Legal Services Bulletin May-June 2013 COMMENT FEATURE: see overleaf REDUCING PROPERTY COSTS why your office space shouldn’t be the ‘final frontier’ in the search for savings! That doesn’t sound like a lot to me, but in chatting to some industry colleagues it would appear that, worryingly, 25% might even be an over-estimate! Just as we went to print Winmark’s annual Looking Glass Report revealed that 80% of Managing Partners expect business to stagnate next year, more than half of firms anticipate a merger and a third of firms have ditched 2013 MID TERM REVIEW The future of the sector is under the microscope again with the release of two more reports in a matter of days. Baker Tilly’s Legal Innovation 2013 informed us that a quarter of firms expect to change their strategy in response to the Legal Services Act. Only a quarter? Jason Adderley T: 0121 602 1445 M: 07824 449 577 E: [email protected]: @ERA_Legal The Editor Jason Adderley is a consultant Partner with ERA specialising in managing programmes of work for legal and professional services firms. He has 18 years experience of working with solicitors and other professional consultants as a client and as a service provider. merger and a third of firms have ditched Partners recently to cut costs. As our brash panel on the right illustrates there still remains the opportunity to remove substantial fat from the non-salary overhead. Just these three projects represent savings in excess of £100,000. The client firms are not huge, nor are they badly run; it’s simply that our expertise and market leverage brings results over and above the savings that firms may attain themselves. We’ve also recently utilised our expertise in Travel Management to assist Withers LLP which is a subject we’ll cover in our next issue.
Transcript
Legal Services BulletinMay-June 2013
COMMENT FEATURE: see overleaf
REDUCING PROPERTY COSTS
why your office space shouldn’t be the
‘final frontier’ in the search for savings!
That doesn’t sound like a lot to me, but inchatting to some industry colleagues it wouldappear that, worryingly, 25% might even be anover-estimate!
Just as we went to print Winmark’s annualLooking Glass Report revealed that 80% ofManaging Partners expect business to stagnatenext year, more than half of firms anticipate amerger and a third of firms have ditched
2013MID TERM REVIEW
The future of the sector isunder the microscope againwith the release of two morereports in a matter of days.
Baker Tilly’s LegalInnovation 2013 informed usthat a quarter of firms expectto change their strategy inresponse to the LegalServices Act.
Jason Adderley is a consultant Partner with ERAspecialising in managing programmes of work forlegal and professional services firms.
He has 18 years experience of working withsolicitors and other professional consultants as aclient and as a service provider.
merger and a third of firms have ditchedPartners recently to cut costs.
As our brash panel on the right illustrates therestill remains the opportunity to removesubstantial fat from the non-salary overhead.Just these three projects represent savings inexcess of £100,000. The client firms are nothuge, nor are they badly run; it’s simply thatour expertise and market leverage brings resultsover and above the savings that firms mayattain themselves.
We’ve also recently utilised our expertise inTravel Management to assist Withers LLPwhich is a subject we’ll cover in our next issue.
#3Auditing& Compliance
Why ERA?
LSN London Networking Event 15 July 2013
Expense Reduction Analysts is Network Partner withLSN. The free Networking Events have no setagenda, and exist to help law firm management &support staff share information.
LSN Networking Events provide a unique opportunityto gather under one roof and share experiences withothers and, as a result, find opportunities to buildsolutions on this common ground – in an informaland social environment.
At the time of going to print over 250 law firm staffhave registered for the next event to be held at:
The Anthologist, 58 Gresham Street, London, EC2V 7BB
For more information visit: www.legalsupportnetwork.co.uk
ERA was recently called in by a client to negotiate a
ANALYSING OCCUPATION FOR 6-FIGURE SAVINGS
STUDY
REDUCING PROPERTY COSTS
A law firm’s office accounts for around 20% ofbusiness operating costs. Clearly therefore, spaceshouldn’t be the final frontier in the search for savings –particularly if inflexible long leases in the ‘wrong’ spacerender expansion or merger discussions unworkable.
With a typical desk space costing a firm around £8,000 perannum, it’s a worthwhile exercise assessing how many ofyour firm’s desks are occupied at any given time. Typicaloccupancy is just 60% accounting for holiday, sickness orworking from other locations. It’s easy to see what a hugebottom-line impact desk sharing and other flexible workingarrangements may have.
A lease event, such as a break or expiry is often the catalystfor a forensic interrogation of costs and working practices;Does the firm really need to pay an office rent for all that filestorage? What services could be centralised? What servicescould be outsourced? Does the office environment encouragecollaboration and innovation?
As the example below suggests, raising these issuescan transform operations as well as the providingsubstantial financial benefits.
CASE
& Compliance
Once we’ve implemented aproject we regularly audit thespend to ensure savings aresustained.
We ensure suppliers remaincompliant with their contractsand pricing – and that yourfirm does everything you canto maximise savings.
Sometimes things change, withnew employees, new systemsand regulations.
Rest assured, that ERA isalways in the market lookingfor new ways to improve theprojects we’ve implementedwith you and bring even moresavings to the table.
ERA was recently called in by a client to negotiate anew lease on his existing building. After dueinspection and an initial occupational analysis ourconsultant, a seasoned Acquisition Surveyor,concluded that the firm could make substantialsavings by taking an alternative course of action torenewal as it appeared that 30% of the floor spacewas unused or under-utilised.
After carrying out a full market search, drawing inappropriate expertise in office design and viewing severalsuitable premises ERA negotiated a highly incentivised dealproviding substantial annual six figure savings in rent, rates,service charge and other occupational costs even afterallowing for the costs of the move and dilapidations liabilitiesfor the existing space.
Moreover, our client has changed their approach to open-plan working, encouraged more sustainable methods ofworking and outsourced elements of IT infrastructure whichhas the had added benefit of de-risking elements of theoperation.
Although our original brief was a simple lease renewal,as a consultant it’s our role to challenge receivedwisdom if we can demonstrate there is a better way.
