evolutionary workplace - tpg architecture€¦ · classified as traditionals. by 2030, millennials...

Evolutionary Workplace

The Legal Industry August 2015

Published August 2015© TPG Architecture, LLP

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About TPGTPG is a leader in the field of architecture and interior design, servicing numerous market sectors including corporate interiors, retail, broadcasting, education, healthcare, hospitality, residential, and base building architecture.

THE EVOLVING WORKPLACE - LEGAL | Issued August 2015 | 3

Adapt or perish, now as ever, is nature’s inexorable imperative.

- H.G. Wells

The Changing Business Environment

EXECUTIVE SUMMARY

We are living in exponential times. The ways in which people work, communicate, learn, and live is changing - rapidly. Evolving business models and the rapid pace of technological innovation requires organizations to continuously adapt to the ever-changing business landscape. In order to thrive in the 21st century, operational goals and human factors within a business must align with a real estate strategy.

The post 2008 economy ushered in a whole new era of business. Substantial consolidation and convergence has resulted in increased competition from large, well capitalized firms. Technology continues to evolve, introducing new ways to market, while also allowing customers and agents to compare products, leading to increased competition across industries. Both large institutional and small firms alike are looking to lower operating costs in order to absorb greater risk, while maintaining their financial viability to remain competitive in today’s market. As the traditional model of business becomes antiquated, so too becomes an organization’s approach to real estate and space utilization.

Today’s increasingly competitive institutions are looking for answers to questions about unprecedented changes to the re-regulation, structure, and organization of various industries. The most successful institutions create facilities by implementing workplace strategies flexible enough to support the evolving requirements of today while adapting for tomorrow.

There are six overarching drivers that will affect a business, and ultimately the design of a workplace. These themes will always be prevalent, though the weight of each will vary from client to client. The Drivers of Change include:

Demographics

Business Innovation

Productivity

Economic Imperatives

Technology & Its Place Within the Workplace

Globalization

These drivers, each a separate facet of business, overlap one another to bring another subset of attributes for a client to consider. Company operational attributes such as culture, engagement, professional development, investments and the return on investment (ROI), infrastructure, and mobility/connectivity, to name a few, all play a role within the office as well.

The biggest variable within the Drivers of Change will be the client itself. Every organization has a different set of values and will prioritize these drivers in a way that is unique to them. As a result, this will greatly affect the operations of the organization, as well as the design of their space.

Though the Drivers of Change are the same across all industries, how they manifest within the legal industry is very different.

Though the Drivers of Change are the same across all industries, how they manifest within the legal industry is very different.

EMPLOYEE PRODUCTIVITY:THE OVERARCHING DRIVER OF CHANGE

By the nature of economic, regulatory, technological, and environmental shifts within the legal profession, employee productivity heightens as a pivotal factor of adaptation for law firms, globally. Considering the legal industry as a service driven market, many aspects of the business operation have been greatly impacted based on the recent past decade of socioeconomic climate fluctuations of their clients.

In preceding years to the overall market downturn, it was common for legal business models to follow an hourly fee structure, where that conducted legal procedures gauged the complexity, and importance of the case, and client at hand. That massing of procedures have now made a turn towards breaking the model into separate components, to leverage time efficiency and employee productivity.

The following pages will take a closer look at the impacts on the bottom line of employee productivity.

Drivers of Change

Workplace Attributes Affecting Design

WHAT IS DRIVING CHANGE?


CULTURE

PROFESSIONALDEVELOPMENT

ENGAGEMENT

INVESTMENTS& ROI

INFRASTRUCTURE

MOBILITY / CONNECTIVITY

CLIENT

The most influential force within the design process will be the client itself. Every organization will give different weight to the above drivers with respect to their priorities, goals, operations, and identity.

