Subletting Office Space? Why Law Firms Don’t Make Good Landlords

By Stephen Furnari - November 10, 2016
Subletting Office Space? Why Law Firms Don’t Make Good Landlords

Sublet office space rented from bigger firms can be a good value, but the law firms that are most interested in collecting rent don’t make for good landlords.

Bigger law firms often sublet office space to small firm attorneys. This is especially true in areas where it’s cost prohibitive for small firms to acquire their own office lease.

By subletting an empty office from another law firm, a small firm attorney can leverage someone else’s long-term financial risk and up-front investment by paying a small premium in rent.

It’s what makes subleased office space the most common office option for solo and small firm attorneys.

Sublet arrangements can be very productive and last for years. Others can be a nightmare.

We’ve found that law firms make terrible landlords, and here’s why:

Law firms are in the business of selling legal services, not being a landlord.

It’s a hassle to sublease office space to lawyers, especially when your primary business is doing something else.

It takes a considerable amount of time to market and show empty office space, negotiate sublease agreements, manage subtenants, collect rent and deal with subtenants who don’t pay.

An Insider's Guide: How to Rent the Perfect Law Office

Law firms make more money billing clients, not managing subtenants.

In light of an attorney’s considerable billable rate, time wasted dealing with a subtenant will greatly exceed the additional revenue generated from the sublet office space. For a firm with a healthy practice, it’s can be more profitable for them to let an unused office stay empty versus taking the time to sublet it.

For this reason, when law firms sublet office space, they do so reluctantly.

To ensure a successful sublet experience, it’s best if you really understand a firm’s true motivations behind their decision to sublet extra offices.

Firms that sublet extra office space frequently have financial problems.

If a law firm is willing to waste valuable billable time to sublease their available office space, there’s a good chance the firm is in a precarious financial position. Either they took on more space than they need and require the income to offset their rent, or they contracted their practice significantly, which resulted in empty office space.

Things often get worse for firms in a bad financial situation, not better. Before you move into a law office sublet, you should do your due diligence about the sublessor firm.

Renting from a firm in financial peril is dangerous. One day, you may show up to the office ready to prep for trial, only to find an eviction notice and very little time to find a new office.

Don’t expect great services in a law office sublet.

Of all the office options for attorneys, when it comes to services, sublet office space falls somewhere in between leased office space and executive suites.

In leased office space, you will get whatever services you’re willing to pay for. Internet, guest reception, conference room availability, reception furnishings, telephone service, office management will all be controlled by you.

On the other end of the spectrum, an executive suite provides all these services for you, either as part of your package or for a small extra fee. Executive suites are in the business of renting office space, and for the most part, will have high-end, reliable services.

In subleased office space, the sublessor law firm typically provides services. In which case, you will often be stuck with whatever services they choose. And if they are unsatisfactory, there may be little you can do about it.

The two most common complaints about sublet law office space services.

The two complaints we hear about most often are reception and internet services.

Chances are in sublet office space your guests will be greeted by the sublessor’s receptionist. If that person is rude to your clients, dresses inappropriately or shows up to work drunk (and it is tolerated by the sublessor), your only recourse may be to move.

As for internet, it’s not uncommon for law firms to have insufficient bandwidth causing the internet to be painfully slow. Your only recourse may be to install your own Internet line at a substantial additional cost.

Being a landlord is a full-time gig. The law firm that offers office space to lawyers must manage landlord responsibilities, in addition to their full-time legal practice.

Which one do you think gets priority?

Landlords of sublet office space make up wacky rules (or have no rules at all).

One of the nice things about law office rentals leased directly from a commercial landlord is that you get to make up your own rules. And sublessor firms do just that.

Even if you rent an office from an executive office center, operators set common-sense rules based on industry best practices that are reasonably consistent from center operator to center operator.

These rules help to keep the center a civilized place to work.

In a law firm sublet, it’s not uncommon to have to deal with quirky rules set by the sublessor. Things we’ve seen, for example:

  • You must have cherry wood furnishings purchased from Room and Board.
  • The cost of paper is split between all lawyers whether you use the copy machine or not.
  • You can use the conference room anytime you want, unless your landlord’s firm needs it; then you’re on your own.

Even worse than quirky rules, some sublet office spaces have no rules at all. In this case, you are at the mercy of whatever decorum is tolerated by the sublessor firm. This may result in a smorgasbord of annoying and disruptive behavior from your suitemates.

Sublessor firms can be fickle.

If a sublet office space does work out well, chances are the sublessor’s firm is also doing well. One of the biggest risks with subletting office space from another firm is being asked to vacate as soon as sublessor’s business picks up enough to fill your office with their own people.

Sublet office space can offer a solo law practice or small law firm with a proper office at a good value. That is, as long as you do your homework and understand exactly what you are getting yourself into.

An Insider's Guide: How to Rent the Perfect Law Office

About Stephen Furnari

Stephen Furnari is a self-employed corporate attorney and the founder of Law Firm Suites, the operator of coworking spaces for law firms. Through Law Firm Suites, Furnari has helped hundreds of attorneys launch and grow successful law practices. He is the author of several eBooks, including “7 Deadly Mistakes that Prevent Law Practice Success” and “An Insider’s Guide to Renting the Perfect Law Office”. Stephen has been featured in the ABA Journal, Entrepreneur, New York Daily News and Crain’s New York. Connect with Stephen on Twitter (@stephenfurnari).

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