Even among its Magic Circle peers, law firm Slaughter and May prides itself on standing out from the crowd. It has a long-standing policy of not reporting financial results, profit per equity partner is said to be the highest in Europe, and its headquarters at One Bunhill Row, EC1, still contains a dining room where every partner has their own pigeonhole and napkin. The site remains, the firm has said, “part of our identity”.
That nearly changed during the pandemic. With the firm’s lease running out midway through the coming decade, it joined a slew of law firms looking for potential new premises in London last year, including Clifford Chance, White & Case, Baker McKenzie and Skadden, Arps, Slate, Meagher & Flom.
Eventually, after a year of viewings and prelet talks, Slaughter and May decided that its historic City office remained its best bet. But with many of its legal peers still hunting for space, there is plenty landlords can learn from the firm’s search. EG caught up with real estate partners Jane Edwarde and John Nevin to find out more.
What lawyers need
First and foremost, law firms need space in their offices to entertain high-paying clients. In the new world of hybrid working, in which Zoom and Microsoft Teams have become ubiquitous, that is not as easy as it once was, says Nevin.
“Thinking about the technology we have employed to keep going during the past year, nobody’s offices are really equipped [for hybrid working],” he says. “New prelets will obviously be fitted out in a manner which is best-in-class in terms of technology. But for existing occupiers, the first thing they are going to have to grapple with over the coming year is that meetings need to be more flexible.”
Nevin adds: “If you were having a meeting of 15 or 20 people in the old days, everyone would trot to either the clients’ or lawyers’ offices. Now, half of those people may elect to join that meeting virtually. Occupiers like ourselves will need to upgrade our client-facing facilities to ensure that we can accommodate that.”
Nevin, who has a speciality in advising other law firms on their real estate paperwork, says flexible lease terms have also become a key factor in HQ negotiations. Firms are increasingly looking for the option to expand or contract the amount of space they take on prelet contracts “right up until close to practical completion” of the building.
This was exemplified by Baker McKenzie, which confirmed in February that it was scaling back plans to move into a 153,000 sq ft office at 280 Bishopsgate, EC2, and will now take only 130,000 sq ft. A spokesman confirmed to EG that the lease, signed last summer after the first Covid-19 lockdown, had the option to downsize built in.
However, Nevin adds, it is “a misconception” that this means firms want shorter lease terms. “If you take Slaughter and May or another professional services organisation, they are willing to spend large sums of money [on their office]. Companies are taking space and sometimes carrying out both a category-A and category-B fit-out,” he says. “So companies are spending large sums of money – and it simply doesn’t make sense to do that against the background of a five- or 10-year lease where they might be looking to break in year five.”
Pandemic perks
Edwarde, who led Slaughter and May’s office search, says this also rang true during her own talks with prospective landlords. And perhaps surprisingly, given the financial uncertainty, the pandemic “presented a good time to be negotiating” the firm’s large space requirement of around 260,000 sq ft.
“It was a bit of a turning point in the market, for developers to be quite so understanding of the need for a business of our shape and size to have that flexibility,” she says. “It showed that things can happen that nobody expects or predicts, and that can have quite a seismic effect on operational needs.”
Despite this, quality, not quantity, remains the most important factor in post-Covid office space. For Slaughter and May – even with its pigeonholed dining room – that has made it vital to “use our space intelligently”, she says. “The office has to be a good place to come to. Otherwise people can work from home, or from really good-quality, flexible, serviced office space nearer to their homes potentially, or near to their clients.”
It is an issue that goes right to the heart of why people want to go into the legal profession, adds Nevin, and is underlined by the firm’s employees’ desire to get back to the workplace – albeit two or three days per week. “We are definitely on the path to the return to normality. There are more and more people who are making that return to the office.
“People like being part of these organisations, and they enjoy working alongside their colleagues,” he adds. “If you take that aspect out of any of those careers, you are taking away the very essence of that attraction.”
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