According to Douglas Sams, Commercial Real Estate Editor of the Atlanta Business Chronicle, referencing commercial real estate brokerage Jones Lang LaSalle, says Atlanta’s economy is rebounding! According to Sams, the region’s second-largest employment sector, professional and business services, has gained back thousands of jobs it lost since the recession began. But who really knows when the recession actually began. All statistics regarding the rebound to 419,200 jobs as of September, 2012 are, according to the U.S. Bureau of Labor Statistics, are professional and business services including: lawyers, engineers, accountants and computer programmers. It is refreshing to see that the economy is apparently rebounding in Atlanta through expansion in this sector, which is second to the largest job sector, trade, transportation and utilities (543,000 jobs).
While it is safe to say there has been a lot of “dark space” in the Atlanta area (ranging from Atlanta to Alpharetta), it is hard to determine which of the professional and business services are taking the actual lead for Atlanta’s “rebound”. It appears that tech services are driving employment gains across the country at a much faster rate than almost any other sector, which may be the lead for Atlanta’s increase in jobs from 2007 to present. Those skilled in computer systems design and related services may even be creating computer programs that will handle the insurance-Obama Care regulations for business.
Atlanta’s high-tech sector is apparently responsible for absorbing one of the highest percentages of office space relative to the size of its nearly 140-million-square-foot office market. According to Sams, only high-tech sectors in Seattle and in the San Francisco peninsula were running overall absorption in their office markets at a faster rate. An absorption rate is the rate at which rentable space is filled. Gross absorption is a measure of the total square feet leased over a specified period with no consideration given to space vacated in the same geographic area during the same time period. Net absorption is equal to the amount occupied at the end of a period minus the amount occupied at the beginning of a period and takes into consideration space vacated during the period.
Notes: Atlanta Business Chronicle by Douglas Sams, November 7, 2012, “Tech sector boosts commercial real estate recovery”
Another Atlanta law firm has made the decision to move from its current office space, negotiating a new lease at Midtown’s 24-story Proscenium Building. Paul, Hastings, Janofsky & Walker, LLP has been operating its law offices in The Bank of America Plaza since the 1990’s, during an Atlanta law firm exodus from downtown. A move for this law firm after over ten years means better lease terms are certainly available in Atlanta with excess law space. Rob Binion’s (of LaVista Associates, Inc.) theory of “flight to qualify” may have been a factor in Paul Hasting’s lease negotiations.
Whether or not Paul Hastings tries to negotiate certain concessions from its current landlord or seeks a different level of quality at the Proscenium Building, the bottom line is law firms are taking the end of the lease term very seriously; lease costs hit the law firm’s bottom line. While the deal may have taken a good part of the past year, Paul Hastings seems to be shrinking its space in this sluggish commercial real estate market; its lawyers and staff are located in approximately 100,000 square feet. A new lease could save Paul Hastings $3.00 to $5.00 a foot, according to certain sources. Will The Bank of America Plaza retain its tenant, Paul Hastings, the 22nd largest law firm in Atlanta, with 68 attorneys and 115 total staff (it has 18 offices worldwide and more than 1,000 attorneys) or will the price and/or the quality offered at the Proscenium Building lure this law firm to its new law offices?
As we mentioned in a prior blog dated November 13, 2011, the owners of office buildings in Atlanta have their own headaches. The Bank of America Plaza was purchased by BentleyForbes Group, LLC from Atlanta-based Cousins Properties in 2006. Sources indicate that BentleyForbes has talked with its lenders for debt considerations hinting that the owner is seeking more favorable or workable terms.
While Paul Hastings has not signed on the dotted line, with its Bank of America Plaza lease expiring in 2012, it seems likely that Paul Hastings will entertain options for its leased law space. Paul Hastings joins Arnall, Golden, Gregory, LLP and Buckhead’s Morris, Manning & Martin, LLP, a few of the largest law firms when considering a new lease deal this year.
Notes: Atlanta Business Chronicle, October 28 through November 3, 2011.
See Also: Law Firms with Unused Offices, A View From Law Students, The LawSpaceMatch Official Podcast
According to a recent report from Grubb & Ellis Company, the 144.4 million-square-foot Atlanta office market in the third-quarter 2011 has a 22.9% vacancy level. The reasons appear to be related to slow growth, undercapitalized ownership and starving landlords.
