Spencer Levy
I'm Spencer Levy and this is The Weekly Take. On this episode, we're calling in the attorneys for a direct examination of a professional sector that has a distinctive relationship with real estate. With due respect to television's long running illegal franchise, we add to the genre with a twist. Cue the two-note refrain: dun dun. This is Law and office.
David Fries
We don't know exactly what the law firm of the future is going to look like and we're going to make some expenses, but there's a huge cost to doing nothing.
Spencer Levy
That's David Fries, Chief Financial Officer of Orrick, a global law firm, specializing in the tech, energy and infrastructure and finance sectors. David joins us from the remote office in Minneapolis, where he's worked for the past 15 years — almost half of his three-plus decades as a public company senior executive and general counsel, a career he began, appropriately enough, in the real-estate business.
Laura Saklad
I remember the days of office moves when lawyers would walk around the office counting the ceiling tiles to decide which office they wanted to bid for next. And I do think that the pandemic and this year of working from home has created a moment for us to change that.
Spencer Levy
And that's Laura Saklad, Orrick’s Chief Operations Officer, joining us from Nevada. Laura works closely with the board management team, leading strategic priorities and day to day functions of a firm that has more than 25 offices worldwide.
We also welcome a third expert witness: CBRE’s own vice chairman Stephen Bay who joins us from California. A co-founder of CBRE’s International Law Firm Practice Group, Stephen has 38 years of experience advising occupiers in the legal sector with clients including Orrick practicing around the globe.
Stephen Bay
Law firms some number of years ago started realizing that they had to manage their real estate like a business.
Spencer Levy
We'll examine the evidence for the profession's unique relationship with real estate, leasing, and the effects of the pandemic. We’ll make the case for culture, the role of office in attracting legal talent and in the practice of serving clients. We'll discuss the slow pace of change in how law firms work — that is challenging traditional ties between physical offices, seniority and status. And we'll hear about the ways a forward-thinking firm such as Orrick is looking to the future.
Coming up, a case of commercial real estate, the legal sector, the law firm office space. That's right now on The Weekly Take.
Welcome to The Weekly Take. And this week, we're going to talk about the law practice and how it's changing their needs for different types of space.
But before we begin, let's start big picture. I am actually a lawyer, practiced law for five years in New York City. My dad practiced for 40 years in New York City.
But there have been quite a few changes in the legal business in the last 20 years. Perhaps we'll start with you David. Why don't you give us just a big picture snapshot on how the law firm business has changed in the last 20 years, particularly as it relates to the use of space.
David Fries
Well, thanks, Spencer. My suspicion is my father knew your father. My father spent 60 years is kind of the senior statesman of the D.C. real estate bar working at the same firm for over 60 years. And I recall as a little kid more than 50 years ago, going down to the federal bar building on H Street in downtown D.C. and kind of getting lost in the maze of offices there.
And I think what's remarkable is how little actually has changed, not just in the last 10 or 20 years, but really in the past 50 years in terms of the way the law firms use their real estate. And despite changes in technology and society, you still see an enormous amount of rentable square feet per employee — much more so than any other industry of knowledge worker.
You still see those large opulent reception areas. You know, a lot of dark woods, a lot of marble. And there have been changes, but they're much more subtle. I mean, for example, there's much less need today for the interior space that you may have seen 25, 30 years ago — there’s a lot less paper in the office. There are fewer paralegals in the industry. There's fewer workrooms, less need for filing and storage rooms. You're starting to see more glass and light. You know, less and less of those dark mahogany doors and more light and air. You certainly have seen a reduction in the use in the conversion of library space with kind of the technology that's been out there and no longer stack upon stack of law treatises.
You know, probably 25 years ago you started to see the emergence of conference centers in law firms and as opposed to kind of years ago when really conference space was tended to be dispersed among the floors, which frankly, now, as we're all looking to kind of reduce space, creates its own issues. Because as you give space up and you've got a conference center, you're left with too much conference rooms relative to your office needs. And you sort of see some changes and things like hire secretarial ratios. And so not as much need for the workspaces.
