My son recently announced that the small law firm website design company he works for will be giving up their trendy office space in Vancouver’s Gas Town and permanently moving to a remote work environment. He was ecstatic, as he LOVES working from home. But my husband (a school teacher near retirement) insists that most workers prefer the sociability of a traditional face-to-face workplace and that despite expert predictions, remote work won’t be a serious thing after the pandemic. It made me wonder where law firms might fall on the scale. (I learned that the answer has significant marketing, HR, technology, firm strategy and administration implications).
To consider this issue, I listened to a Freakanomics podcast on working from home. If you want to hear the full podcast it’s episode # 464.
The podcast began with Morris Davis, an economist with the Business School at Rutgers University. Davis described his own forced work from home experiment as a challenging one. He prefers to teach in person, where he can gauge student understanding by body language and other clues that are hard to see through a computer.
Davis admitted that everyone’s work-from-home experience can differ. But he’s convinced workers are less productive there and referred to it as “shirking from home”. Indeed, Labour Economist and former Freakanomics guest Nicholas Bloom said, “The three great enemies of working from home are the fridge, the bed and the television.” Yet in a study involving the company “Expedia” in the US, Bloom found that working from home actually raised productivity by a substantial 13%. The podcast mentions at least one other study that noted an increase in productivity for remote workers, but many studies have begrudgingly admitted that overall, productivity tends to lower through remote work. (My own view is that most surveys to date consider opportunistic or forced work-from-home conditions. Productivity can increase with greater planning. See more on this at the end of this blog).
When asked, workers say one of the greatest benefits in working from home is that there is no commute. A recent Canadian study found that Vancouverites spend between 27-44 minutes per day commuting…that equates to 8.7 days of driving or 14.2 days of public transit. (In my mind, this completely justifies the new car I just bought, and makes me feel for anyone who has to spend 14 days a year of their life on a bus!) The study found that overall, 40% of Canadian workers stayed home due to Covid, saving a collective 1.37 billion hours of commuting time as a result. A US survey found that on average, Americans spend 54 minutes a day commuting. How did people use this saved time? 35% of it was spent working, and 60% was spent on non-leisure activity such as housecleaning and childcare.
Davis and colleagues Andra Ghent and Jesse Gregory looked at this further with a study that gauged productivity trends in working from home during the pandemic. Their focus was on “high-skill workers” – the people who can do the type of work that can be done at home or in an office. Their paper argues that working from home is always less productive than working in an office. But they did find that work-from-home productivity has significantly improved over the course of the pandemic. How much? By as high as 46%, and largely due to better applications of existing technology. (I would add that kids returning to school may play a big role in increased at-home productivity, as well as just getting used the to rhythm of working from home).
Davis suggests, “My co-authors and I – and I think many people – are now viewing the technology that has enabled us to work from home almost as important a revolution as, say, electricity. We think it’s going to permanently change the landscape of where we work, how we value housing, how we think about our commutes.”
It was suggested that these technology advances include the creation of more stable computers in the early 90’s, the Netscape IPO which led to greater exploration of the world wide web, the creation of email, smartphones, high-speed internet, cloud computing, and video-conferencing (from the desktop). Many of us can have a miniature and fully functioning office in our homes, and can still make a cup of coffee, throw in a load of laundry, or go for a walk when we need to clear our head. This makes for happy, productive workers.
So, you’re a law firm Managing Partner with 65 employees working from home. Productivity is good, although not as good as when they are in the office. But you’re maintaining a large office space in the downtown core of a major Canadian city. At some point, you have to balance that slightly lower level of productivity with the cost of your lease. Davis admits that’s a calculation many employers are dealing with right now. How much space do we actually need, and where does it need to be? “…will a firm be willing to have a large office for one person that’s only occupied two days a week? If you’re going to have all those offices that are only half-occupied, are you really going to waste all that money?” The answer seems to be “no”. 15% of office space in Manhattan is unrented – that’s the highest level in nearly two decades. And the Real Estate Board of New York doesn’t think this is a blip, so they are lobbying the city to allow for more office towers to be converted into residences.
Back here in Vancouver, I know of at least one law firm that has gone completely virtual in the past year. There will be more. Others are seriously considering reducing their space in expensive city office towers and moving to smaller premises where individuals work part from home, and share office space when they work from the firm. Still others are looking at reducing their downtown office space and adding smaller satellite offices further out of the city. This is helping with recruiting as the pandemic has caused many professionals to move into the suburbs where they can get more house for their dollar. And that’s important because workers need more affordable, bigger homes to accommodate a home office or two.
