Is the space an adequate size? Will it work for the short and long-term? Does the space send the right message about the law firm? Will clients feel comfortable? Will employees be comfortable?
Beyond these considerations, a big question is what type of lease to sign? Landlords seek to get law firms locked into long-term leases. After all, it gives the landlord a great deal of security. It locks you down for the long-term. It makes it such that they won’t have to worry about finding another tenant soon.
In addition to long-term leases, landlords often to seek to have one or more of the partners to sign personal guarantees. This ensures that if the law firm doesn’t pay, they can not only go after the law firm, but they can go after the partners individually.
Beyond long-term leases with personal guarantees, landlords often seek a Triple Net Lease. If you don’t know what a Triple Net Lease is, you need to find out before agreeing to one of these leases. If you are a new law firm, or one trying to minimize expenses, a Triple Net Lease will do the opposite for you.
At the end of the day, it is still a tenant’s market in most regions in the country. Landlords don’t have an easy time renting their space.
Versus signing a long-term lease, where you have to sign a personal guarantee and you agree to a Triple Net Lease, it is often wise to seek out shorter-term leases. For most law firms, seek one-year or two-year leases with options to renew the space for an additional term should you want to stay.
And, for most, you should say no to signing personal guarantees or agreeing to a Triple Net Lease. Why take on all this expense and risk when it is still a tenant’s market in most places?
If you are having trouble finding space that fits this bill, keep looking. The last thing you can afford to do is sign a bad lease when you own a law firm.
If you have any questions or comments, feel free to share them below.