Monday, noveMber 15, 2010 Staying Ahead of the Curve The evolution of the workplace environment and its impact on Atlanta’s top law firms john disneyparticipants in the 2010 commercial real estate roundtable (front row l to r) Gannon shepherd, jones lang lasalle; louise Wells, morris manning & martin; duncan Gibbs, jones langlasalle (back row l to r) david demarest, jones lang lasalle; Kurt powell, hunton & Williams; mason stephenson, King & spalding; brad armstrong, jones lang lasalle. 2010 CommerCial real estate roundtable sponsored by:
2 2010 2010 3 CommerCial real estate sponsored seCtion Can you see it? Staying Ahead of the Curve The evolution of the workplace environment and its impact on Atlanta’s top law firms It takes perspective to see potential. In today’s fast-moving real estate market it may feel like the old rules have been thrown out the window. But with the right perspective you can recognize the patterns and anticipate the next play. Guest panelists at the 2010 commercial real estate roundtable included managing partners from three of atlanta’s top law firms. From left: Kurt powell, hunton & Williams; louise Wells, morris manning & martin and mason stephenson, King & spalding. G Jones Lang LaSalle’s global insight and local expertise helps law ﬁrms ﬁnd real estate solutions that lead to lobal real estate services firm Jones Lang without regard to the economy. Where we are seeing real focusing on cost and really how a law firm can provide long-term success. Thank you to our clients for trusting us with your business. LaSalle (JLL) hosted a roundtable discussion progress is within corporate and real estate; of course, that’s value to the organization. Arnall Golden Gregory Hunton & Williams Pursley Lowery Meeks last month with some of Atlanta’s leading quite encouraging. real estate Capital markets, a hybrid of the word that we continue to hear out of the mouths Bryan Cave Jones Day Swift Currie McGhee & Hiers legal minds. The panel included Kurt Powell, both real estate and corporate, has been acting as a leading of almost every general counsel that we speak to is Epstein Becker Green Kilpatrick Stockton Womble Carlyle Sandridge & Rice managing partner of Hunton & Williams’ Atlanta indicator as activity in this space has grown exponentially for value. how can you as a law firm deliver value to our Finnegan Henderson Kutak Rock office; Mason Stephenson, managing partner of the past two years. it helps that our international efforts are organization? they’re looking much more critically at the Holland & Knight Morris Manning & Martin King & Spalding’s Atlanta office; and Louise Wells, benefitting virtually every practice, particularly intellectual value proposition a law firm provides than they may have managing partner of Morris, Manning & Martin, as property, litigation and, increasingly, corporate. done in the past when the economy was just rolling along well as members of JLL’s Atlanta law firm practice poWell: over the last year i have been surprised at the without any real issues. group, Brad Armstrong, David Demarest, Duncan level of transactional activity. in large part, our clients have Gibbs: so it’s coming straight from clients’ general Gibbs and Gannon Shepherd, with Gibbs serving as made the adjustments and have had cash built up over counsel office? panel moderator. The discussion included strategy a period of time. our clients have been able to make the poWell: yes, absolutely. every general counsel you talk and legal trends as well how law firms are using – adjustments that they needed to make to be profitable to wants to know, ‘how can you help us provide value, how and will use – office space and technology. even in this economy. they’re positioned reasonably well. can you give a certainty of cost?’ you always need to listen Gibbs: What are some of the key challenges you see to your clients, but particularly when you’re in a challenging Gibbs: What are some of the positive developments that going forward into 2011, both from the perspective of your economy, you have to be closer and listen more carefully you noticed in a relatively challenging 2009-2010? clients and from the legal-industry perspective? how is than you have in the past. stephenson: We’ve noticed a real uptick in our your firm working to stay ahead of these trends? stephenson: Value is a key word. like everybody else transactional practice, which is something we’ve all been poWell: Clients still are not growing organically as much and just like our clients, we’re facing the pressures of trying waiting on from a demand standpoint. litigation has as anyone would like because it’s difficult to really create to reduce our overall cost structure and bring efficiencies continued to be strong. obviously, bankruptcy has been growth in this type of an economy. that’s why they’re not to the delivery of what our clients want, namely value. We strong in this environment. seeing new deals both in the hiring, and they’re still uncertain about bringing on a lot of must learn from our colleagues in the construction and To learn more about our global real estate services, visit www.us.joneslanglasalle.com/atlanta corporate and even in the real estate area has been very new people. architectural world, and that’s better project management encouraging. so far, we think we’re going to have a very there’s still a tremendous amount of cost pressure in -- how you take a transaction, break it down into its various strong fourth quarter. every organization that we work with from the CFo’s and parts and execute more efficiently to deliver value. Wells: litigation has been running full-steam-ahead general counsel’s office, so we continue to see clients the other thing we’re seeing is a lot of client expectation
