Hogan Lovells' Birmingham base shows near-shoring trend is gathering pace
On the face of things, it's easy to lump all of the latest law firm near-shoring ventures together, putting Hogan Lovells' planned Birmingham launch alongside previous moves by Allen & Overy (A&O) and Herbert Smith Freehills into Belfast, and Ashurst into Glasgow. But there are clear differences in how firms use these low-cost bases. And, in contrast to Ashurst and A&O, where the overwhelming majority of the roles are business services, Hogan Lovells' move is focusing squarely on legal positions. Inevitable perhaps, given it announced plans last month to launch a business services centre in Johannesburg, following its merger with South African firm Routledge Modise in December.
March 06, 2014 at 06:23 AM
4 minute read
On the face of things, it's easy to lump all of the latest law firm near-shoring ventures together, putting Hogan Lovells' planned Birmingham launch alongside previous moves by Allen & Overy (A&O) and Herbert Smith Freehills into Belfast, and Ashurst into Glasgow.
But there are clear differences in how firms use these low-cost bases. And, in contrast to Ashurst and A&O, where the overwhelming majority of the roles are business services, Hogan Lovells' move is focusing squarely on legal positions. Inevitable perhaps, given it announced plans last month to launch a business services centre in Johannesburg, following its merger with South African firm Routledge Modise in December.
"It is primarily a qualified lawyer play," says Susan Bright, Hogan Lovells' managing partner for the UK and Africa. "Where some are concentrating on business support services moving away from London, I am focusing on the way in which we deliver our legal services to clients."
In fact, the Birmingham base is most likely to resemble a hybrid of Herbert Smith's disputes-focused Belfast outpost and Simmons & Simmons' Bristol office, though the latter is being used to support what the firm describes as high-end work generated in London.
All of which shows that there are many ways to skin a cat when it comes to moving the more commoditised work a law firm does away from cash-sapping London.
Birmingham may seem an unusual choice of location for Hogan Lovells, given that there are apparently cheaper alternatives available.
"The two drivers are employment costs and real estate costs," explains Bright. "I thought these would reduce the further away from London we went but that proved not to be the case."
The firm looked at 11 locations around the UK before opting for Birmingham. Although it has yet to find a pied-a-terre in the second city, it has already placed former private equity head Alan Greenough in charge of the operation and begun the search for an initial 20 lawyers to staff it, with the base expected to open in September.
All of the lawyers will be hired locally, with Bright pointing out that Hogan Lovells wanted to go somewhere where the talent pool was sufficiently large to find both the quality and quantity of fee earners required.
And while the Birmingham base is certainly designed to save money, Bright says it is also about winning new business, but from London not Birmingham. The expectation is that giving clients the option of using the low-cost centre will land the firm new panel appointments.
With the office initially expected to focus on corporate, commercial and real estate work, the firm says it will not just be clients in the lower-value latter category that will be most attracted to the offering.
In fact it insists that the centre will be just one of a number of ways the firm can do client work away from its more expensive City base. The firm will continue to use its 'Mexican wave' referral model for real estate work and will still refer work in other practice areas to other firms where appropriate.
As Bright explains: "There's a real demand from clients for us to be flexible."
What is certain is that as clients put ever-more pressure on firms to reduce their fees, it is unlikely that the run of firms moving parts of their business away from the City will come to an end.
"Clients are saying they want to see firms bringing forward alternative sourcing solutions," says Mike Polson, the head of Ashurst's low-cost support centre. Polson adds that he "would not be surprised" if every member of the top 30 UK firms was looking at implementing something similar.
The implication is that firms that sleep on their move to set up similar centres could find themselves competing for an ever-reducing pool of lawyers, and may even be forced to open away from their first choice location.
For more, see Hogan Lovells to open legal services centre in Birmingham.
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