Class A office space in the metropolitan Atlanta area decreased 9 percent to $22.62 per square foot during the quarter, and Class B rates dropped 2 percent to $14.48. The inventory of available sublease space decreased to roughly 3.6 million square feet in the third quarter, according to Grubb & Ellis Company, a drop of approximately 315,000 square feet on the previous quarter. Why the continued vacancy rate? For starters, there is a drop in rental rates due to unemployment. (In the legal sector, July, 2011 brought an increase in unemployment claims for Georgia lawyers.) Secondly, tenants are not renegotiating leases and moving to new office space. Principal Dan Granot of Joel & Granot Real Estate, LLC noted that “some submarkets have been head-and-shoulders above others in terms of recovery, but I do not know if what we are seeing are the results of true absorption or just a game of ‘musical chairs’ playing out.” Atlanta tenants are supporting the trend of moving from older office space to newer office space where they can seek higher quality. The legal profession is no exception. For instance, the law firm Fisher & Phillips moved from a prominent Buckhead space to a Midtown space, siting new quality accommodations which supports Rob Binion’s (associate broker at LaVista Associates, Inc.) theory that 2011 “has proven to be a year of “flight to quality”. According to Binion, a flight-to-quality trend is most evident in the Class A sector of the Buckhead market, “with the overwhelming share of positive absorption for the entire city occurring in here – at the expense of Class B buildings in Buckhead and every other submarket in town”.
In March, 2011, we posted an article noting law firms’ reactions to landlord’s response to lease renewals. Decline of concessions or re-negotiations of the lease was highlighted. The climate has not changed. Lack of incentives for providing incentives for beneficial lease renewal terms and thereby, helping prevent law firms from exiting current law office space is not necessarily derived from Atlanta landlords. Binion seems to uncover one of the reasons why landlords have been unable to provide appropriate concessions to retain law firms: owners of these buildings have no capital available to pay for lease-up expenses, such as marketing, advertising, tenant improvement allowances to commissions and credit checks. If owners and/or venture capitalists holding (equity or debt) in Atlanta office buildings have dry coffers, the sluggish recovery will continue. Simply, there are no funds available for needed improvements and marketing techniques. According to Binion, the ” flight to quality” will accelerate. This leaves the owners of older Class B and C buildings effectively pulling themselves out of the leasing market until more funds are available to provide necessary factors or retaining tenants.
Metro Atlanta landlords will have to remain aggressive in order to compete at least through 2012, according to Russ Jobson, Senior Vice President and Principal in Colliers International (Atlanta office). The decline of the recovery of the Atlanta office market sector directly influences the sublease submarket. If tenants cannot negotiate better deal terms for even a short term lease, their option for subleasing their space is a viable option. Additional “dark space” is not an option for profitable law firms. Atlanta law firms and other law firms around the country are turning to www.lawspacematch.com, an exclusive site for lawyers posting their empty law space and sharing law space with lawyers. On the other hand, if the “flight to quality” continues, according to Binion’s theory, law firms may relocate to a space which more appropriately accommodates the number of lawyers currently employed.
Notes: Atlanta Business Chronicle, Commercial Real Estate Section, November 4-10, 2011.
See Also: Law Firms with Unused Offices, Persistence of the Economic Downturn Forces a New Legal Landscape , Law Firms – Don’t Use Your Empty Offices For Storage – It’s a Waste
Even lawyers are having a hard time finding a job in these economic times. And solo practitioners are hesitant before signing a long term lease usually requiring a personal guaranty. The good news is attorneys are sharing space and simultaneously saving money and improving business. There are many benefits of sharing law space. The cooperative spirit of a group of attorneys who practice with each other is invaluable. Water cooler discussions lead to the exchange of valuable expertise with other lawyers and perhaps even a referral for a case or work project. This does not occur when an attorney practices law from home or a coffee shop.
Another benefit of sharing law space is creating a better image in the eyes of clients. Attorneys are forming associations when they share space and link they names on the letterhead. They are setting themselves out as attorneys who are part of a law firm, even though they are neither partners nor sharing profits. Instead these lawyers are sharing expenses and saving money. While there are State Bar rules governing the representation of a law firm where the lawyers are space sharing, the bottom line of disclosure to the client may be easily addressed in the retainer agreement. The retainer agreement with the client should clearly indicate that the lawyer is a professional corporation, a limited liability company or solo practitioner, and he or she is not an associate or partner of a law firm. (Each state has varying rules so check the State Bar for further reference). These guidelines may be easily met. Expansive letterhead of the association of lawyers sharing office space may show a client a more impressive image and office space than any one single lawyer could afford on her own.
Expenses of copy machines and other office equipment are much less burdensome when costs are divided among space sharing lawyers. The bottom line: an attorney may receive more for office rental dollars. Everything from water to paper may be shared and as long as there is a clearly written space sharing agreement, the arrangement adds prestige and cost savings. Attorneys are not signing long term leases; instead space sharing is a beneficial and prevalent concept. Of course, choosing with whom you wish to share office space is an individual choice and should be closely examined.