4 2010 2010 5 CommerCial real estate sponsored seCtion CommerCial real estate sponsored seCtion and demand for highly specialized and focused lawyers and of costs on an ongoing, real-time basis. i think that’s not like it today, but in 10 years, that might be the accepted team and increase efficiencies. one specific thing we want groups. just being an m&a lawyer is not enough anymore. favorable because it helps us focus on the efficiency of our norm. is flexible conferencing space. it will help reduce wasted you’ve got to be an m&a lawyer with a focus in a particular own organizations in delivering services. poWell: that’s true. if you think about our national space while increasing our capacity to host small, medium industry, whether it’s healthcare or energy, et cetera. our partners have to be better project managers and practices and the way our clients expect us to move and large functions. We’re focusing on industries and bringing expertise to better business managers instead of lawyers who just do sometimes, there are a lot of days that an office is vacant Gibbs: What’s your opinion on the law firm office and bear in response to a client demand for value. at the same good legal work and bill by the hour. just because the lawyer is on the road. work environment as it relates to branding, recruiting and time, we’re trying to reduce costs so you can ultimately Wells: law firms have generally designed themselves stephenson: other firms around the country have retention? deliver what’s needed, bringing to the table a complete around areas of law versus organizing themselves vertically done this, but another trend we’ve looked at and considered stephenson: We are going to see more telecommuting, team of lawyers, tax, corporate and regulatory lawyers, along industry lines, virtually command vs. demand. We is relocating back-office operations to a different location. and our lawyers working from remote locations. but one of whatever it may be, in various areas. can’t do that anymore. We have to think of ourselves in back to the technology point, do you need to have your the reasons we practice together in a law firm is to benefit healthcare is an obvious area of focus for us with the terms of what our clients want now and will need in the accounting department sitting in the same space and the from the exchange of ideas with our fellow lawyers. number current status of the new healthcare legislation. demand is future, both in terms of legal services and value. this will be same building where you are? Could it be in alpharetta or one, you need space where people can gather, can work also strong for our pharma/biotech practice, as it is for our a good thing for the ‘business’ of law. marietta? that’s certainly a possibility. i think you’ll see law together, and walk next door, down the hall and ask that energy practice around the world. Gibbs: the work environment seems to be changing. firms move toward that. question and have a discussion about a legal issue. e-mail Wells: my colleagues are right. We have been focused how has the footprint of the everyday law firm changed Gibbs: how is technology impacting your firm’s and telephones are great, but it’s so much better to be able on providing our clients ‘value’, going beyond being rate with regard to that need for collaboration? productivity, and how are you embracing technology? to discuss an idea in person. sensitive. We developed legal project management to stephenson: When we were evaluating our existing stephenson: With videoconferencing, we are able second, our clients expect it. the number of clients ensure we can transparently demonstrate the connection space in 2002 and considering our options for office space, to have a firm meeting with virtually all of our offices visiting law firms may not be as great, but they still expect a between rates, time and value – all while improving it was amazing how much had changed from 1988 when participating. We use it a great deal for internal meetings law firm to have an office – and an office conveys an image. reporting capabilities. we designed our former office - email did not exist back between offices. We’ve got a number of practice groups it conveys a brand that not only delivers a message to your Mason stephenson While we have maintained our practice areas, we are increasingly focusing our efforts on industry areas. having in 1988. that was a 15-year look back. over the next 10 to 15 years, what we as lawyers have as space today will that span multiple offices, and those meetings by video conference are much more productive than the old clients but also speaks to new and lateral recruits. When a law firm designs its space, it’s making a statement of who it Kurt powell Managing Partner, Atlanta Office full-service capabilities within an industry area allows us change radically. What we’re seeing is a lot more open conference telephone. so that’s one aspect that allows you is. its location matters. it will continue to be important for Managing Partner, Atlanta Office King & Spalding to offer great value. a few years ago, we looked into the space, working environments that promote and facilitate to build your firm and maintain the relationships among the people when they’re looking to move from one law firm to Hunton & Williams proverbial crystal ball and recognized that certain industries collaboration. lawyers, and it’s a lot less expensive than traveling. another, or when they’re in law school looking at which firm were going to grow – healthcare, sustainability/green, and When we designed our new space at the 1180 peachtree Wells: now’s the time to embrace it. We have they want to join. energy. building, we tried to build in flexibility. We’ve got a lot more implemented legal project management, a web-based Clients may not want a law firm to have the high-end space the recession was a market reset and we don’t believe conference rooms than we formerly had in our old space. project management tool, to help provide greater any longer, but they do expect and demand that their law many areas, if any, will return to what we viewed as normal. Whether it’s conference rooms or workrooms, you’ll see a efficiencies and transparency. We have adopted a Crm firms be on the cutting-edge as far as technology and they Client loyalties have been weakened. as such, we must lot more of that. you’ll see more of an open design. system to improve our business development capabilities. expect all the bells and whistles, such as video conferencing, be mindful to remain vigilant in our communication with When you examine how our colleagues in the consulting We are providing clients with extranets and virtual meeting audio-visual equipment, that do cost money. When we our clients and remain focused on their complete needs. industry operate and design their space, it’s a much more rooms to cut down on costs. We are looking into current moved into our new space several years ago, someone Further, that means a number of prospective clients are in open floor plan. the atlanta market, for example, still video conferencing technology for use between our offices commented that it didn’t look like King & spalding. Well, play. i think you will see firms becoming more aggressive in requires law firms to deliver private offices for associates, but and with our clients. you will never 100 percent replace the King & spalding has evolved over 125 years. their marketing and business development. i think that will evolve over time, and