And so there have been changes. But when you compare it to, you know, the high-tech space, the accounting space, the McKinsey and the consultants of the world, we've been much less revolutionary over the past 10, 20 and even 50 years than in most other industries.
Spencer Levy
Well Laura, I think David said something very interesting at the end is that perhaps law firms have lagged behind other firms. Does that mean, in addition to your historic perspective, does that mean law firms are now going to accelerate some of the changes you see going forward?
Laura Saklad
Yeah, I think it's fascinating that part of the reason why I think law firms have been so slow to adapt to change that we've seen some other industries adapt is that typically in law firms space is part of — it's part of your persona, right. It's built in. Historically law firms — the size of your office, it has a lot to do with your status and your standing in the firm.
And when you look at the historical perspective even of where we were five years ago, where many law firms progressed from having, you know, two associates sharing office as a junior associate, then you move internally, then you move externally, and then you have your own office. And then as a partner, you get a smaller partner office. I mean, I remember the days of office moves when lawyers would walk around the office counting the ceiling tiles to decide which office they wanted to bid for next. And I do think that the pandemic and this year of working from home has created a moment for us to change that. And we can talk more about all the reasons I think that's going to be true. But I think that that tie to status has been something that has really been getting in the way for law firms to make these changes.
Spencer Levy
Well, certainly it's not just law firms. When I started at CBRE 14 years ago, I had three offices with my name on the door, one in New York, one in Washington, one in Baltimore. Now I have none. But that's a story for another day, David.
But, Stephen, what's your point of view? You've been in this business a long time representing the leading law firms of the world. How is it changing and how do you see it going forward?
Stephen Bay
I would echo what Laura and David have said in terms of the design of it. I think law firms, some number of years ago, started realizing that they had to manage their real estate like a business — that they couldn't let each office make its own individual decisions. And I think the pace of that has accelerated. And I think the pace of that is going to continue to accelerate out of COVID. We had rents increasing on a compounded basis year over year from 2010 to 2019, and every firm — virtually every firm — looked at their rent and said, if I don't do something about my space, my rent is going to double. So you have that issue, along with all of the other changes in design that David mentioned.
Spencer Levy
David, there's all different types of practices within the law firm business and tell us how those different practices might differ in their needs for use of space.
David Fries
Well, I think traditionally there was a much greater differentiation between the need for space and prices than there probably are today. So you tended to see litigation being very document heavy with a lot of workrooms, a lot of paralegals, whereas on the transactional practices you tended to see more need for conference rooms and meetings over the last, you know, five, 10 years — particularly as you've seen the growth of the alternative legal service providers.
You've seen things like discovery moving from having boxes and boxes that need to be sifted through by large numbers of junior associates and from paralegals. Much of that work has been outsourced. Now, at Orrick, we actually have our Global Operations Innovation Center in Wheeling, West Virginia. We've got a large kind of insourced e-discovery center there. But that's the type of work that traditionally had been done, you know, in downtown office spaces by legions of litigation associates.
So today, I think with technology, with our using Zoom, by using DocuSign and having more and more virtual closings, you're seeing less differentiation in terms of the types of spaces that, say, litigation associates or litigation attorneys need relative to transactional attorneys.
Laura Saklad
I think that's absolutely right. You know, when I look at our, even our e-discovery team that is resident in Wheeling, West Virginia as David described. Even over the past five years — they've been there longer than that — but even over the past five years, as the sophistication of the technology that enables them to do their work has increased and even over the past year, during the pandemic we've seen … initially we thought they needed to be in an office, that there was synergies in them working together as a team with a very particular type of technology set up in their office space. And we've now seen over the past year that they're able to do their work remotely. So I think you're going to see the trend continue.
I think you will continue to see on the litigation side, there are some demands — like taking a deposition — you know doing some of those things where it actually is very helpful to be in an office location. But more and more, a lot of the work can be done online. And you don't need all that paper and you don't need all those paralegals on site.
