I wasn’t surprised to read this week that in London law firms are paying an average rent per fee earner of £20,200. CBRE, the world’s largest real estate services firm, published a well-researched and detailed report that looked at the trends in law firm office costs in London as well as the regions.

In 2015, the average rent per fee earner in London was £21,600. As you might expect, the costs in the regions are lower, with the average rent per fee earner outside London being £9,056.  Of course, these are purely rental costs and don’t take account of other office overheads such as rates, and service charges. These additional costs will typically add around 30% to the basic rental cost.

So, a London firm with say 20 lawyers may have a rent cost of around £400,000 and a total property overhead of more than £550,000 each year. Even in the regions, a similarly sized firm is likely to have a property overhead of around £250,000.  That’s a fixed cost which must be covered by fee income charged to the firm’s clients.

These figures haven’t changed dramatically since Ortolan Legal was founded six years ago. And the basics of law firm business are the same as pretty much any other service business:  if you want to stay in business you’ve got to charge at least as much as you spend!  When I was considering how best to structure a 21^st Century law firm, it seemed to me that a large fixed office cost overhead was not an essential spend for us.  It’s certainly nice to have (and I used to work in a large City practice so have enjoyed the comfort, convenience and prestige of international law firm offices), but I didn’t think our clients would mind if we weren’t based in a flagship city centre office building.  In fact, I thought they would mind even less when we were able to reflect that eliminated overhead cost in much lower fees.  I knew there would be plenty of serviced office space available wherever and whenever we needed to have in-person meetings.  That represents a totally variable and in reality, negligible, cost of doing business.

It’s a model which has worked well for Ortolan Legal. We’re a highly flexible, low-cost business and our clients appreciate these savings which are reflected in our market-leading fee structure.  We can invest wisely in high quality and experienced solicitors because in the end, that is what our clients want to pay for: expert advice, not unnecessary overheads.