you will see, especially need to physically be in the same room as your clients or poWell: think about what our clients do. they spend a Gibbs: When working to change from that practice- younger lawyers, beginning their career in work stations colleagues. but, you can use technology to augment the lot of money on packaging their brand, and they view that group model to a more vertical focus or concentration on at some point. not tomorrow, but over the next 10 years interaction. as a necessary expenditure to really sustain their business specific industries like energy, how does that change the that will be a transition we’ll see in law firm space, which i poWell: that’s where technology really helps facilitate and improve their profitability and growth. in a lot of ways, face of the law firm as you look toward the future? think they might value over time because it will give them client service, because we don’t practice as a local franchise it’s no different than the expectation they have that they stephenson: primarily, you must have partners who the ability to collaborate on work more than the individual in the atlanta market. We practice as one law firm across all of wouldn’t want to see their lawyer walking into court in jeans are willing to work together across practice areas and private office. our offices, and that’s really done effectively and efficiently or in a shabby suit. there’s at least a certain level of minimum offices, and that’s critical, to share clients, expertise and Wells: it is no secret that we’re in the market looking and really seamlessly from the client’s perspective through expectations that they want to see in the office space their relationships. if you can build that kind of environment at office space, so we’re challenged with all of these issues. technology. lawyers occupy. so i agree, not extravagant, but highly inside your law firm - something we have been successful our architects took us on a tour of competing law firms if you leverage your technology, you can provide that functional, efficient, and to a certain extent a perception or at, then you can create this cross-practice group delivery of and showed us one where junior associates were two in an kind of service to clients, accessing all of the assets that you image that’s going to be consistent with the services that services. it’s really important because, for example, clients office. initially, i said, “that will never do. i don’t even need may have as a law firm rather than just those that you may are being provided as a professional service provider. in the energy area need construction, tax and arbitration to look at it.” but when you take a step back to consider the have in a local market. Gibbs: With the abundance of legal talent on the market expertise, just to name a few. idea, it provides for a more collaborative work environment. Gibbs: What’s your perspective on the open work today, what are you doing or planning to do as it relates to We continue to be organized by practice groups, but increasingly, i think we are going to see more shared work environment? We see so many law firm designs now that have recruiting efforts? we do, just like louise mentioned at morris, manning, space and common areas to help foster a team approach. more common areas, whether it’s for entertaining purposes Wells: We are making the same push that many law also organize across industry lines where you can create a in a team setting, leaders step forward and efficiencies are or conferencing purposes. i know the original thought was firms are doing to grow, primarily focusing on lateral growth. client team of lawyers from all the various specialties. We established. to create collaboration by bringing the attorneys out of the although, we are slowly but surely reentering the market of constantly stress to our lawyers to be responsive to clients in We are also going to see an increased infusion of offices into these areas. is this a continuing trend? law school recruiting. the delivery of legal services, and a key component is having technology. We should accept that while technology may stephenson: our conference center is greatly expanded Whether they are lateral or law school recruits, they will people willing to work together as a team. initially be expensive, its long-term impact is most likely to from our former space. We also added an internal cafeteria, need office space. they will need to feel as if they belong. Clients are looking for seamless transition across practice lower expenditures. which we didn’t have before, and it’s open to lawyers and and, that they are being supported, in terms of technology, areas. When the client calls me with a transaction and needs poWell: in terms of the next 10 or 15 years, technology staff. people can sit down and eat together in a social support services, research, et cetera. they need a work tax or employment expertise, the ability to bring in the tax or will continue to have a huge impact on how you use space. environment. it supports collaboration. environment that will allow them to flourish intellectually, employment lawyer on a seamless basis is important to the most of our younger lawyers do not require very much the conference center itself has been a great add. it allows create a sense of team and feel a sense of comfort and client. that’s the sort of relationship you want to establish from their professional assistants. the more you push down us to host clients and meetings, and it also allows us to open belonging. internally and as well as externally with the clients. that equation and, again, the more efficient technology is our space to community groups and support our partners Gibbs: regarding work environment and career path, poWell: For clients it’s a minimum threshold that you becoming to use for even less experienced users, you’re and associates who are involved in various community what generational shifts are you seeing? how are those understand their business. there is an expectation that going to have it right there at your fingertips. you’re not organizations and bring people from the community into changes reflected in the space you occupy and the whole they’re not going to need to educate you on their business going to need as much assistance from a professional our offices. We’re a part of that community and we’re trying approach to recruiting? how do you position yourself? if they’re going to partner with you, nor should they have to assistant. that’s going to affect how space is utilized. to give back. that has really helped us establish and maintain Wells: one of the things we are focused