Biglaw, Outsourcing

As Firms Relocate Their Operations Hubs, Will There Be Layoffs?

Congratulations to the partners at Latham and Littler for finding a new way to pad their pockets, and condolences to the support staff who are being forced to choose between their locations and their livelihoods.

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As we wondered back in June 2014, “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.”

Now it’s 2015, a new year, and many law firms are still searching for ways to save money. We recently learned that two of them may have found the solution to their money-leeching problems — “problems” that are better known as their back-office operations.

Which Biglaw firms expect to save tons of cash each year by sending their support staffers far, far away?

Here’s a report from the Am Law Daily:

A pair of Am Law 100 firms have announced plans for back office operations centers, which in recent years have become all the rage among legal giants looking to slash expenses….

Latham & Watkins has confirmed it will open a business services office in Manchester, England, while Littler Mendelson will open one in Kansas City, Mo.

Latham’s back office in England will launch in the first half of this year, and will provide support to the firm’s European outfits in the areas of finance and technology. Twenty-five new staff members are expected to be hired locally, and only a “very small number” of existing support staff will be affected. Per Am Law, Latham is in talks with the individuals who are soon likely to be Lathamed with regard to their futures at the firm, up to and including the opportunity to work at different offices. How kind.

Here in the United States, Littler Mendelson claims the firm will extend relocation offers to all of its current staff — all 275 of them across 33 separate administrative offices. The Kansas City Business Journal has additional details on why Littler chose to make Kansas City the home of its consolidated administrative services hub:

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“We looked at virtually every major U.S. city in the Central and Mountain time zones, as well as San Francisco,” said Tom Bender, co-president and co-managing partner. “It was an exhaustive process. What drove it a lot was client service. What’s the best way to do it. And we got to Kansas City, and (we liked) the supply, the quality, the diversity of the work force, the fact that it is a Central time zone and our offices are spread across the entire U.S. The cost structure was something else to consider, but those other factors really gave Kansas City the edge.”

Perhaps part of that “edge” came in the form of the nearly $9 million in incentives Missouri offered to Littler to encourage the firm to bring its business to Kansas City.

It’s worth noting that Sedgwick also has an administrative office in Kansas City, in the exact same building as the one chosen by Littler to house its new back-office conglomerate. Sedgwick, on the other hand, was only offered $2.87 million in incentives to make the move to Missouri. According to the Kansas City Business Journal, very few of Sedgwick’s support staff were willing to relocate to Kansas City, and we suspect that the same may hold true for Littler’s affected employees.

Congratulations to the partners at Latham and Littler for finding a new way to pad their pockets, and condolences to the support staff who are being forced to choose between their locations and their livelihoods.

Latham, Littler Launch Back Office Operations [Am Law Daily]
Law firm will bring 275 jobs to KC [Kansas City Business Journal]
Another law firm chooses Kansas City for back-office operations [ABA Journal]

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