AT A GLANCE


AT A GLANCE

The Economics of Real EstateHistorically, law firms have topped all other organizations in real estate utilization with an occupancy of two to three times more space required within the workplace. In New York City, that translates to 11.2% of all Class A real estate property. With the financial economic downturn effects of 2008, law firms have looked to real estate as overhead cost prohibitive, previously ranging between 10%-15%, now down to 7%-10% - a progressive annual reduction of 1%-2% per year. In 2013, gross revenue costs towards real estate for New York City law firms reached a low of 6.2%. This reduction, however, did not parallel with the reduction of physical space. Firms with recent lease terms are looking at a reduction of space between 15%-30%. The culture of the legal workplace have not been accustomed to such shifts in part to the long standing traditional culture it endures, thus impacting the means in which the legal practice conducts business.

Historically, law firms have topped all other organizations in real estate utilization with an occupancy of 2-3 times more space...

Globalization: Moving Business Out of the OfficeContracts for near-shoring, off-shoring and consultancy based services are utilized to reduce in house legal processes that are considered time consuming, and are of low security sensitivity. Time in house is shifting towards the analysis and synthesis processes that require specific expertise of council.

Recent technological advances give way to a spectrum of opportunity for legal document handling and an external talent pool. Law firms and corporate legal departments are seeking third party alternative models such as Legal Process Outsourcing (LPO) to distribute subset skills that range from paralegal, clerical, document review and filing, and coding processes. The wage differential between in-house legal personnel talent and LPO outsourcing overseas can range between 30%-70% less than that within the U.S. market. Whether domestic or international, LPO implementation shifts flexibility of time toward in-house talent.

The advantage to onboarding near-shore or off-shore services increases in-house labor retention especially within smaller boutique firms that specialize in niche expertise. Freeing internal bandwidth can in turn allow for firms to increase production within a shorter time frame.

2-3xLAW FIRMS USE

HISTORY

11.2%THIS EQUATES TO

TODAY

OF ALL CLASS AREAL ESTATE IN NEW YORK CTY

MORE SPACETHAN ALL OTHERORGANIZATIONS

15-30%

TOMORROW

A SPACE REDUCTION OF

IS EXPECTED FOR FIRMS WITH NEW LEASE TERMS

The Rise of TechnologyBy introduction and implementation of cloud computing, document management, knowledge management, and advancements in employee training methods are becoming readily accessible, reducing transaction time between employees.

Cloud ComputingThe convenience of cloud computing has gradually reached the legal industry beyond the usage of e-discovery and noncore functions – and provides great potential cost reduction advantages to business operations, although also presents a series of concerns from a security standpoint. By utilizing such tools, delegation between outside vendors and consultants can serve as a time reduction, in turn a fee reduction. While adoption of cloud computing remains within 60% range of firms, implementation and usage increased by two thirds since 2013, now including document management. The sudden jump accounts for familiarity of use, and trust in security applications cloud companies provide. In addition to time efficiencies, moving document management to the cloud also decreases spatial necessity for document storage and hard research data, thus allowing for space to be reallocated towards in-house talent.

Flexible Training On-DemandTraining is a major component of in-house operations, which increase both spatial capacity, as well as overhead labor cost – items that law firms can no longer justify as part of legal fees. Firms have

been moving toward use of proprietary online video training to maintain the necessary component, while reducing costs associated with employing a training professional in-house. This in turn also allows for flexibility and atonomy in time management - now legal staff can view training videos when needed and suits an individual’s schedule.

MobilityDoing less with more speaks true to the ability to flexible work methods. A noticeable upswing of mobility tools such as tablet devices paired with cloud computing empowers legal staff to conduct business anywhere, and in less time. A 2015 annual tech survey reports a 70% increase in firms adopting this mode of work. No longer tied to a specific office, real estate space reduction can be justified by allowing for remote or off site hours that may suit the needs of senior level positions.

Security ImpactsBy providing lighter, more agile means to conduct business, the industry faces a major concern among their clients in response to this shift: security and privacy. To address client security requirements, larger law firms are onboarding IT security experts and even creating a Director of Security position to join the team – a demographic introduced less than 5 years ago, now can be accounted as a crucial part of operational practice.