on is the term teach us about their business. then you’re going to have a lot more associates or lawyers our presence in the city. “partnership” in that we are a partnership where we come you really get to know a client’s business through who are going to be telecommuting. in many more law From the perspective of a pure work environment, we together to do more than just have an office and only experience in an industry. it’s not necessarily just firms, there are flexible work arrangements where you have will see more open space in office design. For example, practice law in individual units. representing one client in that industry but a number of people who are working from home and only occasionally we have an off-site facility, the discovery Center, where the other thing to witness is that we have multiple clients so that you get exposure over a period of time. Clients may come into the office. we house approximately 200 professionals engaged in generations sharing perspectives, all interesting and equally are placing much more emphasis on that as well. if you have four attorneys who are working flexible hours document review and electronic discovery. many of those valid. bringing them together, while challenging, has been then, with respect to the cost component, they are much or a reduced schedule, do you need to have an office for professionals work in more open areas and they see value fascinating. all perspectives are good perspectives. more data driven in the general counsel’s office than they each one of them? not necessarily. you might have one in it because it gives them the ability to communicate more stephenson: the younger generation probably does used to be and are asking their law firms to understand our office for four staff attorneys or a “hoteling” arrangement. i easily. the space design promotes a team effort. i think we not have the same expectations regarding office space that own cost information and be able to communicate costs to can see that occurring in the future. will see more open areas and more common workrooms to i did 35 years ago. however, they are more interested in them in a more visual and concise way, much in the same stephenson: if you think about the accounting industry encourage collaboration. technology and being connected. they want to be able to way the CFo’s office has historically reported information. where hoteling is a common concept and the amount of Wells: i think it will be a continuing trend. shared work do their work in the coffee shop or wherever they happen to We’re seeing a lot more tracking and dashboards reporting travel that our lawyers do, we could do that. some might space and common areas will help build a greater sense of be at the time. so technology is one of the more important
6 2010 2010 7 CommerCial real estate sponsored seCtion CommerCial real estate sponsored seCtion elements for young people. environment as far as electronic devices go. that came into our miami office and now leads the firm objective. poWell: they’re far more interested in having the right Wells: it went from desktops to laptops and from from our new york office. he became managing partner Gibbs: is that process vetted out as you go through technology than the right office. blackberrys to iphones and ipads. of the law firm after leaving to go in-house and was general your associate programs? or are you finding people who stephenson: right. they’re less concerned about Gibbs: are you finding social networks either productive counsel with a client for a period of time. are coming in saying, “i don’t really care to be a partner. having four walls and a door. or not productive for the firm? is the firm embracing or Wells: and then came back? i just want to be a lawyer within your firm?” are you fully Gibbs: Could you expand on that, Kurt? discouraging social networking as a part of the culture of poWell: and then came back to the law firm. expecting all incoming associates wanting to be an equity poWell: being completely wireless is one example. the law firm? Wells: does he have a term limit? partner? having the capability of being able to work anywhere poWell: Certainly, social networking is here to stay. poWell: no, the managing partner position does not stephenson: We certainly hire our entry-level associates in the office with your laptop, as well as having all of the i would say most of our lawyers are engaging in social have a term limit. that was a conscious decision on the law on that basis. When we all started, there were partners and technology tools that you need to be able to be efficient networking in one fashion or the other. linkedin is certainly firm’s part about how we wanted to move forward in the there were associates. now we have partners, we have and effective, whether you’re sitting in your office, on the a tool that most lawyers are using to various degrees of future and what type of leadership we thought was needed counsel, we have associates, we have senior attorneys, staff road or working from home. success. that will continue to develop. i don’t know exactly to do that effectively. lawyers, project lawyers. there’s a great diversity in the Wells: or your ipad. how that will evolve, but you’ll see lawyers using those tools stephenson: another area of succession planning opportunities and career alternatives. poWell: We also have whole teams now that essentially more effectively in practice development in ways that we is focusing on our relationship with clients, not only firm so, yes, most probably come to the firm thinking they have gone paperless. so there are some good systems. may not quite fully understand yet. governance but succession with the clients. want to be a partner. over time they decide maybe that’s stephenson: then you have the important issue of Wells: believe it or not, we won a national award from our partners must prepare their own practice or business not for them. i think the younger generation perhaps values managing and organizing all that electronic data. the legal marketing association for our social media efforts. plan annually to set goals for the coming year. What do i want its time more than the older generation and wants some poWell: you have to have a very good, secure system We are active on linkedin and encourage our attorneys to to achieve? We’re trying to push that down to our younger more flexibility that not being a partner allows. With the in place. use it as a business development tool. We are very active on lawyers so people can focus where i want to be 12 months generational change, you see more people not having stephenson: you must