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Thinking about applying to roles in commercial law, including vacation schemes and training contracts? Commercial awareness, best defined as an understanding of how business works and recent related news, is a key skill that all law firms and Chambers are looking for in their future employees.
A common commercial awareness question in legal interviews is one regarding recent trends (or potentially even growing challenges) for law firms. One of the most pertinent answers right now is around the hybrid working environment which many workplaces have adopted since Covid and the impact this has on office space in the City.
The current landscape for commercial real estate in the City is somewhat complicated. On the one hand, hybrid working has undoubtedly lowered demand for office space on the whole, with numerous businesses (including law firms) embracing more flexible models where lawyers will often spend a day or two a week working from home (in the case of partners, often even more). The need for less physical office space as a result is obvious.
So what happens to the unused and undesirable office space left over? The City of London Corporation has recently announced its intentions to fast-track applications to convert unused office spaces into new facilities, namely hotels and places of public interest (e.g. galleries or museums). These are seen as the more agreeable tenants of the currently empty buildings – there is some resistance to the idea of residential developments taking over these buildings, since doing so in the past has raised significant concerns over the impact this would have in turn on what else could be built nearby (due to regulations around noise and light pollution, general planning permission restrictions, etc.).
However, the office space that is still required (most law firms still recognise a significant benefit of working in-person at least some of the time) has changed in its composition – meaning that offices which do tick certain boxes are ironically more in-demand than ever.
For example, when employees do come into the office, they are likely doing so in order to collaborate with other workers (e.g. in person meetings) in a way which video calls cannot always facilitate effectively. Office spaces therefore need large, open meeting spaces. At the same time, however, the total opposite is also a necessity – some employees may feel that their home environments are too hectic (perhaps with young children running around in the background), and thus choose to come in so that they can find a quiet space to enter a deeper state of focus. As a consequence, noise isolation pods are increasingly in demand by many of the City’s top law firms.
Another factor setting the most in-demand workspaces apart is their incorporation of top-tier facilities. For example, notoriously (and arguably increasingly) overworked lawyers across the City, unsatisfied with purely monetary compensation (as high as solicitor salaries in particular are at the moment), are increasingly looking for the best perks available. To give just a handful of examples, Allen & Overy’s Spitalfields office features a spa, dance studio and underground futsal court, while Clifford Chance are known for their private swimming pool in Canary Wharf.
Finally, one of the most common legal buzzwords around right now does rear its head in this conversation – ESG (environmental, social, and governance). The environmental impact of office space is a big talking point in the City at the moment. Linklaters’ new office on Ropemaker Street is being touted for its sustainability, while Allen & Overy are making similar promises in regard to their new space just across the road in Liverpool Street.
However, some of these factors often go hand-in-hand (and have sometimes led to accusations of greenwashing) – smaller office spaces (as driven by hybrid working and an obvious interest in cutting costs during a difficult economic climate) are always going to be more eco-friendly, and so the reasons for making the move might be less environmentally-driven than they initially appear (though whether that matters or not is another conversation).
Legal businesses (and law firms in particular) are themselves notable residents of some of London’s most expensive real estate. For example, elite US heavyweight Kirkland & Ellis have operated out of the Gherkin (one of the City’s most iconic landmarks) for the past 17 years (although are expected to leave soon). These firms are a genuinely significant factor in affecting the current mood around commercial real estate in the City.
Another point worth raising is the fact that law firms will likely be acting as advisors on many of these upcoming real estate deals as property investors and office inhabitants reposition themselves in this complex climate. Many top-tier law firms have significant real estate practice areas, including Bryan Cave Leighton Paisner (BCLP) and Herbert Smith Freehills (HSF). The outcome is likely to be not only a high volume of work from a legal angle, but also clients turning to law firms as more broad advisors to discuss what makes the most commercial sense for their business in terms of office space. Law firms acting in a capacity closer to consultants in some ways is another significant trend in the legal industry.
The changing commercial real estate climate in the City is being both partially driven by, and affecting, legal businesses in London, who act as both clients themselves and advisors to others. While the overall demand for office space has ultimately fallen as a result of hybrid working shifts after the pandemic, the office space which does suit the demands of a post-Covid world is more in demand than ever. Amongst this multifaceted landscape, law firms are sure to play a crucial role.
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