Hogan Lovells Restructures U.K. Office, Cuts Support Staff

Sept. 18, 2017, 10:17 PM

Hogan Lovells announced on Monday that it will transfer or remove 90 of its legal support and business administration jobs out of its office in London to branches of the firm in Johannesburg, South Africa and Birmingham, England.

Hogan Lovells is moving 78 business services jobs and 12 legal support roles from London to Johannesburg and Birmingham.

The business services groups affected include conflicts and compliance, finance, information technology, knowledge and research, marketing and business development and office services, according to Chris Hinze, global head of communications at Hogan Lovells. The legal teams affected include litigation support, professional support lawyers and trademark paralegals. Lawyers and other legal support teams are not affected.

Many of the jobs will likely be sourced locally, Hinze said: “This in’t outsourcing, it’s building up our capability with other local offices.”

The move comes as the latest example of Big Law firms’ changing relationship with their support staff.

Law firms have begun to realize that it is cheaper and more sensible to move operations that aren’t geographically pegged to big cities — where real estate is expensive — to smaller communities where the cost of living and office space is low.

These tasks generally include some legal services work and administrative tasks like accounts payable, payroll, time and billing systems.

It’s something that David Cruickshank, a law firm management consultant at Edge International, says is moving from “an initial trend to a potential necessity for firms that are based in expensive centers.”

In 2002, Orrick decided to move its support staff to Wheeling, W.V. There, they set up shop in an old kerosene lamp and tin products factory in the small rust belt city. At the time, Orrick staff in that office did administrative work like payroll, human resources and networking.

In the fifteen years since, the office has remained open, and it has more than tripled in size, Laura Saklad, chief operation officer of Orrick explained.

“Our initial investment of approximately $1.8 million was returned within the first 18 months,” she wrote in an email. The Wheeling office is also home to a 30-person analytics team, and their in-house case management software “Orrick CaseStream.”

As for Hogan Lovells, it opened a support office in Johannesburg in 2014. They chose the South African city because of the cost benefit, the English speaking population and the professional culture, said Hinze, the Hogan Lovells spokesperson. The Birmingham office handles some due diligence and discovery. That work is “expensive and not particularly cost effective work to do out of London,” he said.

Recently, Big Law firms have opened support offices in Louisville and Nashville in the U.S. and Johannesburg and Manila abroad.

Other U.K. firms are also looking outside London to house their operational centers. Earlier in September, Norton Rose Fulbright announced plans to expand its legal processing center in Newcastle, England .

“It’s generally part of the business environment of sophisticated international law firms,” Hinze said. He declined to say how much moving those jobs will save the firm.

Law firms have limited cost cutting measures they can take, Cruickshank explained. “Real estate is one of them.” The second benefit of moving out of expensive cities is firms can hire lower cost staff who have as many of the skills as they need in “Nashville, Wheeling, Johannesburg or Birmingham as they can in London and New York,” he added.

The consolidation also marks a shift in how law firms retain support staff.

Peter Giuliani has been a consultant for law firms since the late sixties. “It used to be that you saw ratios of about one secretary serving two lawyers. Now, you’ll have one secretary serving four or five lawyers, because their job function has changed,” he said.

In the years to come, there will be fewer support jobs partially due to the advancements of technology and automation, he added.

Giuliani, who is a partner at Smock Law Firm Consultants, felt a potential danger in moving support staff out of main offices is saddling lawyers with more administrative work.

“You can cut cross function a certain amount, but sometimes you end up cutting muscle rather than fat,” he said.

CORRECTED: A previous version of this story mis-characterized the nature of jobs affected by the cuts and the jobs Orrick moved to Wheeling, W.V. in 2002. The story has been updated with accurate job definitions.

Write to the reporter at maxsiegelbaum@gmail.com.

Write to the editor at csullivan@bloomberglaw.com.

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