also have a system to organize twitter. my marketing department tells me we ‘tweet’ once or 18 months down the road. With our more senior lawyers, partnership as a goal. you have a lot of alternatives. We have Duncan Gibbs and file e-mail. Gibbs: Give me your perspective on how baby boomers or twice daily and have over 300 followers. john yates has developed a tremendously successful tech-focused blog. we encourage them to transition client relationships. With respect to firm governance, we do have a young- a number of lawyers who will be at King & spalding their entire careers but not as partner. louise Wells Managing Director and millennials, the two different cultures, are using your poWell: blogging is certainly a big part of it. hunton partner seat on our firm’s policy or management committee. poWell: there are a lot more options. law firms in Managing Partner Jones Lang LaSalle office space differently. has five blogs up and running that cover a number of like everyone, we try to bring young partners into leadership general, certainly ours, are very comfortable with that and Morris Manning & Martin poWell: most of the reasons that people come to work practice areas. We’re constantly measuring the impact and roles as soon as possible. even our hiring committee like it. at a law firm involve the intellectual exercise, the analytical evaluating how to maximize our efforts. still, it’s almost like includes associate members. We try to bring them into our Wells: although making partner and being a partner exercise, but i think the reason they stay is the fun of the office space question. there are certain parameters that management at an early stage. still has that really nice cachet. When achieved, it’s nice to collaboration and working on a project together even with are appropriate and other parameters that our clients might Gibbs: Give us your perspective on next year’s associates. have that status. the high pressure, stress, and long hours. these are all things look at and say, “Why are we doing that?” have you changed your recruitment efforts in this area? how stephenson: Clients appreciate the fact that they that have historically come with the practice of law and will stephenson: i was in a meeting last week of real estate might that play into your vision for the future? establish relationships with lawyers who know their continue to be part of the experience. lawyers, and probably most of them were baby boomers. Wells: We are beginning, yes, again, to hire out of law business and have the needed expertise. that lawyer may Where people get enjoyment is, a) from the client there was a presentation on social networking and one of school. the market is still ripe with great opportunities for not be a partner, but that lawyer is still there to maintain the relationships and, b) from that collaborative component. the first questions asked was, “i want everybody in the room second- to fifth-year associates from other firms that have relationship and get the work done. it’s a positive for the boomers and millennials share some common workplace who’s on Facebook to raise their hand.” there were very been downsized along the way. We have farmed in that field clients as well. characteristics. For instance, they both enjoy working with few. then they asked, “how many of you are on Facebook and been very successful in it. again, it’s a balance. Gibbs: What industries have your focus for 2011 as you smart and creative individuals. it’s fun to work with other because either your children or grandchildren are on poWell: it’s a tough employment market for lawyers. align to continue to meet clients’ evolving needs? bright, hard-working people, and you can come up with Facebook?” and that was the primary reason. Clearly, i think just like any other sector of the economy, lawyers have been Wells: healthcare – the perfect storm between great ideas to help solve problems. additionally, both groups that is a trend. i think law firms will move toward linkedin, affected. We are continuing to and want to hire directly from healthcare reform and an aging population means our are team-oriented and like to collaborate. incorporating Facebook, twitter and other social networks. law school, but we’re certainly doing a lot less of it than we healthcare and insurance practices will continue to be work spaces that allow for collaboration and socializing are We certainly monitor social network sites from a recruiting used to. busy for years to come. We have a firm commitment to critical. having that ability, that physical proximity, to work standpoint. people are looking at that now with new hires. Wells: We did put our summer program back into place growth in this space. We also view energy as a growth together easily is still important, notwithstanding the fact young people should realize that before posting things to this year. it was smaller, but it was a lot of fun. it was really nice industry. however, from our perspective, we are focusing that you can arguably do it all through technology. the Web. social networking is clearly a trend that we’ll see law to do it again, to have young people around demonstrating on renewable energy and sustainability. Finally, we view Gibbs: louise, how are you fostering that collaborative firms participating in. however, there are issues. you have to their enthusiasm for the practice of law. international reach as increasingly important. the global environment at morris, manning & martin? be careful. you must avoid creating a client relationship over stephenson: even before the economic meltdown, we recession reset competition. While the u.s. remains the core Wells: every new applicant knows that collaboration is the internet with someone you really don’t know. there are started to move away from only hiring entry level lawyers economic force, other markets, most notably China, india one of my big initiatives. you have to make the partnership a some ethical issues that you have to address. right of law school and had moved more into the lateral and brazil, now command and deserve our full attention. partnership at every level. We focus somewhat on the social Gibbs: a follow up on your comments related to recruiting market - really as a way to expand our bench strength or poWell: We do a lot in the energy arena on a firm-wide environment, as well. and retention. do you have a succession plan? how are you to move into new practice areas where we didn’t have the basis. We certainly have a tremendous amount of practice We have partners’ meetings once a month. We have addressing the pockets and voids that may be created as a