In 2010, Elaine M. Russell created www.lawspacematch.com, a service that matches lawyers seeking to sublet space with unoccupied office space at compatible law firms around the country. Law office space and attorney profiles may be viewed at www.lawspacematch.com. Elaine M. Russell is a corporate and business attorney representing clients throughout Georgia and has an office located in the Buckhead section of Atlanta.
See Also: A Resolution for Student Debt?, , Law Firms – Don’t Use Your Empty Office Space for Storage – It’s a Waste
Debt. It is a word that strikes fear into every law students heart, and is an ever growing issue for post-graduates. Recently, the Young Lawyer’s Division’s 111A Report reported that educational debt, which is almost exclusively incurred by young college and graduate students, has exceeded credit card debt in the United States. This is mainly because college and graduate school tuition has risen at a continuous rate throughout the past 30 years in the US.
In response to this growing issue, the American Bar Association’s Young Lawyer Division proposed two Resolutions; one, Resolution 111A is aimed at providing financial assistance for those students in extreme debt, while the other, Resolution 111B, is geared towards getting Law Schools to provide more transparent reports on job prospects and median salary figures.
As proposed, Resolution 111A seeks to extend federal student loan repayment terms and programs to those students burdened with excessive financial debt due to education. It also calls for programs that give income-based repayment options and loan forgiveness programs. Finally, it calls for a decrease or complete elimination of income levels associated with the federal income tax deduction for interest paid on student loans.
Another factor in student’s debt is their initial misconception of job prospects and beginning income upon graduation; this information is key to making the decision to initially delve into debt, as a high perceived return will encourage students to paying more initially, as they figure it can be made back relatively quickly. Unfortunately, figures published by law schools pertaining to this matter are frequently misleading. In fact, according to a National Association for Law Placement (NALP) report, 8.7 percent of the class of 2009 was unemployed (based on the 36,046 employed graduates out of 40,833 for whom employment status was known). Resolution 111B seeks to address this disconnection between perception and reality by requiring law schools to explain their numbers more clearly by stating how many of these jobs are permanent and how many are temporary (less than 1 year). In addition, the resolution calls for law schools to communicate the cost of living post graduation and while attending law school.
While both of these resolutions have been passed, debt is still a serious issue facing law students. One of the biggest costs a new lawyer faces upon beginning his or her practice is the cost of real estate. In 2010, Elaine Russell, a lawyer operating in the Buckhead section of Atlanta, created LawSpaceMatch.com to help address this issue. This free service allows firms with open office space to quickly and easily post their openings and get into contact with solo practitioners who are in need of this space. This subleasing opportunity allows newly minted lawyers to cut down on a large cost, easing their already-prominent burden of debt.
Reference Article: ABA Adresses Law Graduate’s Job, Debt Woes
See Also: Job Outsourcing: What Does it Mean for the Legal Profession?, Lawyers Sharing Space: Benefits and Responsibilities,
“Outsourcing” is not a term with which I am particularly familiar. The word is tossed around as something that takes jobs away from Americans, as companies take advantage of cheap labor prices in other countries. I have always associated this phenomenon with industries such as computer technology and automotive manufacturing. When I heard of law firms practicing outsourcing, I was baffled to say the least. And the most intriguing fact is that this technique is not a new development.
After finding an article in the New York Times 2010 archive reporting on legal outsourcing, I was curious to know just how long this practice has been in use. It turns out, the earliest occurrence of legal outsourcing dates back to the mid-nineties. Considering all the backlash industrial outsourcing has received, it is surprising to see that legal outsourcing has not only stayed, but actually has grown.
For the firms there is a practical and economical reason for sending certain jobs overseas and it is the same reason that drives many other industries abroad–labor is cheaper. Why spend 200 dollars an hour for an employee performing basic research when you can spend half that abroad? Or, as the website CPA Global puts it, “when [lawyers] are free to focus on the big things, they can produce even greater results.” CPA Global posits that with the removal of menial tasks, lawyers can truly work to the best of their ability. This sounds like a good thing. Who doesn’t want their lawyer to have a clear mind when the time comes for trial?
But as an undergraduate, this is not good news. Many of the jobs that are sent to countries like India are those that normally go to entry-level lawyers and law students just getting their feet wet. This is sadly just more bad news to consider along with the decline in jobs for law school graduates. How is a student supposed to find work when that work is suddenly being shipped elsewhere?
