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Real Estate and Facilities

can take advantage of and use. In many cases, the landlord will be willing to
pay for all or a portion of the finish-out that is required to bring the office
space into tenantable condition by the firm.
The issue of finish-out is often raised during the lease negotiations; how-
ever, in the final analysis, it is important for the firm to have an understanding
of what the landlord is paying for and whether and under what circumstances
the firm will be responsible for completing any aspect of the finish-out. One
way to accomplish this is to attach an exhibit to the lease that includes detailed
descriptions, drawings, and specifications of exactly what improvements each
party is responsible for making. Depending on the amount of work that is re-
quired, the finish-out of the premises could be accomplished relatively quickly
or could take several months.
There are a number of different parts of the office that the firm should
consider when it is assessing its needs and whether and to what extent finish-
out is required. Most professional services firms include at least the follow-
ing types of space within the office: professionals™ offices, staff workstations
and /or cubicles, reception area, filing areas and copy rooms, common areas
and conference rooms, restrooms, and a kitchen or cafeteria. Again, the firm
may be able to find existing office space that meets its requirements; how-
ever, it is much more likely that at least some finish-out will be required be-
fore the firm takes possession of the premises.

Furniture
In selecting furnishings for the professional services firm, there are various
issues to consider.

DESIGN AND STYLE. The design and style of the furniture selected by the
professional services firm is important for a number of reasons. As with many
of the other issues that must be considered in opening a professional office,
clients and potential clients have very real expectations about the style of
furniture that they expect to see in a professional™s office. Traditional furni-
ture styles that incorporate dark woods, leather, and brass predominate many
professional offices; however, it is not mandatory that all professional offices
be furnished in this manner. Indeed, there is a wide range of contemporary
furniture styles that should be considered in light of the image that the firm
is trying to project and the business that the firm is trying to attract.
For example, if the firm™s client base is largely high-tech companies whose
executives and employees are accustomed to more modern office design and
furnishings, they might not feel comfortable meeting in an office furnished
with dark woods and leather chairs. In much the same way that wearing for-
mal business attire in the wrong setting can have a chilling effect on client
interaction, clients might perceive more conservative furniture as being dark
and too formal and inconsistent with the image the client is trying to project.
492 The Back Office: Efficient Firm Operations

On the other hand, many clients expect their professionals™ offices to be de-
signed and furnished in a more formal manner that conveys a greater sense of
seriousness and tradition.
One furniture option that many professional services firms have selected,
at least with respect to employees, is modular furniture. Modular furniture
includes desks, credenzas, and work stations that are constructed based on
standardized units or dimensions, which can be configured in a variety of
ways depending on a particular employee™s or professional™s needs. Modular
furniture provides a firm with a relatively inexpensive and easy way to adapt
the office configuration and organization as the business ebbs and f lows and
as the employee base shrinks and swells. Rather than undertaking major of-
fice furniture purchases only when absolutely necessary, which can prove
costly, time consuming, and disruptive, modular furniture provides the pro-
fessional services firm with the opportunity to more closely tie office reno-
vations and furniture purchases to business demands.
Although modular furniture is an attractive option for employees of the
professional services firm, in many cases, the more senior members of the
firm, such as partners, prefer to furnish their offices with unique furniture
that they have personally selected. Furnishing their offices is one of the few
ways that individual partners can personalize their offices, and it is considered
one of the perks of achieving a more senior position in the firm. Unfortu-
nately, high-end office furniture can be very expensive, and as a result, many
professional services firms require partners to pay for all or a portion of the
furniture that they select. Moreover, there has been a recent trend toward
standardizing the furniture in partner offices in an effort to afford the firm
greater f lexibility as partners come and go and to help reduce conf licts among
partners over status within the firm.
While there are myriad furniture designs and options available to the pro-
fessional services firm, as a general rule, trendy, stylish furniture should be
avoided. Furniture is often one of the largest upfront expenses that the pro-
fessional services firm will incur when moving into new office space. To
avoid having to replace furniture before it is necessary, the firm should avoid
trendy furniture that can quickly go out of vogue and opt for more neutral
furniture that ref lects a professional tone. While it is true that the firm
should consider its furniture options in light of client expectations, a balance
must be struck between the cost of the furniture and client expectations. In
striking this balance, the firm should err on the side of selecting furniture
that will endure any passing trends.