expertise that we needed. in the technology arena through both our privacy and our industry meetings once a month. We have practice group result of the baby boomers’ retiring? We never ended our summer program but its size was global outsourcing practice. meetings once a month. so we try to get people together Wells: We do have a succession plan. We transitioned reduced. We’ll continue to hire directly from law schools, life sciences is an area that’s of focus for the firm and as much as we can. a lot of that is based on opportunity, an management last year from our previous managing partner but, clearly, the market has changed. there appears to be we see as continuing to be fertile. you’re seeing a lot of opportunity to be in front of a client, to participate. partially to a new plan that includes an executive committee, a somewhat of a disconnect between the law school market transactional activity in the life sciences base. it’s closely tied because of our size but partially because of our philosophy, shorter term for the managing partner, and a more defined and the law firm market. to healthcare, and it’s highly regulated. it’s always a changing we give younger attorneys great exposure to what’s going role for our management committee. as part of that, we are poWell: there are several reasons law school enrollment area. it’s the type of area that produces a significant amount on in a case or in a transaction. including, or focusing on including, younger partners at hasn’t declined as much as you would expect. in this of sophisticated legal work. stephenson: the key thing with all of us, whether every level of management, from committees straight on economy, students are continuing their education in lieu of Wells: even traditional areas have changed. real estate you’re a millennial or a baby boomer, is the client. Client up through the management committee, compensation job hunting. additionally, a number of law school students now is so tied in with finance and understanding finance. service is first and foremost what a lawyer has to provide. committee and recruiting committee. it’s a balance. do not plan to work for law firms after graduation. it’s not just a dirt practice, if you will. it’s a different practice. Whether you’re doing it downstairs in the coffee shop with you need to have homegrowns and laterals. you need to Gibbs: do you think people that are entering law school traditional areas are still busy and active, but they’re active your wireless laptop or upstairs with a large team working have a nice mix of both. laterals bring a lot to the table. they have the idea that they want to be a lawyer when they in a different or more complex way, frankly. on a due diligence project, it’s client service. ultimately, bring experience from other firms, ideas that if you’ve been come out, or it’s a tool that’s going to be applied in an stephenson: life sciences is an area of focus for us that’s what drives all of us, no matter what generation, as in the same place, as i have, for your entire career, you may entrepreneurial fashion? as well. it spans the regulatory, intellectual property and far as how we approach the practice. not have considered. it’s a learning experience. stephenson: it varies across the board. When i was litigation practice areas. it brings a lot of different groups Wells: the clients’ decision makers have the same if you start your career at morris, manning & martin and in law school, i think most of us thought we were going into focus on a particular industry. real estate still continues generations we have. the decision makers at the clients are end your career at morris, manning & martin, you certainly to practice law. today, i’m guessing only about 50 percent to be an area of focus at King & spalding, as well. as louise all over the place, and they relate to us all over the place as understand the culture and the fiber of the firm. actually practice law, whether in the traditional law firm, said, real estate involves, for example, corporate, tax and well. poWell: We’ve always had a governing structure that public service or the corporate environment. regardless, traditional real estate lawyers. it’s a very inclusive group. Gibbs: how are the generations within your firm has a built-in role for younger partners on the executive it’s still a great education. poWell: We should mention financial services. With influencing one another as it relates to technology? committee and in practice group leadership. then, they Wells: but it’s a joint m.b.a./law degree program, too. all the changes that we’ve seen with the dodd-Frank stephenson: Well, blackberry is no longer our exclusive naturally evolve. a few years ago we named a new managing that lends itself to business and/or law. act, we’re going to continue to see lots of changes in the mobile e-mail device. millennials moved us towards the partner, Wally martinez, who was originally a lateral. i think poWell: i don’t have any statistics to prove this, but i financial services markets. obviously, that was a big part iphone very quickly. We discovered in one summer class, he was 38 at the time he took the job. Wally has done have a sense that less than half of the people entering law of what created – or was at least regulated – as a result of none of them wanted blackberrys. they all had iphones. a fantastic job of leading the firm through the difficult school today don’t go into law school expecting to become the downturn in the economy. We’ll continue to see a lot of so we now accommodate ipads and iphones as part of economic times. a partner in a law firm. they may expect to practice law, development there, too. our e-mail platform. that’s an easy example of how the there is still a perception in the market that hunton & but they’re not going into law school at the beginning Wells: the real estate capital markets group covers all younger lawyers have influenced the transition to an open Williams is a sleepy southern firm, but Wally was a lateral saying, “i’m going to be a partner in a law firm,” as my career of those.