Stephen Bay
Well, it spins around technology. In addition to what you just said, when I started, a law firm had one admin for maybe two lawyers, sometimes one to one. Now firms can be eight to one — or more. And let's not forget that without technology, we wouldn't all be able to be working remotely. So it's had that effect. It's had the effect of, as we talk about the file rooms themselves and the amount of paper being reduced, so does the number of file cabinets in a lawyer's office — so that a lawyer can get by with a much smaller office. And that's one of the other changes. Before COVID, law firms were tracking their lawyers coming into the office 50 to 70 percent of the time. And we're going to talk about what other effects that has had. But technology's changed everything across the board.
Laura Saklad
And if I can answer that for a minute, Steve, the other thing that's happened in the legal industry is that the pressure around profitability and the client pressure on fees has created an increased business orientation of decision makers. And, you know, real estate is our second largest expense behind people. And it's one of the few expenses that we believe we can control in a way that will not negatively impact our business at all. In fact, we probably can get better. And so it's really a lever that I think every law firm is looking at to try to figure out how to set up a workplace that makes the most sense in the future.
Stephen Bay
Absolutely. Not only is it controllable in that you can make decisions about the timing of when you make the decision, you can't change a market rent necessarily, but you can certainly change how much space you take and you can change when you make that decision. And every firm is studying their profitability and every firm is looking at making decisions at the right time. Not that they didn't necessarily before, but I think it's gotten a lot more scientific. Certainly it has on our end.
Spencer Levy
Well, Laura, you made a very interesting point there as it relates to how client pressures and needs are dictating to some degree what your space needs are. Now, there is the big picture of profitability and cost pressures. But I remember when I was a young associate in a law firm that we were sort of like wanting to be one of the meeting places for our clients with these excessed conference rooms with this excess space. Is that now changing? David, do you have a point of view?
David Fries
I think it has changed pretty dramatically. Our ability, for example, to be together today via Zoom makes us much more efficient in everything we're doing and clients are seeing that as well. It's not as if there is not going to be a future for the office. It's not as if there's not going to be a need for conference rooms and other space. But people are picking and choosing their times. They're trying to maximize their return on their investment in travel and commuting and all those other things. And that will have long term implications for our business.
And when we started 20 years ago, I think we were the first law firm that had a global insourcing center. So we essentially took our support functions, finance, IT, H.R., marketing, and we moved them out of the high cost downtowns of San Francisco in New York, and we ended up settling in Wheeling, West Virginia. Now, I think originally the thought of doing that was a move towards, you know, what, lower cost sources. But I think what we ultimately found was that there are a tremendous number of incredibly qualified people that are outside of the major cities.
And when you look at the time that we made this decision, kind of, you know, during the dot com days in San Francisco, it was really, really challenging to attract and retain people. It opened us up to a wealth of talent that otherwise wouldn't be available because we had 100 people applying for every job. We had virtually no voluntary turnover. And I think we're moving towards this next wave of being able from remote working to tap into all types of other talent that might not otherwise be available to law firms like ourselves that are principally located in major metropolitan areas.
Spencer Levy
Laura, what's your point of view on that, on diversifying your talent base by market?
Laura Saklad
So I think it's a tremendous opportunity coming out of this pandemic and the move towards remote working. The idea that we can tap into markets where we did not previously have a physical presence, by definition, will open up a broader audience of potential talent to work at the firm. It could give us access into markets where we can recruit more diverse talent, which I think would be a tremendous benefit.
I think that there's the opportunity to retain talent that might otherwise find it challenging to work in the kind of intense legal career that associates are our law firm have when they need to commute. And getting rid of that commute gives us the ability to help retain really talented people that are struggling with work-life balance challenges or otherwise just want to have more time in their day to work and then time to still exercise and be with their families.
So I think that there is a real move. And I think we are all going to need to be on top of it in order to create workspace that brings people to the office so that they can be together and also taps into all those markets that we didn't previously have access to.
Spencer Levy
Stephen let's talk about some of these things that you're advising your clients to do in the law firm practice to make their space most attractive for their employees to come back.