The podcast (broadcast June 2, 2021) advised that 50% of US workers are still virtual (at least part of the time), down from 70% one year ago. Where will it settle? The podcast referenced a new study that estimates 20% of full work days will be done from home in the future. A study done earlier last year in the US suggested that number would be closer to 30%. Davis lives in a suburb of Manhattan where all of his neighbors tell him they will never commute five days a week ever again. They might do one or two days…but not five.
If this is going to be the new reality, how do we effectively manage it?
Raj Choudhury is the Lumry Family Associate Professor at the Harvard Business School who researches the future of work or specifically, “work from anywhere”. Work from anywhere covers working from an office, a shared workspace, or from home. But the emphasis is on working from where you want to live, not where the company has an office. The pandemic has provided a wonderful environment in which to study remote work with a live example, rather than a theoretical one.
The main issues with a distributed workforce tend to be around managing communication, coordination, and ensuring the team feels socialized and part of the same culture. On this last point, in the past year Choudhury ran an experiment around the concept of virtual water coolers which created random interactions in the workplace between senior managers and new employees/interns. This increased performance and the chances of a full-time job offer, and Choudhury estimated these interactions were more successful than the live water cooler concept. He cited an MIT research from the 70’s that discovered water coolers only help with interaction of those in the immediate area. If there is a floor between you, forget it. Virtual water coolers aren’t at all limited by physical location, so interaction can be broader and more purposeful…and more successful.
He also referenced a study that demonstrated the positive impact of face-to-face interactions so he’s not suggesting that we all move to 100% remote work. “I think face-to-face is here to stay, as is remote work. The equilibrium is to find ways to facilitate face-to-face within the remote-work model.”
So, what does this mean for law firms? I believe there are five implications we need to consider carefully:
- Remote working implementation: Many law firms are looking at permanent (partial) remote work environments going forwrad. This means allowing lawyers and staff to work from their home office at least part of the time. Thanks to forced learning, we are more familiar and comfortable with effective communication and collaboration through Zoom/Teams, email and phone than ever before. So are our clients. Under those conditions, it becomes less material if some of us work remotely for part of the time. Partial remote work has implications for policies and procedures, technology, and support structures (like staff). These need to be thought through carefully for logistical sense, fairness, and efficiency.
- Office size/location: My observation, as a law firm strategist but also as someone helping to buy and sell firms, is that lawyers/staff and clients want to stay closer to home. We want to go out to restaurants and the movies again; we don’t want to have to face a two-hour round trip in rush hour and $25 parking fee just to see our lawyer. And we certainly don’t want to spend 14 days per year on a bus for our job. And when we’re at the office for several days a week, we can probably share that space with someone else who works partially from home, which means that firms don’t need as much space overall. Also, that office doesn’t have to be in the most expensive real estate in town. One of my clients is in the process of shrinking their downtown Vancouver office space to satellite size, and increasing the size of their satellite offices. These satellites are located much closer to where more of their clients, lawyers and staff actually live, cutting down everyone’s commute time and lowering overall lease costs for the firm.
- Recruitment/training: As firms start to embrace these changes, we must admit that with a changed playing field, we need to recruit and train our talent differently. Our leaders need to learn how to coalesce teams that might be partially remote at any time. Our lawyers must learn how to use support staff and technology in the most productive, efficient ways. Firms must recruit and train support staff who are competent and productive whether they are in the office or working remotely, and regardless of where their lawyers are located on any given day.
- Technology: We would not be here except for the technological advances that are listed earlier in this article. They form the basic support structure of a distributed workforce. Maximize your use of technology. Spend money on upgrades. Learn to use your products to their fullest extent (which few firms actually do). Take the time and money to ensure you have back-up systems that will catch you quickly if anything goes wrong. Consider providing some funding to anyone in the firm who needs to upgrade their home office to be able to work more efficiently from home.
- Social fabric/culture: Think through the social/cultural implications for a partially remote workforce. Consider how the firm will continue to support its culture. Consider how training and mentoring will continue. Consider how to ensure all team members continue to feel part of a team. This will need carefully planning and action…if it is forever a wish list item and never actuated on an ongoing basis, the fabric of the firm will eventually fall apart. So, while this is the last time on this list, it’s also the most important.
Incidentally, the second things my son’s company did after it advised everyone they were going virtual was to hand out raises. Smart.