8 2010 2010 9 CommerCial real estate sponsored seCtion CommerCial real estate sponsored seCtion Global Law Firm Office Gibbs: as you look into 2011 at your roles within your relationships that you have with your people to try to get communication in just gathering with our staff and lawyersorganizations, what one thing is at the top of your mind them comfortable working through an environment like in part because it’s a more difficult economy and we wantas far as what might keep you awake at night? What’s one this. one of the disadvantages, especially for our younger to try to create bonds across the firm. We’re spending morething that you’re focused on, something that you’re excited lawyers, is that this is the first downturn they’ve been time focusing on our staff in addition to our relationships.or worried about? through, and they don’t have the longer-term perspective Gibbs: that’s a good point. how do you see that day-in Market Perspective Wells: my sleepless nights stem from worrying about to know that we’ll get over the hump and that things will and day-out as far as that’s concerned?the balancing act between continuing to provide exemplary change. some of them entered their careers either at or poWell: really it’s more just event-based. Fifteen or 20 Ten anclient services and the time and expense demands of shortly before this downturn, so their view of what the years ago, you had lawyer events and you had staff events. t-fbusiness development. it’s marrying client demands with practice of law and what the business world is like is very, maybe once a year you would do something together. a lot avdemands of our lawyers for greater opportunity. very limited. you really have to focus on helping younger of our events, probably the majority at this point, really mix, ora poWell: looking externally to our clients, we need to lawyers get that perspective and communicate. the at least during-the-day events. our staff is very involved in ble Favorable conditions remain for tenants across the Americas and Europe blecontinue to focus on the value component. tendency of people in tough times is to hunker down when the philanthropic things that we’re doing, and community ra vo i was reading a white paper that ibm produced on the you need to do really just the oppposite. service is integral to our firm’s core values. -faCFo, and it was the value-integrator role that CFo’s needed stephenson: the thing that you have least control our firm is very active in the pro bono and the charitable lordto play in their organizations. they did studies saying that over, the economy, would be the thing we’re worried about and community service realm. our staff really takes a Ten an Landthe CFo’s who played that role in their organizations were the most. as long as the economy continues to improve, leadership role with respect to those types of things. We by john sikaitis and lanie rea Houston, Miami jones lang lasalle americas research Peaking Market Falling Market t-ffar more successful. i look at the role that we play with our the market and demand will continue to improve. encourage it and we have a lot of fun with it. recently, we special to the daily report avclients as really being in a similar fashion, and we have to be First and foremost, we focus on our clients. you must held a Wii bowling and a Wii boxing tournament fundraiser, ora blevery efficient and understand the business to help integrate constantly remind your lawyers – client service, growing again another use of technology in the workplace. during Los Angeles, St. Louis blethat value into our clients’ organizations. We really need to that relationship, maintaining that relationship, expanding the tournament, i was boxing with one of our it people and twelve months ago, the world was a different place. From ra the law firm side, firms were shedding jobs and space at San Diego vobe very focused on using the right tools to do that. the relationship. We’ve got to focus on delivering value and it was some of the most fun we’ve had. fast clips as business and billings firm-wide were down -fa With technology, again, a lot of our clients are becoming being more efficient in how we practice law. stephenson: another element, too, is the diversity Rising Market Bottoming Market Chicago lordmore data driven. We need to be more data driven so that and your people are important. your assets ride up and in professional expertise. We talked about the various significantly. many law firms from the real estate perspective were adding excess blocks of space to the sublease market ATLANTA, Philadelphia Landwe can not only produce those results but communicate down the elevator every day, and that’s your number one, categories of lawyer and the alternative career paths. today, Houston, Miamieffectively to our clients. largest expense in the law firm -- salaries and compensation. we also have people who are professionals, but they’re not if they had locked in longer terms. in contrast, firms with Peaking Market Falling Market internally, i think everybody has to be a little bit you’ve got to maintain quality lawyers and staff. lawyers. they’re experts in foreign trade. they’re pension near-term expirations were in many cases doing short- Boston, Silicon Valleyuncomfortable even though all of our respective you must retain them – keep those people. you have actuaries. they’re nurse practitioners who assist our term extensions if they were uncertain about their business prospects or locking in long-term extensions (blend and Los Angeles, St. LouisFransisco Dallas, New York, Sanorganizations are doing well in these economic times to maintain the relationships so those rainmakers, if you litigation groups. you have a whole range of people, and extends) if they wanted to take advantage of the depressed Hong Kong, London Torontobecause there still remains a tremendous amount of will, the people that do have those client relationships, will the traditional law-firm model of just lawyers and staff has San Diegouncertainty. uncertainty is always going to create legal continue to want to practice at your law firm. totally changed. now you have these other professionals market environment. today’s office market presents firms Washington D.C. with a different perspective in many markets around the Rising Market Bottoming Market Chicagoissues and legal problems that we can advise our clients Growing demand and maintaining the client relationships, who are experts in their field who aid and assist the client.on, but the macro is still important. those are the challenges. Wells: that’s true at our firm. as an example, our China world; however those perspectives vary greatly depending ATLANTA, Philadelphia if our clients are not growing and prospering and the poWell: a positive that’s probably occurred a little bit practice has 15 mandarin-speaking people, most of whom on the local market dynamic.economy is not growing, it has an effect on everybody. is the stratification that historically has existed in law firms, are not attorneys but rather patent agents, technical Atlanta Legal Office Market is Tenant-Favorable Boston, Silicon Valley in those times, it is important to focus