Stephen Bay
Good question, Spencer. As I say, some number of times every day, there is no blueprint yet for how to successfully design a law firm post COVID. There is not a true sense of exactly what working from home or remote working is going to look like in terms of headcount or percentage. There isn't a sense of where those people are going to sit when they come into the office. There isn't a sense of if you're going to design your space — and a number of our clients including Orrick, if I may say so — have moved to making decisions where they're going to provide less than one office on a percentage basis for their lawyers. If they have 100 lawyers there, maybe they'll have 70 offices.
Not every firm has made that decision. I think a lot of firms are going to go in that direction. But then the question becomes on days where you want all 100 lawyers in the office, where will they sit? And there is not an answer to that yet.
Law firm space might be some of the most expensive space to design. And law firms are hesitant right now to make a commitment to leap into that void not knowing what the ultimate outcome is going to be.
Laura Saklad
And, Steve, I think that there may be some framing questions that are helpful there to lay out. I mean, when I think about designing office space, I think there's really three questions. What space will help our lawyers and our staff deliver the best service to our clients? And that leads us to think about what is individual and group work — how do we create spaces for both of those types of activities? And where do we need to have client meetings and client events? So that's the client-facing side. Then there's a question around what space will foster team connection and culture? How do you keep a firm together? And that's all about the different kinds of interactions, whether that be social or professional or training. How do you keep the culture of the office together? And then I think the third is the one that David tends to love the most, which is how do we do both of those and keep the cost in a reasonable place to help, you know, drive the profitability of the firm.
Stephen Bay
I mean, to me, Orrick is one of the few firms that is very active moving forward and looking at longer-term transactions. And I think the reason why is because of what Laura just said. They have come up with their internal guidelines for what it is they're looking for. And if the purpose of this podcast is to inform some law firms, I think what Laura just mentioned is a very interesting thing to talk about because there are many firms that don't have their arms around it the way Laura and David would describe or approach to you.
Spencer Levy
Well, speaking of Orrick’s approach, David, you talked about Orrick’s, quote, “four pillars.” What are they and how do those influence your real estate decisions?
David Fries
Yeah, well, the first pillar is that we focus on the three sectors that are driving the global economy: Tech and innovation, energy and infrastructure, and finance. I don't think our sector strategy specifically really dictates it other than the fact that it means that we need to be physically located most of the world's major markets.
Second, you know, we seek to be the best law firm to work at and that drives all of our decision making, including our real estate.
The third is our focus on innovating to deliver distinctive quality and efficiency. And the last is that we are really focused on achieving financial results that allow us to attract, retain and reinvest in our people, the firm and the community. And that's the balancing act that Laura just spoke about. And, you know, the phrases I tend to like to use is one we need to grow into less. Pre-pandemic, about two years ago, we set a goal as a firm to cut our spend on real estate as a percentage of revenue by 25 percent by 2030. And we ran a lot of models on that. What if revenue growth on the same store basis exceeds the growth in real estate expense by one and a half percent per year? And what if it's one percent per year? And we found that even with reasonably aggressive modeling, we still needed to cut our footprint by about 15 percent to achieve that goal. And particularly with long term leases and other capital commitments that we've made into our existing space, I worried a lot about that.
Today, you know, even with long term leases and having, you know, some substantial abandonment charges to move, I no longer think that that's an ambitious goal. What's really happened with the pandemic is it's a lot easier for us to have those conversations. We haven't figured it all out. When you're making 10-, 12-, 15-year lease commitments and you're looking at major markets of 350 to 400 dollars a square foot of building out your space, there is a huge risk and cost of being really wrong. And I think we would bet on the side that we're going to see an accelerating trend towards less square footage per lawyer to a more adaptable workspace. And while we don't have it all figured out, I think we do have a pretty strong sense that we're not going back to the 1960s.
Spencer Levy
Well, two follow-on questions there. Given the reduced footprint, but to Steve's point, there's going to be some days where everybody's in the office. Number one, is flex space part of the solution? And I know there's complications there related to privacy. And the second question is, does your approach differ by market? Laura, what's your point of view?
