When lawyers are selecting office space for their law office, the decision is often very difficult. For most lawyers, they want office space that sends a message. They want office space that is going to impress and attract clients. They want to feel great when they are sitting in their shiny office.
At the same time, some lawyers can really be tempted to overspend on office space. In other words, they can obligate themselves to pay for office space that increases the overhead of the law firm in an unreasonable manner. They might do so because the space is impressive. They might do so because they are so overly optimistic about how their law firm will do.
To make matters worse, many law firm owners personally guarantee their office space. This means that if they ever fall behind on rent, not only can the landlord come after the law firm itself, but they can come after the law firm owner personally.
When choosing law firm office space, lawyers should undertake a careful review and analysis of their revenue and their budget. For many law firms, this may mean sitting down with an accountant or financial professional and really digging into the numbers before signing any lease.
Certainly as well, location matter as it relates to law firm office space. In many localities, and for many law firms, clients are used to going to a particular area of town to seek out a lawyer. If a law firm is not located in the part of town that top clients are used to going to, it can result in a law firm missing out on the quality clients the law firm needs.
On the other extreme, it is true as well that a law firm should not sign a lease for space that sends the wrong message about the law firm. In other words, while A and B office space might be okay, do you really want C and D office space just because the rent is cheap? It is also not helpful if the law is in a location that the quality potential clients you are seeking will not go. The reality is that — even if the space is cheap — it might be difficult to get the best clients if the space sends the message that the law firm is a fly by night operation.
Ultimately, law firm owners should really take the time to determine how much rent they can comfortably afford, while still having an appropriate profit margin. They then need to know what part of town their law firm office should be and the space features they need. For most law firm owners, they then need to get the very best space available at that price in the desired location and with the appropriate space attributes.
However, if a law firm owner really breaks the bank on office space, and goes above and beyond what they should spend, it can cause the law firm all kinds of financial problems in the long run. It can result in a law firm not hitting the profit margin numbers they need to hit.
Or worse yet, it can result in some law firms even going in the red and being unable to pay their rent. This is where many law firms and law firm owners can get themselves in deep financial trouble. This is particularly true where the lease is long-term — and the law firm owner has signed a personal guarantee.
No law firm or law firm owner wants to get behind on rent. Thus, be careful not overspend or over-commit on law firm office space.
If you have any thoughts, feel free to share them below.