earlier this month. When a few partners left its small outpost in San Diego, it chose to relocate the remaining lawyers to Los Angeles and close the office, rather than rebuilding it. The practice mix among the remaining San Diego lawyers was more fitting in the Los Angeles market, firm chairman Mark Stewart said.
Ballard Spahr also relocated its Bethesda, Maryland, lawyers to its nearby Washington, D.C., office two years ago, citing efficiency reasons. It kept the space largely unused until this year, when the lease ran out.
In contrast, when the firm brought on a group in Boulder, Colorado, earlier this year, it chose to keep that location, despite its close proximity to the existing Denver office. The high-tech and startup community in Boulder is distinct, Stewart said, and clients there want their lawyers to be part of the community.
Firms’ decisions in that respect are “going to be driven by practice mix and what the clients want,” Stewart said. “There’s no rule here anymore.”
Fox Rothschild managing partner Mark Morris said the fate of suburban law offices has been a topic of discussion at his firm, though he doesn’t anticipate any office closures in the near future. It may be something to consider when leases expire, he said.
The firm has three offices in the Philadelphia suburbs, each within 35 miles of the Center City location, and two are less than 15 miles apart. It also has an office in Wilmington, Delaware, less than 30 miles from Center City. That footprint was a product of Fox Rothschild’s early growth model and the resulting acquisitions, Morris said, when it was focused on growth within a one-hour travel radius of Philadelphia.
Those locations still have their benefits, particularly for lawyers who live close by, Morris said, but it will likely become less common to see law firms opening new offices in the suburbs.
“If we were starting from scratch [now], I’m sure we would never have laid it out this way,” Morris said.
Fox Rothschild did choose to close an office it gained in a 2011 acquisition, but not in the Philadelphia region. Chan Law Group had an office in downtown Los Angeles, about 13 miles from Fox Rothschild’s existing Century City location. But the firm wasn’t keen on maintaining two L.A. offices, Morris said. The downtown office was small, and easy to wind down.
Costs and Benefits
A number of factors play into the fate of satellite offices, Nourian said—distance between the offices, timing of the lease and lawyers’ desire or willingness to work remotely.
“Clients are used to having lawyers from around the country,” Nourian said. “There isn’t as much of an emphasis on having to be on top of your clients.”
Consolidating offices goes along with a legal industry trend toward spending less on office space, said Sanjay Benegal, of Citizens Financial Group. Many firms, in Philadelphia and elsewhere, are shrinking their footprints by 10 to 15 percent before renewing their leases, and remodeling to make better use of common areas and office space.
“Firms may rethink the need for their existing smaller offices that are in close proximity to a nearby large office,” Benegal said. “As millennials continue to make up a larger portion of the attorney population, we will likely see the phenomenon of virtual office space become more of a reality for many firms.”
Still, clients’ location remains a consideration in some circumstances, such as Ballard Spahr’s Boulder practice. That’s especially true with highly local practices. Fox Rothschild’s Morris cited some of the firm’s zoning and land use lawyers in suburban Philadelphia who take advantage of their close proximity to the businesses they serve.
“If you consolidated [the offices], you would lose some of that,” he said. “People would not turn to you as a local expert.”
Even if those offices only had a few lawyers, Morris said, it might be worth keeping them open for that purpose. And in one recent situation, he said, the firm’s presence in the suburbs was a deciding factor for a group of laterals.
“One of the things that does keep satellite offices open from time to time is when they’re protected by a rainmaker or group of rainmakers that want to keep that office open,” Nourian said. “Many firms are reluctant to potentially lose significant revenue that might be generated by those folks.”