Law firms don’t have a crystal ball

Law firms don’t have a crystal ball

Back in 2015, I interviewed a wide range of managing partners at City law firms. The topic was Brexit. Predictably, most of them were vigorously opposed to the idea of Britain leaving the EU and even fewer believed that it would ever happen. Soon afterwards, I undertook the same exercise with their New York counterparts concerning the possibility of Donald Trump becoming the 45th President of the United States. Responses to that suggestion were similarly antipathetic, and equally doubtful as to its likelihood.

That both events did in fact come to pass is not an indictment of the lawyers concerned. They are not political pundits. Indeed, most of those whose job it is to read the political runes proved to be equally wrong in their judgment that these things simply would not happen. Right up to the day of the referendum vote on Brexit in June 2016, the odds were continuously in favour of Remain, and in various YouTube compilations a strong consensus of US pundits and commentators vigorously argued that Trump could not, and would not, win.  

Unexpected shocks happen. Globally, none has been greater than Covid-19 which continues to affect the world in myriad ways. For commercial law firms, the impact has been rather less severe than initially feared: many have thrived thanks to enormous client demand on everything from employment and insurance to refinancing and restructuring.

Although a consensus exists that international law firms will continue to be very busy advising clients in a post-Covid world, exactly where they do it is much more contentious.  There is a divergence – in particular over the issues of working from home (WFH) and what to do with all that office space.

After a year of WFH, an end to the lockdown is accompanied by a general expectation that lawyers will continue to mix home working with commuting into the office. The issue is to what extent the home working element will apply.

A key benchmark is that some law firms have already begun to reduce their London footprint. In February, Baker McKenzie reduced the amount of office space it is taking in a new development at 280 Bishopsgate. Having originally signed a lease for 150,000 square feet, it cut that back to 130,000 sq ft. The key driver behind this decision was the anticipation of a sustained WFH strategy once Covid restrictions are lifted.

On the policy front, there has also been clear movement. Last September, Linklaters became the first City law firm to announce a long-term WFH policy, allowing its 5,200 staff to work remotely for up to 50% of their time. The firm said its decision would apply beyond the Covid-19 restrictions.

“The policy captures the lessons learned from remote working during the Covid-19 pandemic,” said a Linklaters spokeswoman. She added that it reflects “that high-quality work can be delivered whilst working remotely, supported by the firm’s longstanding investment in robust technology.”

Seen as a game-changer, the Times recently ran a story headlined: Why working from home looks here to stay for law firms. The article included a mini survey of several big City law firms to assess where they now stood on WFH and the potential risk of eroding a culture they have spent decades carefully creating.

Some firms have an unambiguous WFH strategy. Keith Froud, managing partner at Eversheds Sutherland, says that “one thing is certain, we won’t be going back to full-time office attendance. Our people want a blended office-remote environment, combining the best of both, and we want to support that. Over time, this means that we are likely to need less office space.”

A spokeswoman for Hogan Lovells is more cautious, arguing that “it is too early to say what a return to the office or long-term approach to agile working will look like although in some locations we have already had a significant return to the office”.

Following its WFH announcement, Linklaters is already planning a move from its Silk Street HQ to offices that are nearly a third smaller. Among other magic circle firms, the outlook is distinctly more opaque. Allen & Overy’s future plans are described as “vague” while a Slaughter and May spokesman said that the firm’s senior partners “will digest the government’s four-step plan for easing restrictions and, as more information and guidance emerges, we will keep everyone updated”.

Clifford Chance may leave Canary Wharf and has instructed agents to look for a new home, possibly returning to the Square Mile, after 2028. Freshfields has no such plans, having just moved into a state-of-the-art office at 100 Bishopsgate. According to the firm’s website, the new office “has been carefully planned to minimise our environmental impact and support wellbeing.”

A spokeswoman for Norton Rose Fulbright says that “We need to ensure that greater home working offers the same career prospects to all our people; that junior lawyers are trained effectively and enjoy the full experience of working as part of a dynamic team; that we continue to meet the evolving needs of our clients and that we maintain cohesion in our firm in a more fluid environment.”

In other reports, some firms have cast further doubt on the WFH strategy – most notably, Quinn Emanuel Urquhart & Sullivan, which defied sceptics by announcing a remarkable 27% spike in London revenues to reach £127.4m last year.  More recently, the firm announced an increase in the amount of space it is taking at its 90 High Holborn headquarters, and signed up for an option to increase it further in the future. 

Co-managing partner of the firm’s London office, Alex Gerbi, said: “The space we now have caters for our growth plans and gives us great security for the future.” Another Quinn partner added that allowing people to work remotely half the time would mean that “the firm may lose its culture, that it could make it difficult to give the right training to junior lawyers, and it would be impractical to working as a team and with clients, and therefore the firm would be thinking about options cautiously.”

Having recently agreed a major pre-let, Latham & Watkins is also on the bullish side of the argument in planning for bigger rather than smaller offices. The firm expects to occupy a minimum of 200,000 square feet at 1 Leadenhall from early 2026. 

Office-based staff – including law firms – have been advised by the government to work from home until the final stage of the easing of lockdown. The guidance to work from home will remain in place until 21 June at the earliest. That buys some further time for decisions to be made on WFH and future office needs.

But many City-based employees have already made up their mind. In a recent report published by Deloitte, 77% of financial services employees said they expected to work from home for at least one day a week, compared with just 41% before the pandemic.

In trying to predict future employee expectations and office space requirements, law firm managing partners certainly have a difficult task. As one FT headline summarised the problem: Working from home may be bigger test for City of London than Brexit. The question is which firms will make the right call.

Dominic Carman

Written by:

Dominic Carman, journalist, writer and legal commentator. www.dominiccarman.com

Print Friendly, PDF & Email

Author: Dominic Carman

Print Friendly, PDF & Email

Leave a Reply

*