internally on the at least in our environment, is less today. We do a lot more advisors or business development professionals. § AsiA pAcific in asia, rents across the region were down substantially Dallas, New York, San Fransisco Legal Office Property Clock. The Jones Lang LaSalle office property clock demonstrates where each market sits within its real estate cycle as of Q3 2010. in 2009 due to demand levels plummeting and speculative Hong Kong, London clockwise. The Atlanta legal market is comprised of Buckhead, Downtown and Midtown. Source: Jones Lang LaSalle Research Markets sometimes move Toronto construction adding vacancy across several markets. in Washington D.C. Searching for the right location? We know Atlantas buildings inside and out. hong Kong, rents had fallen 43.4 percent, while rents in beijing, tokyo and mumbai fell 17.1 percent, 25.0 percent and 36.4 percent, respectively. the market has shifted quickly though in asia due to substantial economic growth Atlanta Legal Office Market is Tenant-Favorable One Atlantic Center across various markets spanning the region. in the current market, tight supply levels driven by limited development Legal Office Property Clock. The Jones Lang LaSalle office property clock demonstrates where each market sits within its real estate cycle as of Q3 2010. Floor Notable law firm tenants and increased demand and take-up due to steady economic Markets sometimes move clockwise. The Atlanta legal market is comprised of Buckhead, Downtown and Midtown. Source: Jones Lang LaSalle Research Alston & Bird growth, have driven rents up significantly since the end of 2009. relocations and upgrading of space have driven options and increased rents over the near- and mid-term varying more with each individual building than by overall Carlton Fields overall leasing volumes higher region-wide, however, throughout many parts of europe. submarket. landlord willingness to compromise net rent 60 expansions and growth of firms have yielded tighter market is entirely dependent upon the loan-to-value ratio of that DLA Piper fundamentals in hong Kong, singapore and other primary AMericAs particular building. this approach is a real departure from Schiff Hardin markets throughout China and india. With hiring picking depressed employment markets throughout the pre-recessionary times, when landlords looked to see what up across sectors in asia, we expect demand levels to united states have kept market fundamentals in the office each other was doing and concessions tended to trend 50 Thompson Hine increase, which will drive pricing upward and options for sector relatively stable over the past few quarters. While collectively by submarket. law firm tenants have been Holland & Knight occupiers down. rents have moved most and are expected law firms and other private sector tenants are no longer able to capitalize on this. Whereas tenant improvement to continue to increase at faster rates in markets such as shedding space at the clips they were in 2009, growth allowances of $55.00 per square foot used to raise Bryan Cave hong Kong, shanghai and singapore where growth levels remains limited to atypical office-using sectors, including eyebrows, record-setting, build-out allowances of $75.00 40 are projected to be highest. education, healthcare and government. Vacancy levels to $90.00 per square foot have been garnered since the have declined from cyclical peaks and occupancy rates economic downturn. With plenty of the premium space europe AnD MiDDle eAst have begun to creep up, but leverage remains firmly with typically required by law firms available, many of these 30 office markets across the region are witnessing upturns in occupiers. stronger demand levels for core-located, Class a tenants are shopping the market well in advance of their demand; however, activity has been predominantly driven and trophy product have driven rents upward in numerous lease expirations to leverage current conditions. by portfolio churn rather than expansion. the increase in segments of the market across new york, san Francisco, activity levels has caused prime rents to largely stabilize Washington, dC and toronto, among a handful of other boston 20 with growth now evident in a number of markets leading markets. With employment markets still lagging the overall boston was not immune to the economic downturn and the cycle. markets with the most significant increase in rents economy due to confidence issues among both consumers many law firms have faced significant layoffs resulting in over the past 12 months have been moscow, london and and businesses, law firms and occupiers, overall, will have reduced office space needs. legal services employment in the paris with annual increases of 14.3 percent, 13.3 percent and enhanced leverage in the marketplace throughout 2010 boston metro area was down 9.5 percent from peak-to-trough 10 7.1 percent, respectively. soft spots do remain though as and well into 2011 between july 2008 and may 2010. in recent months the sector rental ranges between prime and secondary product have has shown signs of stabilization recovering approximately 500 continued to widen as secondary rents continue to soften AtlAntA of the 2,500 total jobs lost during the recession. and second-hand space continues to be released into many atlanta’s downtown and midtown submarkets have despite unfavorable economic conditions, law firms, who 1 markets, causing elevated vacancy in that segment. traditionally housed the majority of top tier law firms, but comprise 12.2 percent of boston’s overall office market, 1,100,312 s.f. From the core perspective, however, the pipeline of 2010 has seen much of the activity in this sector extend were quite active over the past twelve months with 16 Occupied/ Direct Sublease Not Leasable high-quality office supply remains limited in many markets. north in the Central business district to buckhead, where tenants leasing a combined 905,304 square feet in the not available Available Available (parking, residential) london, paris, berlin, Warsaw and luxembourg, among nearly 2.0 million square feet of trophy office space boston Cbd alone. lease expirations and proactive firms other markets, have demonstrated vacancy levels in the delivered in the past two years. With office fundamentals looking to lock in favorable terms drove leasing activity in For a complete Atlanta Skyline building analysis, contact Duncan Gibbs at email@example.com single digits. these tight conditions will lead to diminished bumping along the bottom of the market, concessions are the market. additionally, more than 80.0 percent of these