Laura Saklad
So I think flex space has to be a critical component of future office design. And as we are looking at new leases that are coming up, that is absolutely part of the design process that we're going through. You're 100 percent right that we can't get there all at once. And we certainly — it would not be wise to, I think, invest a lot of capital in renovating all of our space and changing it to offices. But we're looking at creative ways to do that. Can we take some of the bigger partner offices and create collaborative spaces? Can we have people that are sitting together when they don't have a private space?
I think designing quiet rooms to address the privacy issues that you just mentioned, Spencer, in terms of when you need to have a completely confidential conversation but you don't have access to a private office, you need to have a space where you can go to have that conversation and you have to build that into our design. So I think all of that is incredibly important.
And we are going to have to take regional approaches. What we've been talking about is having a global philosophy, having a consistency in approach across the firm, being clear what the firm leadership expects, because I think we're all finding our way through this and there's a million different opinions if there's literally 500 different people. So you really are just grappling with bringing a lot of people together and trying to march in the same direction. But we are taking a global strategy, regional-implementation approach to really adapt to local market differences.
David Fries
I'm just going to add, Spencer, that flex space can mean lots of different things. It can mean having greater flexibility within your existing office space. It means being more focused on expansion and contraction rates in your lease negotiations. It may mean taking some serviced office space. It may mean having staggered lease maturities and taking less space on a long-term basis in a market and taking some additional space on a short-term basis. And so there's lots of different ways of achieving that level of flexibility within your office and external to your office.
Spencer Levy
Well, Stephen, I know you run a very disciplined process when you evaluate space needs. Tell us a little bit about how that differs by market. And please also tell us how some of your points of view on how giving the client more flexibility in their leases has changed.
Stephen Bay
While the economics differ market to market, the approach doesn't really differ. If you're negotiating in a market that has very, very limited vacancy and therefore your decisions must be accelerated, that's different.
But if you're negotiating in Houston or downtown Los Angeles or Washington, D.C., where you have many, many spaces — you have lots of time to make a decision. I would say previously we were talking with firms about accelerating their decision-making process to take advantage if they were over space of trying to change those economics at the end of the term before the lease expired. Today I think firms have slowed down, making long term projections, trying to commit if their lease was up three years ahead of time. Right now, I think they're very happy to watch and wait.
Spencer Levy
Sure. So it was really a two part question. The other was the legal side of the lease. How have leases changed for law firms to give them more flexibility?
Stephen Bay
Great question. When I am asked, what's the one thing that a law firm should do it’s provide themselves with flexibility. That's both in the design and then that's in the document. If you're signing a lease that sometimes is even longer than seven years, you should push very hard for termination rights. We push very hard for contraction rights. We, of course, always go in with renewal options. We push for it as aggressive expansion rates as we can possibly get.
Very few landlords want to provide fixed expansion space. But for a firm with a lot of clout and a growth history that you can describe, oftentimes we can get those — rights of offer, right off refusal. So if you're going to get rights to sublease as something that's provided, any way you can you're trying to make sure that the law firm is as light and nimble on his feet as it can be with this document.
Laura Saklad
And Steve, just a comment on that. I the partnership with you at CBRE giving us those options so that we can go back and have a conversation with our partners about … we want to try a new approach, we want to try something different. Yes, we are in the middle of a major, major, pivotal moment in terms of transformation of the way that law firms are organized and the way we use our space. Having that optionality helps us get to the right decision. And it's critically important to the way we can deal with our constituencies internally at the law firm.
Stephen Bay
Any good broker, any really good broker, is telling their client that these are fundamental prerequisites in a lease. You don't always get them in certain very tight markets in Palo Alto — very challenging. But oftentimes, if you leave these on the table to the last issues, the landlords will agree, if you can describe to them why you need these rights.
Spencer Levy
Back to the talent question for a moment. I note that Fortune listed Orrick as one of the 100 best places to work, and you certainly should be proud of that. And it's over the last five years. So, Laura, let me ask you, what do you think Orrick does differently than other law firms to maintain that status?
