Subleasing for Lawyers: Managing the Relationship

In my last post, I shared some of the strategies that have worked for me in choosing attorney subtenants, and in establishing my relationship with them. Today, I’ll give you a few suggestions for managing your relationship with your subtenants.

• It’s not a good idea to provide secretarial space or answer your subtenants’ phones, but if you do, make sure you charge for it. The same is true for office supplies. It’s smart to avoid providing office supplies for your subtenants, but if you do, you need to charge for the supplies they use.
• Another concern is allowing a subtenant to use your postage meter and reimburse you. I have found this to be a bad idea, because the arrangement forces you to keep track of what they use, and you end up: (a) being their banker; and (b) never getting reimbursed 100% of the postage that they use because people sometimes forget to mark down what they use. Instead, I have my subtenants use stamps.com.
• It’s smart to avoid providing staff support for your subtenants, but if you do, you’ll want to only do so sparingly to avoid it becoming a habit; and, of course, you’ll want to charge for the service. Depending on your firm’s salary and benefits structure, you will need to charge probably at least 20-33% above the staff member’s standard hourly rate to cover your true costs and put a little profit in your pocket. One important caveat:  if one of my subtenants ran into a serious problem, needed immediate support, and had no immediate ability to pay for it, I would provide the support and worry about getting paid later.
• Last, but not least, we treat our subtenants as though they were Members of the firm, which means we celebrate their birthdays (with a big cookie) and we include them in our periodic firm-paid lunches. One subtenant does not want us to celebrate his birthday, so we order a cookie anyway and then I put a memo in everyone’s chair, including the subtenant’s, that says we are not celebrating his birthday… the cookie is for no good reason… and to not say “Happy Birthday” to the subtenant because we are honoring his desire not to celebrate his birthday. He takes in good spirits, because he knows we care about him.

What happens if you need to sever ties with a subtenant?
I have only asked two subtenants to leave for lack of payment, and those guys simply fell on hard times. We parted amicably. In one case, the attorney covered probate hearings as a way to repay us. We still use him for probate hearings, but we now pay him to cover the hearings. In the other case, we accepted his offer to keep his office furniture in satisfaction of his debt. We still occasionally permit both attorneys to use the office for the execution of a will for their clients, provided they bring us cookies as a fee for the conference room. The point is, be nice to the folks that fall on hard times and leave, because they are referral sources for you. For example, one of our former subtenants sent us a probate worth $5,000.

About the author: Stephen A. Mendel is a trial, real estate, business, and estate planning/probate attorney in the Houston, Texas area. Mr. Mendel has over thirty-four (34) years of business experience, over twenty-three (23) years of legal experience, and has maintained his own private law practice for the past sixteen (16) years. Mr. Mendel is a also a registered architect, licensed real estate broker, AV rated by Martindale Hubbell, was recognized in 2010 as one of Houston’s Top 100 Professionals, and was recognized as 2011 Boss of the Year by the Houston Association of Legal Professionals. Mr. Mendel was a fulltime faculty member for five (5) years with the University of Houston, Central Campus, where he taught construction related courses while he attended law school. Mr. Mendel is a contributing author of four books:  (1) Strictly Business; (2) Love, Money & Control; (3) Total Wealth Management; and (4) Guiding Those Left Behind in Texas (a book on probate). Mr. Mendel publishes his own blog for his estate planning clients. www.mendaellawfirm.com/blog. In his “spare” time, Mr. Mendel enjoys jogging with his wife, snow skiing and attending sporting events with his son, and cycling.

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