TECHNOLOGY RATE OF CHANGE

Current rate of change for technology is 12-18 months. Today’s workplace environments are being designed with the mindset that infrastructure must be able to evolve with technology.

AT A GLANCE

TIME

BUILDING REVITALIZATION - EVERY 40 YEARS

WORKPLACE CHANGE EVERY 10 YEARS

WORKPLACE TRANSITIONEVERY 5 YEARS

BUSINESS CHANGEEVERY 3 YEARS

POLITICAL SHIFTEVERY 2 YEARS

TECHNOLOGY CHANGEEVERY 12–18 MONTHS!

SH

IFT

The Multi - Generational WorkforceApproximately 75% of the current US employment comprises Baby Boomers and Generation Y. Prior to 1980, approximately 95% of employees were classified as Traditionals. By 2030, Millennials and Generation Z are projected to fully replace the more institution-rooted Baby Boomers in the workplace.

These changes in employee composition have produced new professional scopes, career goals, and a sharpened focus on work/life integration. Organizations have responded to these changing expectations by creating specific workplace amenities programs and policies. Baby Boomers who have traditionally prized physical comfort and spaciousness in discrete office units are now working alongside proceeding generations whom prioritize job diversification, technological connectivity, and mobility.

One of the key challenges for business leaders therefore includes balancing the needs and expectations of their diverse employee types.Unlike other markets, the legal industry is experiencing the opposite shift of generational presence. The statistical data reports 22,000 new attorneys enter the workforce each year, and contrary to assumption, the demand for younger attorneys has declined at a rapid rate - from 36% in 1980 to 13% in 2005. A report released by the American Bar Association Lawyer Demographics

show a ten year increase in median age, and a stable 10% - 13% Traditionals presence within firms. Entry level jobs have declined considerably since 1980, which ties into the current imbalance of workforce experience.

... the demand for younger attorneys has declined at a rapid rate - from 36% in 1980 to 13% in 2005 ...

Today, approximately 40% of total staff hold equity partnership level positions. This number is comprised of mostly Traditionals and Baby Boomers. With the increase of non-equity positions (up 29% within the past decade), the incentive for these individuals to remain within their current positions is very high. Considering the recent approach to economic imperatives paired to a decrease of available potential for young lawyers, the alternative career positions for younger demographics are not within the traditional law firm - at least for now.

95% 75%TODAY1980

BABY BOOMERS & GEN Y

TRADITIONALS


Innovation, Forming a Competitive Edge: The Rise of Alternative Business Structures

Global regulatory changes, such as the Legal Services Act in the UK have carved a new path in which legal services can be met. This alternative business structure impacts profit margins previously included into an operations bottom line by providing customer enabled Q&A legal advice rather than conventional face to face advice. By use of tech conduits such as cloud computing and web based interaction, these new service models are providing convenient means for clients to access legal advice on demand – at a fraction of the cost.

These innovations have not only offered alternate means for services to clients, but also the way lawyers and legal staff collaborate. Readily available data once deemed as ‘crown jewels’ of the firm are can be broadly accessed, reducing spatial need for in-house libraries. ABA reported firms are reducing this use by 56%, and anticipate this to increase in time. Now, research can be conducted by legal staff in less time and fee, yet another means to increase efficiency.

...

Looking Across Industries.

How does the Legal Industry Compare?

Adoptation Rates of Evolving Workplace Design

FINANCIAL

PUBLISHING

CREATIVE

TECH

ADVERTISING

MEDIA

DIGITAL

PROFESSIONAL

SERVICES

LAW

TIPPING POINT

LATEEARLY

Of all industries, the legal industry has had the latest adoption of newer workplace concepts. Even publishing, which was once conservative in its approach to design, was forced to adopt new ways of working due to their business models shifting.

As all business start to become more digital in nature, they have started to take some of their cues from the creative and media industries. Though not every industry is as comfortable with being as aggressive in their approach, they are willing to adopt concepts such as the implementation of

amenities and different collaborative settings, as well as mobility programs.

