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Finally ready to hang out a shingle? Presumably, you do not intend to practice law out of the trunk of your car and/or arrange client meetings at the courthouse cafeteria. In short, you need office space. Before inspecting spaces and counting square footage, ask yourself some basic questions about what you’re looking for. For example, where should the law office be located? Should space be rented or owned? Should you be a tenant or landlord? What’s affordable, and how much space is actually needed? What type of financing options should be considered? What type of image should the space project, and how can the space become user-friendly? The type of law practiced often influences office location. For example, for pragmatic reasons, large firms traditionally gravitate toward high-rise office space in central business districts. With a central business district location, these firms are not only close to one another, but they also are close to their major clients, such as banking, corporate, insurance, and financial institutions. Like larger firms, a solo practitioner has incentive to open an office close to his or her clients. Unlike larger firms, however, this does not always mean renting space next to a bank or corporate headquarters. Take a moment to think about the clients you intend to represent. Where are those prospective clients likely to be drawn from? Exclusive demographic research isn’t necessary; just use common sense. For example, active criminal-law practitioners often congregate close to a jail and a courthouse; divorce lawyers may want space close to the communities where their clients live. Aside from location, it’s important to decide whether space should be rented or owned. Philosophically, some people prefer the tangible ownership of an asset. If that’s the case, you’ll need to deal with earnest money, an ample down payment, closing costs, title insurance, and financing. Also, investigate the tax consequences, including issues such as expenses, depreciation, and capital gains treatment. Consider purchasing more space than needed, which can then be leased. This helps defray costs and provide cash flow, but it also means dealing with complaints and being responsible for repairs. If this is too much responsibility � after all, you’ll have your hands full with a new firm � try leasing. There are many types of lease arrangements, such as becoming a primary tenant or a sublessee. Subleasing in an existing firm has advantages, including access to a private firm’s library and a potential for mentoring. Another attractive variation is the availability of executive suites. These arrangements often feature a shared receptionist and access to a central conference room by appointment. Affordability is a primary concern in the search for office space. The most obvious expense is the price-per-square-foot amount, but there are many other expenses associated with a lease. Most landlords prefer a “triple net” lease, meaning that the tenant is responsible for a pro rata share of the taxes, insurance, and common area maintenance. A tenant also may be responsible for a share of the utility bills. Be sure to ask whether the base rental per square foot includes such charges. If you hire a real estate broker who specializes in commercial office tenant representation, the broker can help tackle such issues, plus other considerations, such as whether there are charges for parking. A broker also may be able to negotiate for a lower base rental. Another way to save money is to make sure to rent only the amount of space needed. What are the needs of your practice? For example, do you want a break room and a library? Can you include a conference area in a large partner office, or do you need a separate room? For mediations, two or three separate rooms may be needed. Do you need a large reception area, or do clients rarely visit? Will files be stored on site, or will off-site storage do? A PRACTICAL STRATEGY Another aspect to consider when leasing office space is whether to negotiate for renewal options. Leasing space in a down market, when vacancy rates are up and office space is plentiful, you may be able to negotiate to lock in to a longer primary term. Often, when an option to renew or extend a lease is granted, it is more like “an agreement to agree” rather than a deal for an ironclad, predetermined rental rate. Although this may seem worthless, the goal is to make sure you’re not suddenly out of an office when the lease expires. Without a track record as a firm or practitioner, don’t be surprised if a landlord insists that you personally guarantee the lease. Obviously, if this can be avoided, it is to your advantage. A better option would be financing the lease through a bank or financial institution that specializes in small business loans. Consider a letter of credit or a prearranged loan with a private banker in anticipation of fluctuating cash flows and collections. Image is important. If you look at office space that is new or being renovated, it may be possible to negotiate a “finish out” allowance. This gives some control over the choice of wall treatments, lighting, fixtures, and floor covering. Depending on the market and the length of the lease, upgrades on these items without a significant markup is possible. If you decide to go all out in the decorating department, don’t forget to check into building and office space maintenance. Filling an office with Picassos isn’t as impressive when there’s trash on the ground in the building’s common areas. Of course, office space must be functional, too. For example, a solo may not want to locate the employee break room next to the reception area, and a built-in desk providing for a right-handed return may not be ideal if an assistant is left-handed. Conferencing areas should be spaced away from attorney offices if the office soundproofing is inadequate. Selecting office space is one of the most important decisions a solo or small-firm practitioner can make. Although there are myriad considerations, it won’t become a daunting task if you take the time to plan a practical strategy. Kenneth A. Wright is a partner at Rogers & Wright in Dallas. This article first appeared in the American Lawyer Media newspaper Texas Lawyer.

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