A recent study from the Thomson Reuters Solo and Small Law Firm group shows that Cost Control and Expense Growth is one of the top four concerns of solo and small Firm attorneys. And certainly, that makes sense. Without the economies of size created in a larger firm, every little piece adds up. Some attorneys address this challenge by banding together with others to share office space. While the benefits to this arrangement can be plentiful—lower expenses, shared administrative staff, and a built-in sounding board—there are several considerations to be addressed before signing that lease. A recent Monthly Mingle call took a look at those issues.
- Location, location, location. While the advent of e-filing has made courthouse proximity less of a concern, and it seems like less and less clients want to actually meet face-to-face, you should still give careful thought to your office’s geography. Is your space accessible? Easy to find? Is there enough parking? Is there room for expansion? You also want to ensure your signage is easy for people to see. You don’t want clients to find a new lawyer simply because they could not easily find or get to your office.
- Know thy neighbor. Several of the Monthly Mingle call-ins had a pretty ideal setup for their office share; they’d known their cohort for years and trusted them to a fault. Even enough to share the space on nothing more than a handshake—if litigators are willing to pass on the paperwork, you know that trust is real! But what if you aren’t so lucky? What if you have to go through the law practice version of finding a roommate on Craigslist? You can avoid this potential nightmare by doing your due diligence. Check your potential suitemate’s reputation in the community, social media, and financial references. If you’d run the check on a potential romantic partner or employee, why wouldn’t you do the same for the person sharing half your bills?
- Get it in writing. Once you’ve decided on your new suitemate, it may be tempting to skip right to the fun part of opening your doors. Resist! In any business relationship, it is crucial to plan for the divorce before the honeymoon—that’s why operating and buy/sell agreements exist. This step is even more important if you are just getting to know your co-tenant. Address insurance for the premises, define exactly which space is shared and which is private, even figure out who’s responsible for emptying the dishwasher. The more that is hammered out up front, the less likely a minor disagreement is to blow up the whole arrangement.
- Keep it confidential. You would never go into another law office and read their mail or answer their phones. But when sharing an office space, it can be easy to inadvertently look at the other office’s inbox or receive a misdirected call. You must take steps to prevent this. Avoid sharing staff with access to confidential materials, like paralegals. File cabinets should be locked. Computers, servers, scanners and copiers should not be networked together and should be password protected. Watch what you say in the shared physical spaces—take that call behind closed doors, rather than while you’re walking to the coffee pot. For further guidance, take a look at your state’s interpretation of Model Rule 1.6 obligations.
- Appearance is everything. When sharing office space with another legal practice, it is imperative that some thought is given to how you represent yourselves. ABA Model Rule of Professional Conduct 7.5(d) prohibits lawyers from holding themselves out as partners when they are not. There is also a doctrine called “partnership by estoppel” that would allow third parties, in certain circumstances, to hold lawyers who share space liable for their co-tenant’s torts. Read your state bar’s guidance on the rule and be sure your clients (and your suitemate’s clients) understand that you are not actually partners. Some easy ways to make this apparent are to:
- Use separate letterhead and business cards
- List firms separately on building directory
- Include language to that effect in your engagement agreements; and
- Maintain separate phone lines.
Keep these guidelines in mind if you’re thinking of finding someone to share overhead expenses. Done right, an office share’s benefits can greatly outweigh its drawbacks by reducing expenses and expanding your resources.