Rethinking law firm real estate in the digital world

Covid-19 has undoubtedly turbo-charged digital transformation, with many commentators arguing that this is a watershed moment for the sector. The pandemic forced change, with law firms adopting cloud-based software, digital documentation and remote working tools in short order. Additionally, law firm leaders and clients now have a greater practical understanding of the role technology plays in the effective delivery of legal services and this is creating strong momentum for further investment. According to research from Acritas Sharplegal, for example, 84% of Partners responding to their survey expect their firms to increase investment in technology over the next 12 months. The top three investment areas identified are; remote working, video conferencing software and collaboration and communication tools. Each underpins a growing appreciation and acceptance of new ways of working.

Law firms are achieving deeper digital transformation in a variety of ways, be that the establishment of dedicated innovation and technology teams, innovation labs, partnerships with start-ups and academia or the attraction of VC funding. Freshfields, for example, now has two digital innovation labs based in London and Berlin, while Clifford Chance created a research and development hub that brings the firm’s product research, design and development capabilities together in one place.

Law firms are also turning their attention to addressing the challenges of digital transformation. A 2021 study for the Solicitors Regulation Authority cited a lack of expertise as one of the main barriers to adopting legal technology. Moving forward law firms will need to re-skill staff, recruit new talent and work more collaboratively to share knowledge and expertise. Examples of this in practice include: Ashurst’s partnership with the University of Stirling to offer a course that features tech training, and Linklaters, who are offering secondments within its in-house tech start-up Nakohda.

The acceleration of digital transformation amongst law firms is most obvious when looking at investment at UK LegalTech, which had its best year ever in 2021, with equity investment reaching £143m – an almost threefold increase on the £51m invested in 2020.

Accelerated digital transformation will require law firms to rethink their real estate strategies in a number of ways, notably:

1. The office will further its role in bringing people together as a place of knowledge exchange and collaboration.  Indeed, 62% of respondents to our law firm (Y)OUR SPACE survey believe that there will be an increase in the proportion of collaborative space found within their portfolios over the next three years – a proportion higher than other industry sectors surveyed.
2. Growing consideration will need to be given to establishing corporate innovation labs as part of the future portfolio mix within a law firm.  These may be located either within the HQ or outside.
3. Law firms will need to rethink their space and locational requirements to entice and retain tech talent and hybrid tech and legal skills. Furthermore, workplaces will need to support the digital reskilling agenda. In practice this means a flight to quality, amenity rich office space within a strong and vibrant setting that incorporates spaces for learning and development.
4. The law firm office will need to support, facilitate or portray this new strategic intent. An exemplar of this is Osborne Clarke who will relocate to Halo, in Bristol.  The law firm noted that occupying space at Halo will help cement their reputation as a leading technology law firm given the innovative and smart nature of the building.
5. Workplaces will be required to align to new models of work that harness the power of technology. 50% of the UK’s top 100 law firms have already launched formal hybrid working policies.

Amid disruption from technology, law firms should consider the contribution that real estate makes in achieving digital transformation, and adopt new occupational strategies aligned to this new strategic intent. This means occupying and designing spaces that are: innovative, collaborative, smart, high-quality, amenity-rich and agile.  Spaces that are more akin to those seen in the technology sector, and certainly spaces that have appeal to the tech-savvy talent that will be so critical to a law firm’s future competitiveness.

1. Acritas Sharplegal, taken from an article by Thomson Reuters – How Law Firms’ 2021 plans are being shaped by their 2020 experiences. Author: Jordan Schuetzle. February 2021.

2. PitchBook, December 2021