COVID accelerated downsizing trend for law offices, leasing survey finds

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With companies nationwide downsizing their office space in the wake of the COVID pandemic, some local law firms have joined the trend, according to a small survey of Twin Cities firms conducted by real estate firm Newmark. Others have gone in the opposite direction to keep pace with growth in their practices.

The survey includes data from 20 of the top law firms with offices in Minnesota. The firms vary in size, with office spaces ranging from 15,000 to 207,000 square feet and employing from 15 to 202 lawyers.

Law firm leasing activity averaged 52,725 square feet in 2020 and 2021. The number significantly rose in 2022, with a total of 252,913 square feet leased. Year-to-date, law firms have leased 160,000 square feet, and it is projected that the total square footage will reach 192,000 square feet in 2024, based on announced deals.

According to Newmark, law firms have been downsizing their office footprints for years. The pandemic accelerated this trend, resulting in the average square foot per lawyer decreasing by 7.3% since 2014.

In the three most recent law firm office leases signed, the square feet per lawyer was 438, 500 and 682 square feet.

Among law firms that renewed or signed new leases from 2020-2023, 55% chose to contract, 36% chose to expand and 9% had no or a negligible change in their size, according to the survey.

Only 6.2% of law firm employees in the survey are working in a fully remote capacity. That contrasts with data from the U.S. Census Bureau showing that 23.5% of workers in Minnesota and 20.1% of workers in the United States primarily work from home for three or more days a week.

Among the law firms who took the survey: 65% (13) have some remote employees; 30% (6) have one to five remote employees; 35% (7) have five to 15 remote employees; and 10% (2) have more than 16 remote employees.

The trend of decreasing the square footage allocated per lawyer and standardizing office sizes has been going on for years, but it was significantly accelerated by the impact of the pandemic.

The report also cites national data from the Kastle Legal Industry Back to Work Barometer, which found the square foot per lawyer at firms that renewed or signed new leases between 2020 and 2023 went from 733 square feet to 572 square feet, a 22.% decrease.

When it moved to new space at Washington Square in late 2019, Minneapolis-based Chestnut & Cambronne more than doubled in size, from 10,000 square feet to 23,915, “just before we sent everybody home because of COVID,” said Jeff Bores, managing partner at the firm.

In June 2021, the firm’s leaders chose not to participate in the hybrid work trend, Bores said. “We made an early decision asking everyone to return to the office.”

The firm decided that “when your attorneys need staff support during the day, it’s more productive for everybody to be together. It is better for clients and staff. We provide better service, and mentoring happens better, when you are able to walk into someone’s office, rather than sending an email that might be returned a few days later.”  The firm continues to be in growth mode, Bores said.

In June and July, Minneapolis-based Fredrikson — one of the state’s largest law firms — downsized from 204,459 square feet at U.S. Bank Plaza to 158,394 over eight floors at 60 S. Sixth St., with nearly 600 local employees, and 19 conference spaces.

The process of downsizing to a smaller space started even before the pandemic, said executive committee member James Snelson, who helped plan the process. “We knew we’d have to be patient and creative, so we started formulating our needs in 2018.”

“We knew having an open feeling with plenty of natural light and technology was a key part of what we’re looking to accomplish, with a lot of team meeting areas and gathering space that people have been taking advantage of,” Snelson said.

The firm took advantage of the building’s layout, with elevators along the side rather than the core of the building. “The first thing people see when they enter is a cafe and we’ve built into that meeting spaces where there is plenty of natural light,” said firm President Melodie Rose.

Amenities, like a fitness center on the lower level of the building, lockers for each employee, bike storage and a tenant lounge area with pool table and TVs, are useful “for when they want to get out of the office a little bit but not go too far,” she said.

Office attendance year over year has been trending upward. Snelson said. Clients and community partners also appreciate the new space for hosting events.

“When we took the place over, we started with a blank space, which was a great opportunity to design the office space for how we work and intend to work for years to come,” Rose said.

Fredrikson has taken advantage of current technology. All the internal meeting rooms are designed to make hybrid meetings easy to set up, even for non-techies. “The way we use Zoom and Microsoft Teams makes interactions inclusive even for people who aren’t in physical proximity,” Snelson said.

“We’ve been able to design and implement tools in offices to provide a lot of flexibility. Each office is set up so a lawyer only needs to bring their notebook computer, plug in and they are all set with the same dual monitor setup with sit-stand desk,” Snelson said.

The reservable office scenario allows people to interact more with different teams and groups, Rose said. “People have started to enjoy working on projects and being able to choose their ‘neighborhood.’ It’s a trend we’re seeing in other professional service organizations, and it fits with our culture and hybrid work model.  A lot of intentionality went into the space to make it fit who we are and reflect the collaborative nature of the firm.”

Minneapolis-based law firm Lathrop GPM recently moved into its second suite of offices redesigned to support the firm’s new hybrid work model, which allows lawyers to split time working at home or in the office. The firm now occupies the 30th and 31st floors of the IDS center.

The new space design is based on feedback from attorneys and administrative staff, said Partner in Charge Brian Dillon. Features include rooms with modular tables and chairs to configure to the size and purpose of any meeting, stand-or-sit desks, more common spaces and a cafe for better collaboration. Flexible office layouts are designed to support employees who work in the office full time, and those who come in fewer days per week or are visiting from another office.

The firm “has downsized pretty significantly” as it has adopted the hybrid work model, Dillon said. One option allows employees to choose permanent, dedicated office space but they must “commit to at least three days a week, and follow through,” Dillon said. Another option allows “hotelling,” in which a website app allows attorneys to reserve office space for certain days and weeks when they will be in-office. Hotelling “has allowed us to shrink our space even more significantly,” Dillon said. Offices are slightly smaller, with every attorney’s office the same size, and no corner offices. “The ergonomics of the new space are ‘night and day’ better.”

Perhaps the best result of the smaller space is that employees are interacting more, Dillon said. “In the first couple of weeks I saw more interacting by virtue of proximity than in the last three years.”