Regardless of the willingness to try new design concepts, the legal industry still maintains the highest square footages; Looking at opposite sides of the spectrum, the T.A.M.I. (Tech, Advertisement, Media, & Information) industries are able to meet their programmatic requirements in approximately 30% less space than many law firms. This trend will likely start to decline as these firms start to adopt newer workplace design concepts.


DENSIFICATIONAs economics come into play, many times clients will ask about densification. Many believe that it will shed a lot of square footage, and hopefully cut costs. The reality is that densifying the personal work spaces could yield some results, but it should be noted that many times the square footage gained within the personal space is usually re-allocated into workplace amenities such as additional conference areas, cafes/pantries, gaming areas, etc. Striking a balance between open and enclosed spaces is key.

Trends in Today’s Law Firm

What is being designed for today’s lawyers?

The legal practice has been forced to evolve, and as a result what is being designed for today’s law firms is evolving as well.

OPENNESS & TRANSPARENCYSpaces have become much lighter in feel, and though the legal industry is still an office intensive one, the walls are coming down, with the high-partitioned cublicles of yesteryear following. Where perimeter offices have remained, daylight is beginning to permeate through glass fronts, and flood the workplace. These changes are giving way to natural light, stronger sightlines, and more human connectivity.

PLACES FOR INTERACTIONCollaboration, which takes on many forms, requires a variety of different applications in order to foster the activity. And though the idea of collaborative environment is discussed across all industries, lawyers collaborate very differently, and therefore require the correct spaces to foster the interaction that best suits them.

Mentorship has become an important part of the workplace, and when the younger demographics do enter the workforce, they are seeking mentors to guide them through their careers.

Spaces to foster these interactions can be implemented in a variety of different ways. Some common forms include conference rooms, huddle

rooms, huddle booths, informal collaboration areas in open plan, etc. Current law firm projects are showing ratios as high as 1.3 collaborative seats per attorney. This means, that for every one person within an office, there is at least one additional seat available for their use; this can be a seat in any collaborative setting, or even the cafe.

Current law firm projects are showing ratios as high as 1.3 collaborative seats per attorney.

LONG & SHORT TERM FLEXIBILITYOrganizations are being proactive and planning for impending change, and are choosing to stay nimble. A strategically-designed workplace can be planned to adapt to multiple - with better functionality, and higher utilization.

Flexibility, on a micro level, will allow an organization’s workplace and/or furniture to be reconfigured to meet the needs of a business at any given time. This can mean having spaces that are multi-purpose, or designing spaces that allow the end-user to convert a room or multiple rooms for


On a macro level, spatial flexibility can also ebb and flow with staff growth or contraction. Proper planning will ensure that the space can accommodate headcount on ‘Day One’ (move in day), after 2 years, or even 10 years down the road.

MAXIMIZING UTILIZATIONAs the legal practice continues to shrink the amount of real estate that they utilize, these companies are seeking to make the most of the space that they do acquire. Rentable Square Footages (RSF) per attorney are falling below 600.

AMENITIESRecruitment and retention of talent is always a topic of conversation, though the means with which to recruit and retain have shifted. Upon entering a space, an interviewee will make a decision on whether or not to take a position based on the workplace. In order to stay competitive, companies are now incorporating cafes, additional collaboration, & other communal spaces for staff.

MOBILITYWith the mobile force in full effect, employees are untethered flexibility in the workplace. And, as this continues, designing spaces that allows staff to move freely throughout the office will foster an expansion of roles or duties that an employee can be achieve.

ALTERNATIVE WORKPLACE STRATEGIESThere are now more ways than ever to work, and as a result, there are more options for places to work. Programs that include mobility, free address, and even virtual working have given employees the opportunity to work from anywhere. Companies worldwide are adopting these types of workplace strategies, and range from conservative to aggressive.

Though some of these alternative workplace strategies may seem far fetched for many law firms, the idea of mobility and virtual working is starting to make its way into some of the more progressive legal practices.

