As Freshfields mulls more low-cost bases, why are firms increasingly keen to set up multiple hubs?
Providing inexpensive support to all jurisdictions and timezones is moving up the agenda for law firms
June 21, 2015 at 07:04 PM
4 minute read
Freshfields Bruckhaus Deringer's plans to add a second and third low-cost support hub to its new Manchester base are nothing if not ambitious.
Before Manchester has even opened for business the firm this week confirmed it is already planning to create two further support centres in the US and Asia-Pacific.
Numerous firms have set up nearshoring centres for support functions in recent years, but the number with multiple offices spanning different timezones is still relatively small, making Freshfields' decision from the outset to open in a trio of locations a brave move.
The list is growing though, and now includes Latham & Watkins, whose new Manchester base comes on top of an existing hub in Los Angeles; Baker & McKenzie, which recently opened in Belfast after nearly 15 years in Manila; White & Case, which has a legal support centre in Tampa and back-office support in Manila; and Linklaters, which opened in Warsaw last year, adding to its long-established centre in Colchester.
Clifford Chance (CC) meanwhile has put finding at least one more base to add to its Delhi shared service centre firmly on the table as part of its new strategy, with Herbert Smith Freehills also looking to build on its Belfast centre elsewhere.
The reasons for adopting a multi-centre model are compelling, according to partners. As global law firms get ever larger, providing low-cost support for all jurisdictions and timezones is moving up the agenda.
"Rather than employing people on the graveyard shift, we can find good people in the European timezone to work proper business hours over here," says Rod Harrington, Latham's chief administrative officer for Europe and the Middle East. "We worked hard to provide coverage by employing people in the middle of the night, but that's not an efficient or sustainable model. People who work those late shifts don't hang around for long."
Time differences are not the only factors in setting up a support service that straddles jurisdictions though. Language skills also play a large part, with CC, for example, keen to fill this gap in support.
Jason Marty, global director of operations at Bakers, explains the firm's decision to have more than one support centre: "It's not just timezones. We are a global firm and like our global clients we need to be focused on the right people doing the right
work in the right places [to achieve] the best service and financial outcomes."
So why have more firms not gone down this route before? "Larger firms generally still have a headquarters, most of their revenue comes from a small number of countries and smaller competitors probably just don't need multiple centres," Marty points out.
The investment costs relating to each centre mean there are risks involved. Bakers, for instance, expects its Belfast office to cost £8m a year to run by 2017, a not insignificant sum of money.
Certainly, in the US, where wages and rents are often higher than in developing nations, a service centre is not likely to come cheap. Particularly as, unlike the handful of firms listed above with multiple bases, Freshfields is planning to offer both legal and back-office support at all three proposed sites.
One UK-based support centre head says they are surprised at Freshfields' decision to target the US in particular because they "can't see where the cost saving is".
With the firm yet to reveal a timescale, staffing levels or precise locations for the two new hubs, the success of the venture will probably come down to the details. Regardless of success, it is increasingly likely that other firms will follow Freshfields' move as the market becomes ever-more global.
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