We’ve written that it’s not quite true that we know nothing about “the other side” of this global pox, and currently holding the pole position among things we abruptly realized will look different is that as of, say, 10 weeks ago, we all were used to large-scale, grand and frightfully expensive office space because, well, because we were used to it—and now we realize we had only the most tenuous grasp of why that should be the case.
“The office” will never be the same.
I’d be surprised if any of our thinking readers doubts this, but here’s a wide range of observations on this topic. According to a comprehensive article in The New York Times earlier this week:
- Facebook and Google have extended their WFH policies through the end of this year, Microsoft through at least the end of October.
- Twitter told all its employees a few days ago that they could work remotely “forever” if they want to and their position allows for it.
- James Gorman, the CEO of Morgan Stanley, said the company had “proven we can operate with no footprint. That tells you an enormous amount about where people need to be physically.”
- At the investment bank Jefferies, the firm’s C.E.O., Rich Handler, and president, Brian Friedman, wrote in a memo to staff. “We will not be bringing anyone ‘back’ to work because, as best as we can tell, none of us has stopped working.”
- “In Hong Kong there have been no cases for three weeks so we’re also thinking about moving back,” said [Wim] Dejonghe [global managing partner of Allen & Overy]. “But there is no need for any of our people to return to the office. There are very few people in these offices and it’s voluntary.”
- Eversheds just announced that it will be repurposing a substantial portion of its real estate spend to technology.
- And finally, for unmatched brevity, we offer the response of an AmLaw 10 COO in response to partners’ pestering about when the firm’s offices might reopen: “What’s the rush?”
The lone dissenting voice came wanly and unconvincingly from Steven Roth, chairman of Vornado Realty Trust, one of the largest commercial landlords in New York: “We do not believe working from home will become a trend that will impair office demand and property values. The socialization and collaboration of the traditional office is the winning ticket.”
If nothing else, this proves how remarkably adaptable human beings are. So adaptable, in fact, that we are already at risk of forgetting how quickly we have all adopted brand-new views on this, essentially opposite the conventional wisdom ca. March 1st. According to an unsourced Managing Partner Forum survey, “90% of managing partners said they believed that working remotely reduces productivity.” Quite the reverse: Actual experience during the lockdown has been zero dropoff at worst and measurable improvements at best.
So the real-estate genie is out of the bottle; maybe there are others ripe for release?
But those are other columns; this one is about the office.
Anyone glancingly familiar with law firm P&L’s knows that “occupancy” is the second largest bucket of expense after compensation and benefits. Nice chunky target that, eh? Over the next decade or so as leases come up for renewal, I suspect we’re all going to find out how much we can squeeze from that category.
Consider the short- (medium-? long-??) term obstacles to returning to the old office this side of a vaccine or herd immunity:
- Is everyone really going to go up and down in the elevators one at a time or two at a time? One major real estate investment trust that owns a not-insignificant proportion of midtown Manhattan recently estimated it could take 12 hours to fill a standard office tower under those constraints. Maybe most people can take the stairs of you’re on a single-digit floor, but above that?
- What tests will you need to conduct, presumably each and every day, before your professionals and staff can be permitted to enter the office? Temperature? Nasal swab? Saliva?
- If someone in your office tests positive for Covid-19, I assume you plan to tell everyone else who was there to stay home for 14 days. How long before more or less everyone is back home under effective quarantine again at that rate?
- How are your people even going to get to the office and home again in major metropolises dependent, for all practical purposes, on mass transit?
- Finally (this is an unwelcome but necessary question), how willing is your firm to keep paying full freight to the landlord for space you effectively cannot occupy for the foreseeable future?
Thinking about your “next” office involves much more than cost, however, including, fortunately, far more worthy and fascinating topics. Don’t imagine for a moment that the law firm office of the future will be the law firm office of February run through the copier @ 50% (or 30%); it will be designed, built, and occupied around fundamentally different assumptions about why human beings find it fruitful to get together in the first place.
Imagine, if you will (what bliss!), our post-social distancing world, when we can congregate at will together once again.
Out will be dedicated, name-plated private offices—which studies have long since shown are vacant 60-80% of the work week anyway. In will be flexible, modular co-working, meeting, and conference spaces. The questions are (a) Why do people really need to get together? And (b) What do they do when they are together?
Now, I would be the last to propose that we should do away with offices; study upon study has shown that for bonds between people to remain strong, they need to be together in person from time to time. Julie Sweet, CEO of Accenture (Columbia Law and former Cravath partner) gave a Bloomberg interview this week recounting how that firm had begun going virtual/remote in a big way in the 1990’s but recognized there are limits: There’s no substitute for renewing personal face to face connections on a regular basis. In the long run, your culture depends upon it.
Of course, all of this is premised on equipping all your professionals and staff with the two indispensable tools of delivering legal (or any professional) services today: High-powered computer hardware in the appropriate variety of form factors, from smartphone to laptop to multi-monitor desk PC, plus high-speed broadband. You think your firm has invested a lot in technology now? Just wait. Satya Nadella, the CEO of Microsoft, has said that the last 10 weeks have seen as much progress in digital adoption as the previous five years, and he calls tech the “run-time” of business.
When I started out as a baby associate at a Wall Street law firm, the reception area was on the 57th floor. Directly ahead from the elevators, was a heavy mahogany desk enshrined left, right, and center by the firm’s library behind glass walls, with oil portraits of the three name partners. It made a powerful and impressive statement, and the library was to me the most “high-functioning” part of the office.
“High-functioning” is what we still need most. But it’s going to be unrecognizable from what we thought it had to be in February.