EMPLOYEE PRODUCTIVITY AND SATISFACTION. Selection of office
furniture can have a dramatic impact on employee performance and job
satisfaction. The right office furniture should make it easy for both the
professionals and nonprofessionals in a firm to perform their respective
job functions efficiently and comfortably. Modular furniture that can be
493
Real Estate and Facilities

adjusted to meet individual needs is important to retaining happy, productive
employees. According to one report, “Furniture systems that adjust to individ-
ual needs are key to keeping employees. . . . We really have to provide solu-
tions that allow people to feel ownership with their workspace, to identify
with the place that they spend a significant period of their lives.”7
Purchasing comfortable and user-friendly furniture makes sense from an
efficiency perspective, and ergonomically designed furniture can help save
the firm the expense and downtime associated with cumulative trauma dis-
orders and repetitive strain injuries. Disorders such as carpal tunnel syn-
drome and lower back pain account for a significant number of workers™
compensation claims annually. Ergonomically designed chairs, keyboards,
and workstations can help minimize these health risks and cut down on em-
ployee downtime.

PURCHASING AND/OR FINANCING FURNITURE. When weighing its op-
tions with respect to furniture, the firm should consider whether to pur-
chase new or used furniture. New furniture offers the firm a greater degree
of f lexibility in terms of selection and variety, whereas the options in the
used furniture market are often much more limited. Thus, for example, if
the firm were to choose to purchase used furniture, it is likely that there
would be several different styles of furniture throughout the office, which,
depending on the image the firm is trying to project, might not be an unat-
tractive option.
While the options may be less plentiful in the used furniture market, the
firm will pay considerably more for new furniture than used furniture. De-
preciation of used office furniture occurs rapidly, and the firm may be able
to find excellent quality used office furniture at a deep discount under what
it would pay for new furniture. Moreover, in many instances, the firm may be
able to meet all or a portion of its furniture requirements by purchasing or
leasing furniture from the landlord or former tenant, particularly in a sub-
lease situation where the former tenant has not relocated and does not want
to incur the cost of moving its office furniture.
In most cases, the firm can defray some of the cost of furnishing its new of-
fice space by financing the purchase of office furniture, both new and used.
Indeed, if the firm decides that it does not want to purchase office furniture,
the firm could simply lease furniture. However, under both the financing and
leasing scenarios, the firm would pay a premium in finance charges and inter-
est, and as a result, despite the relatively high cost, simply buying the furni-
ture upfront might be in the best long-term interests of the firm.

FILING SYSTEMS. Although professional services firms rely on computers
and electronic media more than ever before, they still generate a significant
amount of paper. As a result, in addition to furniture, the firm will need fil-
ing cabinets, which, depending on the volume of paper being produced by the
494 The Back Office: Efficient Firm Operations

firm, can be expensive. Shelf files are a more efficient alternative to tradi-
tional drawer file cabinets. Additionally, the firm should consider cabinets
that can be stacked five to seven drawers high to minimize the price per
square foot that the firm is paying to simply store hard copies of documents.


Summary
Locating the right office space can be an incredibly important development
in the life of a professional services firm. To make the right decision, the
firm should critically assess its needs upfront and arm itself with as much in-
formation on the market as it can find. Leasing agents can prove to be valu-
able allies who possess a great deal of information and expertise. Once the
firm has identified the office that best suits its needs, it should take care in
negotiating with the landlord and, with the assistance of legal counsel, care-
fully review all of the various terms of the lease before execution. Last, the
firm needs to decide what office design and furniture best suit its needs. Al-
though the firm need not wait until a lease is executed to undertake this as-
sessment, because office finish-out and furnishings can be such large
expenses for the firm, it is important that, with or without the assistance of a
space planner or interior designer, the firm properly budget for these ex-
penses as early as possible in the office search process.

