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In the complex world of lease management, operating expenses represent a significant portion of a law firm’s real estate budget. Given their impact on a firm’s financial health, the review of operating expense statements through a lease audit becomes not just beneficial but essential. National Lease Advisors stands at the forefront of this critical lease audit task, providing expert analysis and significant cost recoveries for law firms across the nation.

Lease Audit Recovery Success Stories for Law Firms

Our lease audit expertise has led to substantial recoveries for our clients, uncovering errors and overcharges that, once corrected, translate into significant cost savings. Below are a few select recoveries for our law firm clients.

Example 1 – $150,000 Recovery

  • Background: The building where our client’s office is located had a high rate of vacant space and had just lost another significant tenant. Upon examining the reconciliation invoice, we discovered that the landlord had incorrectly calculated the operating expenses, thereby inflating the amount our client owed. Specifically, the landlord had fully ‘grossed-up’ certain operational costs such as security, janitorial services, and utilities. The landlord failed to acknowledge that there would still be a fixed component to these costs that exists irrespective of the building’s occupancy levels. According to standard industry and lease norms, these expenses should only be partially grossed-up based on actual occupancy rates.
  • Resolution: We initiated a dialogue with the landlord to clarify our observations and to correct the improper gross-up calculations. After a series of respectful yet assertive communications, the landlord agreed to adjust the reconciliation based on the correct method for grossing up expenses.

Example 2 – $800,000 Recovery

  • Background: As part of our standard lease administration onboarding process, we undertook a detailed examination of the law firm’s lease agreements and billing history. It was during this audit that we discovered a significant discrepancy. The law firm had been billed for Common Area Maintenance (CAM) costs on a triple net (NNN) basis, while their lease agreement specified a base year CAM structure. The billing error was also supported by the buildings rental rate being well below what the client was paying.
  • Resolution: Armed with the necessary evidence, we opened a dialogue with the client and landlord to rectify this error. This required careful negotiation, as we had to balance the need for a swift resolution with maintaining the law firm’s relationship with their landlord.

Example 3: $90,000 Recovery

  • Background: The mistake identified was a miscalculation of the client’s base year. The landlord was utilizing estimated property taxes for a newly constructed building as the base year expense figure. When the county’s assessments were later finalized, the actual property taxes were significantly higher than the landlord’s original estimate, which should have resulted in a higher base year figure.
  • Resolution: NLA compared the property tax expenses in the CAM reconciliation with public property tax records to identify the miscalculation. NLA presented the findings to the landlord who made a quick correction and credited the overcharged amount to the law firm.

The Bottom Line

In today’s competitive market, law firms must judiciously manage every aspect of their operations, including real estate expenses. The review of operating expense statements is a critical, yet often overlooked, component of lease administration. National Lease Advisors offers the expertise and dedication necessary to ensure that law firms are not paying more than they should, turning potential overcharges into recovered funds that can significantly impact a firm’s bottom line.

For law firms looking to secure their financial future and ensure the accuracy of their operating expenses, partnering with National Lease Advisors is not just a choice but a strategic decision towards sustainable growth and financial health.