Biglaw, Intellectual Property, Outsourcing, Partner Issues, Partner Profits

Another Law Firm Jumps On The ‘Administrative Hub’ Bandwagon

Minnesota is beautiful this time of year.

Is having your back-office functions handled on-site — i.e., in the same location as the lawyers being serviced — now a luxury? More and more law firms are adopting the model of sending their administrative support functions to lower-cost locations.

Thanks to advances in technology, it’s no longer necessary to have your back office in the same pricey place as your lawyers. And it’s not surprising that firms are going in this direction when you consider the cost savings involved.

Which law firm expects to save millions of dollars a year by sending support staffers to the land o’ lakes?

Here’s a report from the ABA Journal:

Fish & Richardson is the latest law firm to announce a consolidation of its administrative functions in a single location as a cost-cutting move. The 400-attorney intellectual property specialist said Tuesday that it plans to make Minneapolis its administrative hub by March of 2015.

Here are additional details about the number and types of positions being moved to Minnesota, from the firm’s press release:

Fish & Richardson announced today that it will open an Administrative Hub in its current office space in Minneapolis, Minnesota, where the firm has had an office for 20 years. The new Administrative Hub will house the core operations of Fish’s Finance & Accounting, Information Technology, and Human Resources functions, as well as part of its Patent Practice Systems group. A total of 130 positions will be based in the Administrative Hub, 80 of which are moving from other offices.

Fish is just the latest firm to swim in this direction. As noted by the American Lawyer, past participants in this trend include Orrick (Wheeling, West Virginia); Sedgwick (Kansas City, Missouri); Kaye Scholer (Tallahassee, Florida); Bingham McCutchen (Lexington, Kentucky); Pillsbury Winthrop (Nashville, Tennessee); and WilmerHale (Dayton, Ohio).

We immediately wondered: will there be layoffs? Fish told us in a statement that it’s not conducting any cuts. From their press release:

All affected employees will be offered the opportunity to relocate to the Twin Cities. “We hope many of our employees will choose to join us in Twin Cities,” [president and CEO Peter] Devlin added.

Employees who choose not to move will keep their jobs in their current office until March 31, 2015, and will be offered a generous severance package based on tenure if they stay through March 31.

Even though the firm isn’t doing layoffs, it will benefit financially. The consolidation cost the firm $4 million, according to the Minneapolis Star-Tribune, butt Fish expects to save $3 million a year going forward, so it seems well worth it. The firm didn’t have a banner year in 2013 — according to the latest Am Law 100 rankings, Fish & Richardson’s revenue fell by 9.6 percent last year, and profits per partner dropped by 12.1 percent — so the savings will surely be appreciated by partners.

And perhaps by clients, which Fish is committed to serving in a value-maximizing way. As Peter Devlin said last year in an interview with Above the Law, the greatest challenge faced by the legal profession right now is communicating value: “On a micro level, lawyers need to show clients that money invested in good legal counsel is just that: an investment. Invested wisely, legal spending pays dividends because it helps achieve business goals.”

Fish & Richardson to make Minneapolis its administrative hub [ABA Journal]
Fish & Richardson Shifts Back-Office Functions to Minneapolis [Am Law Daily]
Law firm plans 130-person admin hub in Minneapolis [Minneapolis / St. Paul Business Journal]
Fish & Richardson law firm plans administrative hub for Minneapolis [Minneapolis Star-Tribune]
Fish & Richardson to Open Administrative Hub in Twin Cities Office [Fish & Richardson (press release)]

Earlier: Why Doesn’t Every Biglaw Firm Have An Office In Wheeling, West Virginia?
The ATL Interrogatories: 10 Questions with Peter Devlin from Fish & Richardson
Nationwide Layoff Watch: Fish & Richardson

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