NOTES
1. Attributed to Abraham Lincoln in multiple sources including http://www.quota-
tionspage.com/subjects/success.
2. American Public Transportation Association (APTA) online glossary available
from http://www.apta.com/info/online/glossary.html.
3. The Urban Land Institute is available from http://www.uli.org.
4. Candace S. Baggett, Desperately Seeking Space, State Bar of Texas 22nd Annual
Advanced Real Estate Law Course (July 12 to 14, 2000).
5. The Urban Land Institute, Office Development Handbook (2nd ed., 1998),
available from http://www.uli.org.
6. Workplace Trends in Law Firms, white paper from Herman Miller, Inc. (2003).
7. Gail Repsher Emery, Changes in Modern Office Mirror the Past (Washington
Technology, 2001).
19
Legal Counsel
SCOTT M. MCELHANEY AND MICHAEL W. MALAKOFF


A person who represents himself has a fool for a client.
”Anonymous




This chapter covers the selection and retention of legal advisors for profes-
sional services firms. As with most businesses, professional services firms re-
quire good legal advice”whether for client disputes, incorporation, mergers
and acquisitions, or simple contract advice.


Why This Topic Is Important
Professional services firms cover a variety of industries, from real estate to
medical practices to management consulting. While such firms may not need
counsel on a day-to-day basis, inevitably the time comes when legal advice is
required, or at least helpful. Using the right lawyer for the right situation in



Disclaimer: The material in this chapter has been prepared for informational pur-
poses only. The chapter is not offered as legal advice on any matter and should not
be used as a substitute for seeking professional advice from a competent attorney in
your jurisdiction for your particular problem. Although we have attempted to be ac-
curate, we do not guarantee that the information in this chapter is correct, com-
plete, or up to date. The laws of different jurisdictions may be entirely different
from what is described in this chapter. The authors will not be responsible for any
action or failure to act in reliance on the information in this chapter. In addition,
this information is not intended to create, and receipt of it does not constitute, an
attorney-client relationship.

495
496 The Back Office: Efficient Firm Operations

the right way can help professional services providers run their businesses
more effectively and see legal services as a benefit to their businesses rather
than a painful, distracting cost. Thus, we explain in this chapter: (1) the most
common times (but not all the times) that the firm should solicit legal advice,
(2) how to select, and organize legal service providers, and (3) how to man-
age the relationship with your legal service providers.


When the Firm Needs a Lawyer
An important aspect of managing a professional services firm is successfully
navigating your way through the legal environment. When used properly, a
qualified lawyer can help you take advantage of the opportunities the legal
system provides, thereby helping you run your firm more effectively, as well
as minimizing the difficulties that present themselves from time to time. In
this section, we examine some of the situations in which the firm may want
to consult a lawyer. This is, of course, not a comprehensive list. Rather, we
intend to point out some of the more frequent situations in which a lawyer
can be useful. Naturally, a given firm may have many other major needs, de-
pending on the nature of the business and the specifics of the organization,
size, geography and other factors.

Organizing Your Firm
Organizing your business is a challenging task for which a lawyer can be very
valuable. The considerations when establishing and organizing your legal en-
tity are complex. As discussed in Chapter 3, the firm™s management will be
presented with a variety of entity selections to evaluate”corporations, part-
nerships, limited liability companies, and so on”each with advantages and
disadvantages that must be considered. The choices you make during the for-
mation of your entity will have an impact on firm and partner tax liabilities,
personal liability, and other important issues. The specifics of taxes, liability
limits, and other relevant issues, however, are complex and vary by legal ju-
risdiction. Working with a lawyer can help you choose the best entity for
your specific set of circumstances.
Once you have chosen your entity type, you will need to work through a va-
riety of additional requirements associated with the set up of your entity.
These diverse requirements range from bylaws to shareholder agreements to
setting up the company checking account to a host of other checklist items.
Again, working with a lawyer who helps establish new businesses frequently
can help a new firm through the many complex issues associated with getting
set up. The lawyers will likely have checklists and standard operating prac-
tices that may help avoid large omissions during the process and promote the
efficient use of your time and money.
497
Legal Counsel

Employment Law Matters
In addition to seeking assistance in organizing your business, it is usually use-
ful and, in the long run, extremely cost effective, to consult a lawyer who can
guide you through the typical maze of rules and regulations that govern the
relationship between your business and the people who work for it. This part
of the chapter surveys some of the major topics and considerations you may
want to discuss with a lawyer.

INDEPENDENT CONTRACTORS VERSUS EMPLOYEES. If you need other
people to help you in your business, one of the first questions you should ad-
dress is whether it is more appropriate for you to hire employees or indepen-

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