Laura Saklad
Well, first, thank you for mentioning it and thank you for asking. We are very proud of it, and it really is core to what we do.
I think one of the advantages we have is that we have a really clear vision of what it means to be a best place to work and what it takes to get there. For us, it really starts with doing leading work, the most sophisticated work for the world's leading companies and providing our lawyers with that experience. I think that translates on the real estate side to making sure that we are designing, making our office decisions in a way that enables us to meet our client's needs.
I think another key component of our definition is that we're really focused on providing early at bats to our attorneys and making sure that they have meaningful career progression that is not lockstep. People can move at the pace that fits them. So that also speaks to the need to make sure that our offices are attracting people to come in so that they can have the right mentoring, the right sponsorship and be in that dialogue with the lawyers that can train them to be the best they can be and provide those early at bats.
Another element is that we keep DEI — diversity and inclusion — at the center of every decision that we make. And we're spending a lot of time thinking about this now in relationship to creating a level playing field for individuals who are coming to the office and individuals that are working from home. And I think that the more that, you know, advisors on space can help us think about how to use technology to do that effectively and how to design a space that does create that level playing field, it is going to be tremendously beneficial as we're making those decisions.
The fourth element is a real focus on wellness, both mental and physical wellness. Taking care of sort of “the whole you” is the way that we talk about it.
And I think the last piece of it is this real commitment to continued innovation. I think that young lawyers today are looking and professionals are looking for an innovative place to work. This changing market requires us to be faster on our feet and creative and not afraid to fail — you know, try something new, learn from it and move on. And I think all of that is going to be relevant to what we're all facing together as we think about space.
Spencer Levy
We're now going to look in our crystal ball. We've been looking back for the last 20 years. I want to look now forward for the next maybe not 20 years, maybe the next five years. How different do you think the law from practice will be, both overall, but more specifically around real estate needs?
David Fries
I think we'll see more change in the next five years than we've seen in the last fifty. I think you will start seeing the widespread adoption of the lack of an attorney's proprietary sense of ownership in their own office space. It doesn't mean that it's going to be, you know, complete open space. It doesn't mean that it's going to be complete hoteling.
But we will see, I would say, a democratization of the use of real estate based upon need. And so it will be a mix of “me space” and it will be a mix of “we space,” so you’ll see more activity-based spaces. You'll certainly see smaller offices. I think I have not had one of our three hundred and seventy partners call me and tell me that that they missed their stack of drafts, documents that were polluting their office while they've been out for the last year. I don't know anyone who's complained to me that they miss seeing all of their deal cubes. And so the concept of your office being, you know, your storage bin — the place where all of your art that your spouse didn't want you to hang in the house but suddenly gets stored in your office space … that's going to go away. You'll see more light in there. We're going to see better technology. You're going to be able to plug and play much more quickly. And I think you will see us moving down to something much closer to 400 square feet per attorney than the, you know, Steve could tell you. But it's kind of the 700 to 900 square feet that has prevailed in the legal industry.
And so I think we will see some pretty widespread change. I think we're all looking at it right now worried about all the types of things that we as lawyers worry about — all the risks, all of the challenges. But if we spend more time — one of the things that Hamid Moghadam and Prologis always used to say to me is, “Don't talk to me about issues and challenges. Talk to me about opportunities.” And there is an enormous opportunity for us to do things so much better, to do it so much more effectively and more efficiently, and to be able to actually have a much higher quality of life than back in the pre-pandemic days.
Spencer Levy
By the way, David, I was smiling when you were giving your answer because you were talking about the stack of paper on the desk, the bad artwork littering your office. You just described my dad's office — I mean to a tee. And I'm sure he wouldn't have missed that either. But he would miss the lunches he had every single day at a steak joint somewhere in New York City, which is another reason why I think the cities are going to do well. But nevertheless, I agree with you on the office space out of it for sure.
So, Laura, again, crystal ball question. What do we say is different five years from now than today in the legal practice, specifically around space?
