Partners back moves to 'near-shore' to low cost regional markets, arguing that this option is more reliable than outsourcing, but respondents concede such moves send poor signals to support staff

Nearly 60% of partners see relocating support teams to lower-cost regional centres in the UK or Europe as an attractive option, with even greater numbers predicting an increase in the number of law firms embracing 'near-shoring'.

The results of Legal Week's latest Big Question survey show 59% of partners consider near-shoring to be either "very" or "considerably" attractive, with only 12% dismissing the concept altogether, claiming the saving is not worth the disruption.

When asked to what extent they thought large law firms would embrace the use of low-cost regional markets over the next five years, just under half (49%) said firms would embrace near-shoring or cheaper regional UK markets to a "considerable" extent, with a further 14% claiming firms would "very much" adopt it. Not a single respondent thought firms would not embrace it at all.

Slaughter and May practice partner Paul Olney said: "From our perspective we seek to be as responsive to clients as we can by looking at cost-saving measures on the particular work we do for them. We will work – and have worked – using legal process outsourcing (LPO) providers agreed with clients, but this is only one way of saving costs. We are continuing to review our LPO options, but we are not currently looking to outsource our own business support services."

The findings come in the wake of Allen & Overy (A&O) and Herbert Smith announcing ventures to offshore back-office and legal support functions to Belfast. Just under half of partners responding to the survey saw the moves as either "positive" or "very positive", with 29% saying they had mixed feelings. Around 22% were against initiatives like those of A&O and Herbert Smith.

Around a third of respondents agreed with A&O and Herbert Smith that Belfast is an attractive region for law firm near-shoring; however, the remainder dismissed the region as either only "a little" or "not at all" attractive.

Herbert Smith London litigation partner Ted Greeno said: "Belfast ticks a lot of boxes. There is a pool of really talented graduates in Northern Ireland, not enough legal work and, generally speaking, they prefer to stay in their home country. It is in the same timezone, relatively easy to get to and offers a significantly lower cost base. For all of the reasons that we have decided to go for this near-shoring option, I think we can expect others to follow suit in the next five years."

Despite some prominent law firms opting to send some support functions to cheaper regional or offshore locations, many respondents believe such ventures send out a negative signal about the value law firms place on their non-legal staff. Only 18% said it did not send out any negative signal, with just under half arguing the message was either "very" or "considerably" negative.

Hogan Lovells litigation, arbitration and employment head Patrick Sherrington said: "It is unfortunate that these decisions often involve having to uproot people from their jobs, but like most commercial businesses it is important to operate as efficiently and cost-effectively as possible. This is the sort of thing that should be on the agenda at some level for all major law firms."

The survey found that respondents generally felt that wholly-owned offshore divisions offered law firms and clients more reliability than LPO. Just under half said wholly-owned ventures provided firms with a lot more certainty, 20% said "a little", 19% said "not much" and 12% said that LPO providers were more reliable.

Partners on near-shoring

  • 63% believe law firms will embrace lower-cost regional centres over next five years
  • 49% think offshoring is considerably more reliable than legal process outsourcing
  • 49% feel broadly positive about offshoring
  • 47% feel offshoring sends out negative signals to non-legal staff

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