Well, there really isn’t cause to worry, yet. Legal outsourcing is still a rather small niche. But some very good advice can be found in an article posted by Merrick Pastore in April on LawSpaceMatch.com. The article impresses upon all up-and-coming lawyers the importance of networking. When a firm hires a lawyer from another country, they are a faceless and possibly nameless being. An American law student on the other hand certainly doesn’t have to be. Networking allows employers to see potential and gauge drive of legal hopefuls. By showing a little tenacity, it is possible to convince others that you are worth the greater paycheck.
A major Atlanta law firm, Epstein Becker & Green has been sued by its landlord for unpaid rent for its Atlanta/Buckhead law office. While the law firm and the landlord were engaged in negotiations regarding failure to pay for legal space under the lease agreement, the law firm has been sued for failure to pay rental payments in the amount of $855,000 in back rent. Ken Menendez, the Atlanta local managing shareholder, was surprised by the filing of the lawsuit and stated, “… notwithstanding the lawsuit, we expect to work out a deal to restructure our lease.”
Epstein Becker is not the only larger law firm which has contracted during the recent recession. Other Atlanta law firms have also downsized. Epstein Becker has allowed one and one half floors of “dark space” in Resurgens Plaza, a well-known Atlanta Buckhead commercial building near Lenox Mall. Atlanta’s commercial real estate landscape has left a lot of law firms with vacant space. As a result of tenants having too much empty space, even when attempting to renegotiate with landlords, law firms risk getting sued for back rent. A sublet is an option for tenants with excessive vacant law space. Extra law office space may be subleased to lawyers seeking a turn-key law office situated in a prestigious commercial building. Smaller law firms in Atlanta are engaging in this space sharing and benefit from reduced costs. LawSpaceMatch.com provides a simple avenue for lawyers and law firms with empty law space to sublease to lawyers in transition and seeking to sublease from lawyers. Law firms may post their empty law space on LawSpaceMatch.com for free. Lawyers seeking to share space may search by zip code or by custom criteria based on areas of practice, and other amenities such as receptionists, shared secretaries, covered parking, and rental rates for the sublease.
Perhaps during its negotiations with the landlord at Resurgens Plaza, Epstein Becker could have considered utilizing a free service and obtained a sublease, even for a short period of time, allowing a sublease for lawyers desiring the creation of a law practice within its prestigious law space within Resurgens Plaza.
Notes: Fulton Daily Report – Friday, July 1, 2011
See Also: The Need For Law Space Match, Landlords Make Room for New Tenants, Provide Relief for Existing Tenants, Atlanta’s Largest Law Firm Comes Out on Top with Strategic Cost Cutting
Atlanta lawyers are subleasing with other lawyers and entering into law space sharing arrangements. The Georgia Rules of Professional Conduct do not prohibit attorneys from sharing office space. With law firms downsizing, the empty law office space entices new lawyers into a sublet deal. Know the benefits and responsibilities. Benefits of law space sharing include: (i) the occasional consult or assisting with certain legal issues which may arise; (ii) reduction of overhead costs; and (iii) potential referrals for legal work in each lawyers’ area of practice. While lawyers seek to share rent, copier costs, internet costs, legal research expenses, lawyers must use extra care about maintaining the confidences and secrets of clients. For instance, if the lawyers sharing law space retain a joint receptionist who performs legal tasks, she or he should be advised to maintain confidentiality of the clients and keep files for the clients in a separate work area. Ethical issues can be triggered by sloppy administrative practices. All confidential information gained in the professional relations with a client, unless the client consents after consultation are required by the Georgia Rules of Professional Conduct (Rule 1.6) to be protected. The duty of confidentiality shall continue after the client-lawyer relationship has terminated (Rule 1.6(e)). So the files must be kept separate even after the case or matter is completed. The bottom line: lawyers or law firms should not fail to take adequate measures to protect the client’s confidential information of each space-sharing lawyer.
Lawyers who are dual professionals also must make clear to the public the separate nature of their legal and other businesses, and should take measures to protect client confidentiality. The dual professional may be required to keep separate phone numbers, letterhead, books, records, and files. The lawyer should take special care to keep separate the provision of law-related and legal services in order to minimize the risk that the client/customer will assume that the law-related services are legal services. (See Georgia Rule 5.7, comment (8)).
Each state may have a specific position regarding the dual professional practicing in one office. For instance, Colorado takes a stronger view, stating that it is easier to avoid confusion if the second occupation is not conducted from the legal office. The basis for Colorado’s opinion is that risks such as improper solicitation are increased when one office is used.
Whatever the commissions ultimately decide, space-sharing is an important concern for many lawyers and can be maneuvered easily if thoughtful steps are taken prior to conducting the business of law. Lawyers should always remember that the essence of the Rules of Professional Conduct is based on communication with the clients.