Laura Saklad
I think we're going to have a very mobile workforce. We're going to have a hybrid workforce where people are working from home and from the office in innumerable ways. It'll be customized by person, by practice.
I think that that means that we are going to have office space five years from now. That is there are fewer individual offices, there are quiet rooms, there are collaborative workspaces. There is better technology that enables people from home to connect and participate in the way that people in the office connect and participate. There will be a need to accommodate having everybody in the office sometimes — which is, I think, going to be the biggest challenge. How do we do that in the most effective way? And firms that can figure that out, how to have the quiet space, the collaborative space and the connection to people that are not in the office are the ones that are going to succeed.
Spencer Levy
So, Laura, let me follow up on one other point here. You mentioned this earlier on. You saw an opportunity for DEI — diversity, equity and inclusion — in part because of the fragmentation of where you can find talent five years from now on that issue. How do you think we are going to be looking at ourselves as an industry then versus today?
Laura Saklad
So there's so much there's so much there in terms of all the work that that law firms and I think corporate America period needs to do to really bring us where we need to be on the diversity, equity and inclusion front.
But I think there is an opportunity. One of the things we heard from our lawyers over the period of this past year is that some of the barriers to connection have actually been broken down by virtue of this format. You can talk with people that you work with that sit in a different office just as easily as you can talk with the people you work with that sit in your office. In a law firm environment where, you know, there may not be as many people like you in your location — and we've for years been trying to figure out how to create a community right among our affinity groups — being able to create an affinity network that really is virtual right? You can be with your colleagues across the firm in a format like this. I am hopeful that it really does advance the ball — and also help us bring more diverse individuals into our law firm. So I'm optimistic.
Spencer Levy
Good. So, Stephen, our friend and colleague, the last word to you, crystal ball five years from now. Looking back, what do we see is different about the legal space?
Stephen Bay
The pace of it is going to continue to accelerate as has been mentioned already. If you look at the National Law Journal top 100 law firms and you look at each individual office for them, they are leasing about 1,000 square feet per lawyer and they are carrying somewhere between 25 and 30 percent excess space. That's just held vacancy. They are burning millions of dollars every year.
So I think all the things that we've talked about — you're going to see the herd mentality watch some firms do this successfully, and then there's going to be a race to make those changes .. typically, when your lease is up.
So I think you're going to see firms shrink pretty significantly. As we are looking at Orrick’s footprint around the world … when we have the opportunity to do so, we are right sizing their space and it does not feel uncomfortable anywhere to them … I don't think that they're doing this. And they're going to save millions and millions of dollars. And I think you're going to see a lot of, if not every firm follow that lead.
Spencer Levy
On behalf of the weekly take, this was a pleasure to have two of our friends and clients. David Fries, CFO of Orrick, joining us today. David, thank you.
David Fries
Thank you, Spencer.
Spencer Levy
And then we have Laura Saklad, the COO of Orrick. Laura, thank you for joining us.
Laura Saklad
My pleasure, thank you.
Spencer Levy
And then our friend and colleague, Stephen Bay in L.A., but in Santa Barbara today. Stephen, thank you for joining us.
Stephen Bay
Thanks for having me, Spencer.
David Fries
Can I add one last thing?
Spencer Levy
Sure can. Go ahead, David.
David Fries
I did just want to add that it is times like today where markets are in flux, where it really is critical to have a great partnering relationship with a great firm. That is what's making us able to effectively and efficiently execute. And it's a partnership that is bringing great rewards and great success to us. And we really do appreciate everything that CBRE is doing for us.
Stephen Bay
Thank you, David. Spencer — if that's not in the podcast, I'm never talking to you again.
Spencer Levy
That's all we have on the docket for this episode, but if you want to discover more on the legal sector and real estate, as well as more on our guests and on our show, feel free to investigate our website at CBRE.com/TheWeeklyTake.
As always, we also welcome your testimony. Please share your feedback and of course, please subscribe rate and review us wherever you listen. Thanks for joining us. I'm Spencer Levy. Smart. Be safe. Be well.
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