SUSTAINABILITYDesigning via sustainable practices has become important to all industries, including law firms. Many practices around the country and the world have taken it upon themselves to ensure that their workplaces are designed with qualities to better the indoor environment - some of the larger firms have taken it a step further to pursue LEED Certification.

STRATEGY IN ACTIONThe following pages will explore how some of these trends are being explored for law firms, and the metrics associated with their respective projects.

KEY METRICS

54,137Total Rentable Square Feet (RSF)

98Attorney Headcount

552Total RSF / Attorney

1.3 : 1Conference Seats : Attorney

STRATEGY IN ACTION

Maximize UtilizationThis client was able to reduce their overall footprint by 13% with a 17% increased attorney headcount.

Create a Flexible PlanA universal office sizes for partners and associates allow this client to anticipate future programmatic requirements with little disruption.

Openness & TransparencyGlass is used throughout the design in order to take advantage of natural light.

Places for InteractionThis plan has a high collaboration ratio, with a variety of different spaces throughout the plan.

UNIVERSAL OFFICE SIZE

GLASS FRONTS THROUGHOUT

A VARIETY OFCONFERENCE

SPACES


KEY METRICS




.8 : 1Conference Seats : Attorney

STRATEGY IN ACTION

Maximize UtilizationThis client set the challenge to reduce their overall square footage, while accommodating a growing headcount.

Create a Flexible PlanA modular floor plan allows this client to easily grow into their space in the future.

Openness & TransparencyAll office fronts are glass, and the conferencing center, located on the perimeter also has glass fronts.

CONFERENCE CENTER WITH GLASS FRONTS

BREAKOUT AREA/CAFE

SHARED OFFICES

GLASS FRONTSON ALL PERIMETEROFFICES

KEY METRICS




1.2 : 1Conference Seats : Attorney

STRATEGY IN ACTION

Maximize UtilizationWith a stay-in-place renovation, this client was able to shed a floor, equating to a 16% decrease in space, while accommodating an increased headcount of 17%.

Long & Short Term FlexibilityThis plan incorporates interior attorney offices, shared associate offices, and flexible furniture; It allows for future flexibility for future growth - up to 585 people.

Openness & TransparencyGlass fronts are used throughout the design.

INTERIORATTORNEYOFFICES

MULTIPLE CONFERENCINGAREAS

GLASS FRONTSTHROUGHOUT

SHAREDASSOCIATEOFFICES

It’s a Spectrum of Choice.

It’s up to you where you fall within it.

While many organizations are shifting towards these more progressive ways of working, not all sectors are moving at the same pace.

Early adopters of Alternative Workplace Strategies tend to be from sectors such as creative, media and digital, while laggards include the finance, publishing, and legal industries.

Though this has been the trend in the past, it is evident in recent years, that even laggards are thinking about different workplace options that could be appropriate for their businesses.

The choice is up to you.The right workplace for an organization will mean different things to different businesses. There is a spectrum of choice. Where each company lands is completely up to them.


INTERIOR ATTORNEY OFFICES

GLASS FRONTS / TRANSPARENCY

DOUBLED ASSOCIATE OFFICES

LOWER ATTORNEY TO NON ATTORNEY RATIO

DIMINISHED LIBRARIES

CAREER ASSOCIATES

FLEXIBLE SPACES & FURNITURE

SUPPORT FUNCTIONS OFFSITE

UNIVERSAL SIZE OFFICE

NON-DEDICATED OFFICES

PROGRESSIVETRADITIONAL

CLOSED OPEN

100% OPENTelecommuting

Collaborative TeamsFree Address

Third Party Locations

Private Perimeter OfficesHigh Attorney to Non-Attorney RatioFormal/Fixed Conference RoomsMultiple Standards by Hierarchy

ASSOC. IN OPEN PLAN

Spectrum of Choice

PARTNER/ASSOC. OFFICES

www.tpgarchitecture.com

Strategy & [email protected]

evolutionary workplace - tpg architecture€¦ · classified as traditionals. by 2030, millennials...

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