See Also: You Can’t Run a Law Practice from a Coffee Shop, Atlanta Lawyers Sublease Space, The Need for Law Space Match, Law Firms with Unused Offices
Being a solo practitioner can sometimes be overwhelming, particularly for those who have never done it before. Among the many different decisions that a prospective solo practitioner needs to make is office space for the law firm. Because so much of the practice of law has become electronic, some solo practitioners have come to the conclusion that they can successfully practice law without dedicated office space.
However, just about anyone who has attempted this sort of arrangement will tell you, having functional and reasonably appealing office space is a very worthwhile investment. While it is true that you can work on a letter or brief from a laptop at the local coffee shop or a room at the law school or your converted garage space, these types of arrangements are typically inefficient. Functionality is the key to efficiency, and it is hard to replace a well-designed office space with reliable copying, scanning, and other equipment, high-speed internet connection, and a dedicated space you can meet with clients and potential witnesses. Nothing screams a lack of credibility to potential clients and opposing counsel more than an attorney that does not have a dedicated office address. Meeting with a client in a home-office leaves the client wondering why the attorney is not profitable enough to afford office space. Having opposing counsel send documents to a post office box opposed to an office address indicates you do not have the resources to adequately handle cases. In short, there is a reason why virtually all successful attorneys invest in adequate law office space to support their practice.
Moreover, particularly in light of the current economic trends, there is very good space to be had at a bargain. Opportunities to sub-let “Class A” space at a discount abound. And while you may not have your name over the door as a sub-tenant, you will have access to functional space, adequate equipment, and respectable surroundings. If you are planning to run a law practice, finding good Atlanta office space at a reasonable price is well worth the investment.
In 2010, Elaine M. Russell created LawSpaceMatch.com, a website dedicated to helping law firms with open office space and solo practitioners connect with each other. This free service matches lawyers seeking to sublet office space with law firms possessing unused office space across the country. Elaine is a corporate and business attorney representing clients throughout Georgia. Her office is located in the Buckhead section of Atlanta.
Contributed by: William B. Ney
See Also: Atlanta’s March Unemployment Report Offers Hope for Region , Don’t Count On Your Real Estate Broker When You Need a Sublease of Your Office Space, Law Firms with Unused Offices
The video game industry is among the most expanding branch of the electronic business today, with customer bases ranging from the stereotypical adolescent teen to the parents of these teens. Video gamers are becoming increasingly more interconnected through networks such as Xbox Live, and the Playstation Network. On these networks, gamers not only compete against each other, but can do many things not related to games, such as stream their instant queue from Netflix, download music using Rhapsody, and even update their Twitter and Facebook.
With these developments, consumers have put increasingly more personal information onto these networks in order to reap their benefits. One would think that a major industry giant such as Sony would be able to keep this information under padlock and key, but recent developments have shown that this may not be the case. In the month of April, hackers officially deemed by Sony as “anonymous” hacked into an estimated 100 million user accounts on the Playstation Network, obtaining street addresses, phone numbers, full names, and other personal information. Thankfully, most credit information was locked in a different network and was not reached, but the hackers still reached about 12,700 non-U.S. credit and debit accounts. Sony has stated that many of these numbers are outdated, but the company is still moving to notify affected customers “as quickly as possible”.
This situation is incredibly disconcerting, and presents many possible legal ramifications against Sony. One has to wonder how much precaution Sony put into locking this personal information, given that the conglomerate is one of the largest electronic companies in the world. Through this, the question of negligence pops up. In the coming months, the true ramifications of this hack will be seen, as the information stolen from Sony will undoubtedly be sold off and subsequently used by its buyers. A possible use for this information is to assist in stealing people’s identities, a crime that may have been assisted by Sony’s lack of precaution in safely storing their customer’s personal information. So, a rational thought for a customer finding his/her identity to be stolen after knowingly giving personal information to Sony may be to sue the computer giant for customer negligence. This presents a larger issue for Sony and its legal team, an opportunity for some lawyers, and exposes a problem that may have even more far-reaching ramifications. Cloud Networking is an ever-growing method for businesses to store their information and contacts over the Internet. The Sony debacle has exposed these networks to be vulnerable, and has caused people to think that they have possibly put too much faith in corporate clouds. As a result, companies such as Safesforce.com, network software engineering company, have seen dips in stock prices, which had previously been among the highest performing stocks in the past year. Thus, the hack of Sony’s Playstation network may be seen to have much more far-reaching ramifications than one would initially think, both legally and business-wise. As the situation shows, no network is impervious to hackers, representing an up and coming issue as our society moves into a state fueled by and reliant upon technology and networking.