Law firms look outside City to meet client cost expectations
It is a sign of the times that the majority of City partners can’t understand the fuss around Ashurst’s new low-cost base in Scotland.
The top-15 UK firm announced in mid-June that it is to create a 150-strong unit in Glasgow, headed by former Dundas & Wilson partner Michael Polson, which will cover back office support and volume legal work, initially document review in litigation and corporate.
The move echoes earlier initiatives, launched to more fanfare, by Herbert Smith Freehills (HSF) (then just Herbert Smith) and Allen & Overy (A&O), which set up volume support operations in Belfast in 2011 and 2012 respectively as a means of lowering client costs.
Much like those two firms, Ashurst is being supported by a local grant, in this case worth up to £2.4m from Scottish Enterprise and based on the firm employing 300 staff in Scotland within the next five years.
Ashurst has put 350 London support staff at risk of redundancy, entering into a consultation that will take 45 days, with London staff understood to have been offered the option of moving to Glasgow. However, HSF, which has focused far less on back office support and more on providing clients with an alternative resource for volume litigation work, made no redundancies and has grown through local hires and organic growth.
Ashurst managing partner James Collis commented: ‘The shape of the legal services market is changing and clients want their law firms to take responsibility for efficient sourcing of services without compromising on quality. We believe that our new venture in Scotland will be of great benefit to the firm and its clients. We have been looking at this for some time and, unfortunately, this has also required us to make some difficult decisions in relation to our business support services. Ultimately, however, we need to have the right people, with the right skills, doing the right work in the right location.’
The new office will see the creation of a new title of legal analyst to handle legal work currently undertaken by paralegals, trainees and junior associates. The new unit is expected to comprise around 120 support staff and 30 legal analysts.
The Glasgow office, which will not offer Scots law capability or compete with Scots law firms, will initially focus on supporting the City firms’ work in London before moving to support the global network.
According to Simmons & Simmons managing partner Jeremy Hoyland, most firms are struggling with the same cost challenges and exploring different routes to be more cost-effective. In 2012 his firm opened a Bristol office, which supports London on transactions and provides better value to the client by operating from a lower cost base.
‘Clients that are international don’t care whether lawyers are based in London, so we can pitch for work more aggressively while saving costs and adding greater efficiency and value,’ Hoyland said.
Libby Jackson, director at HSF’s Belfast office, said: ‘Ashurst’s recent announcement is part of a continuing trend. Global law firms are seeking to deliver legal services ever more efficiently as well as to manage their costs closely, all with the ultimate goal of becoming more keenly competitive in a demanding global marketplace.’