As Freshfields plots two more low-cost offices, what's drawing firms to set up multiple support centres?
With the magic circle firm planning US and Asian support offices, why do firms need centres in more than one time zone?
June 21, 2015 at 07:03 PM
4 minute read
Say what you will about Freshfields Bruckhaus Deringer in 2015, but you can hardly fault its ambition. Not content with opening just one low-cost support hub in Manchester this summer, the magic circle firm now has its eyes set on another two service centres: one in the US and one in the Asia- Pacific region.
While many firms have 'nearshored' over the last couple of years, few have set up multiple support offices that span different time zones. (Latham and Watkin's plans for Manchester, adding to an existing Los Angeles hub, and Baker and McKenzie's decision to set up shop in Belfast after nearly 15 years using a Manilla back office are notable exceptions.)
Clifford Chance (CC) put adding capability in other regions, on top of its Delhi shared service centre, firmly on the table as part of consultations on a new strategy earlier this year. Having also previously discussed the possibility of opening another base adding to its Belfast office, Herbert Smith Freehills recently brought together that Northern Ireland service centre with its Australian information logistics team and its London-based disputes data management service in an attempt to create a more global 'alternative legal services' business.
Nearshoring has been debated on an almost interminable basis over the last few years, but does having support centres in multiple jurisdictions represent the next evolution in the rush towards low-cost service provision?
The reasons for running a multi-centre model are becoming more compelling. As global law firms get ever larger, spreading the support capacity to adequately cater for all jurisdictions has started moving up the agenda.
For Latham, the firm decided it needed to service increasing demand for support services from its European offices in a more effective way than having staff in the US work unsavoury hours.
"Rather than employing people on the graveyard shift, we can find good people in the European time zone to work proper business hours over here," said 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 difference is not the only factor in setting up a support service that straddles jurisdictions though. When it comes to CC's view to set up more low-cost bases, a compelling factor is wanting to limit the language barriers to work. Regardless of location, support staff need to be able to communicate with fee earners across Asia, Africa and Europe, which might not be so easy when the majority of their Delhi staff will be English speakers.
"It's not just timezones," says Jason Marty, global director of operations at Baker & McKenzie, justifying the firm's decision to have more than one support centre. "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 for the best service and financial outcomes. Having more options for these decisions is a benefit for us and our clients."
So why have few others looked to follow in similar directions until now then? "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," points out Marty.
With Freshfields' Manchester office still yet to open, it does seem that launching not just one but potentially three new support centres is a leap into the unknown for the firm.
It's certainly not without its risks – Bakers for instance expects its Belfast office to cost it £8m a year by 2017, a not insignificant sum of money. In the US in particular, a Freshfields legal and business service centre isn't likely to come cheap.
One UK based support centre head said they were "surprised" at Freshfields' decision to target the States because they "couldn't see where the cost saving is there."
"Freshfields do know what they're doing," they added. "There's clearly a plan there but I can't see why you would need three back offices…It must be something to do with how their systems work."
With the firm yet to reveal a timescale, staffing levels or a precise location for the two new business and legal support hubs, the success of the venture will likely be down to the detail to come. Nonetheless, chances are other firms will look to follow where Freshfields are leading.
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