UK 200: Office costs

It’s the overhead that just keeps costing. Managing property costs is central to many firms’ strategies in straitened times. When it comes to a law firm’s overheads, they don’t come much bigger than property. This is the unavoidable headache that can be the difference between success and failure. Consequently, for the second year we have asked firms to provide details of the property they control and what it costs. Well over 100 were happy to do so.

To purchase access to the full report visit www.thelawyer.com/uk200 or contact Daniela Badcock on +44 (0) 207 970 4582.

The total costs data coupled with the staff, fee-earner, lawyer, partner and equity partner headcounts also supplied by each firm allows us to calculate the occupancy costs for those that supplied data across the UK 200.

It also allows us to consider a range of metrics such as square foot per person (ie the amount of space per each individual – including fee-earners and support staff – in the firm), square foot per lawyer and square foot per fee-earner, as well as the corresponding cost of each of those results. We can also work out how much revenue each firm is generating per square foot of space it controls.

All this data is contained within this year’s UK 200 on a fully searchable and benchmarking basis.

Size, of course, is the key determinant of cost. So what really counts, and what is reflected in the data, is a firm’s location and business model. Here it is a mixture of metrics such as cost per square foot, revenue per square foot and square feet per staff member and per lawyer that reveal how the UK market is stratifying, with a variety of business models taking hold.

This year we asked firms to split data between UK-wide and purely London property if appropriate. This question was aimed at highlighting both the differences in costs for big City firms compared with those in the regions and the reasons behind the trend for firms to farm out some legal work to the regions, leveraging the lower-cost offices in their UK networks.

This divide has been one of the drivers behind the consolidation trend seen recently in the Scottish legal market.

Square foot race

The full results are tabulated in this year’s The Lawyer UK 200 Annual Report and can be compared digitally, but here’s a snapshot.

The sole member of the UK Big Four to provide data was Allen & Overy (A&O). In the UK the firm has 573,759sq ft of property, the second-highest of the firms that provided data (Eversheds has most, with 715,607sq ft), for which it pays £40m at a per square foot cost of £69.70.

Taking A&O as a benchmark, last year it had 1,996 total staff across the UK. Based on the property data it has provided, that equates to 287sq ft per person, considerably more than the industry standard, which hovers around 166sq ft per person for London law firms.

Similarly, with a turnover of £1.189bn, A&O is generating £2,072 per square foot.

A&O was once again the biggest spender on property among the firms that provided data. The £40m it spends each year in the UK compares with £18.9m at Eversheds, £10.5m at Clyde & Co and the £9m at DWF.

The firm that topped the cost per square foot table is a new entrant this year, blue-blood London firm Boodle Hatfield, which, on the data provided, is paying £91.50 for each one of its 29,693sq ft of West End space.

At the other end of the scale, Newcastle’s Winn Solicitors, another new entrant and a firm that recently secured an injection of external funding, is paying the least, just £6.25 per square foot.

And talking of cost, a key metric is the cost of a firm’s property on a per-lawyer basis. A&O heads that table with a cost per lawyer (CPL) of £52,770, followed by Boodle Hatfield at £45,074 and Stewarts Law at £37,254.

Mayo Wynn Baxter acts as the footer in that table with a CPL of just £3,934 with Derby’s Flint Bishop slightly ahead on £4,983.

Small wonder that an increasing number of firms, not to mention clients, are embracing the joys of ‘nearshoring’.

The full results are tabulated in this year’s UK200 and can be compared digitally but here’s a snapshot.

The sole member of the UK big four to provide data was A&O. In the UK the firm has 573,759 sq ft of property, the second-highest of the firms that provided data (Eversheds has the most with 715,607 sq ft), for which it pays £40m at a per square foot cost of £69.70.

Taking A&O as a benchmark, last year it had 1,996 total staff across the UK. Based on the real estate data it has provided that equates to 287sq ft per person, considerably higher than the industry standard which hovers around the 166sq ft per person for London law firms.

Similarly with a turnover of £1.189bn, A&O is generating £2,072 per square foot.

A&O was once again the biggest spender on real estate among the firms that provided data. The £40m it spends each year in the UK compares with £18.9m at Eversheds, £10.5m at Clyde & Co and the £9m at DWF.

The firm that topped the cost per square foot table is a new entrant this year, blue blood London firm Boodle Hatfield, which on the data provided is currently paying £91.5 for each of its 29, 693 square feet of West End space.

At the other end of this scale Newcastle’s Winn Solicitors, another new entrant and a firm that recently secured an injection of external funding, is paying the least, just £6.25 per square foot.

And talking of cost, a key metric is the cost of a firm’s property on a per lawyer basis. A&O heads that table with a cost per lawyer (CPL) of £52,770 followed by Boodle Hatfield at £45,074 and Stewarts Law at £37,254.

Mayo Wynn Baxter acts as the footer in that table with a CPL of just £3,934 with Derby’s Flint Bishop slightly ahead on £4,983.

Small wonder that an increasing number of firms, not to mention clients, are embracing the joys of near shoring.

To purchase access to the full report visit www.thelawyer.com/uk200 or contact Daniela Badcock on +44 (0) 207 970 4582