Allen & Overy, Freshfields and Axiom all fall for the charms of Belfast

For some time now the pressure has been increasing on law firms to enhance efficiencies and to lower costs, as clients start to jib at paying City rates for relatively routine work.  An obvious way of doing this is to relocate staff or outsource routine work to a lower cost jurisdiction, but lawyers have always been wary about the difficulties of maintaining quality under this model, fearing that clients would not be happy dealing with far flung locations and strange time zones, and that quality of service may be difficult to maintain.

It seems that Northern Ireland has taken the opportunity to position itself as an ideal location from which firms can lower their cost base without many of the attendant difficulties of dealing with more distant centres such as India, with some success. And in order to make its proposition more attractive, it is offering significant financial incentives through regional development agency Invest Northern Ireland (“INI”) to lure firms to the territory; a strategy which seems to be having some success.

INI has already agreed £2.5 million of funding for Allen & Overy which is aiming to have 300 employees in Belfast by 2014.  Of these, approximately 50 are expected to be newly created fee-earning jobs and 250 will be support roles relocated from elsewhere (presumably mainly from London).  The subsidy being offered by INI to A&O therefore equates to about £8,000 per head, which is certainly not to be sniffed at.

Freshfields has also announced that it plans to create 26 new fee earner roles in Belfast, and will receive a grant of approximately £10,000 per employee from INI for their trouble.

The latest law firm to follow the same path is Axiom, which has launched a new centre in Belfast after being offered up to £1.6m in public funding to make the move.  Axiom’s new Northern Irish operation hopes to create over 100 lawyer and para-legal jobs in the city by 2014.

INI is believed to have offered Axiom up to £1.1m over an eight year period and the Department of Employment and Learning is reported to have offered an additional sum of up to £500,000 for skills development.

The financial incentives being offered are no doubt attractive to the firms involved, but the real prize is that the firms should benefit from a well educated, English-speaking talent pool in a city with a materially lower cost base than it would experience in London.  The long term potential benefits to Belfast are significant in terms of stimulating its local economy and offering prospects to its talented young people, so the short term financial invectives are probably a very astute move to secure the City’s long term future.  I would expect that more firms will follow suit before long.