The problem with low cost legal hubs is that law graduates don’t want to work in them

Students say ‘no thanks’ to northshoring

It was the dawn of a grand new vision for City of London law firms.

Keen to cut costs at a time of brutal market conditions following the 2008 financial crisis, they began dabbling in outsourcing to cheaper overseas locations like India. But in many cases working across time zones and cultures was more difficult than anticipated. Unperturbed, the firms turned instead to less wealthy parts of the UK where they set up ‘low cost hubs’ in cities such as Belfast, Glasgow, Newcastle, Manchester and Birmingham.

There were bumps in the road but the strategy seemed to be a success, with early movers like Allen & Overy and Herbert Smith Freehills expanding their ‘northshoring’ operations significantly since launching in 2011. Initially they focused on non-legal tasks, but as momentum grew increasingly lower level legal work was sent north.

With the big UK regional cities well served by universities and law schools, there was confidence that a plentiful stream of adequately trained graduates would be on hand to do this work at budget rates — propping up stagnant but still huge partner profits down in the Capital as low growth conditions lingered. But that assumption has sometimes proved wide of the mark.

Law graduates have aspirations beyond staffing second-tier offices as paralegals, it turns out. Instead, they want training contracts, preferably in London. And where they don’t succeed in this aim, many would rather use their still valued law degrees to pursue alternative careers in other high status fields like finance, PR and marketing for big companies or exciting start-ups. The lure of a watered down law career isn’t as strong as those who run the profession are prone to assume.

This reality is proving problematic. Some firms have responded by offering their northern paralegals career paths, with Allen & Overy leading the way by introducing training contracts in Belfast in 2014. Others are incorporating northern hubs into their trainee secondment roster as a way to boost numbers. Indeed, Berwin Leighton Paisner, which has a hub in Manchester, announced such a move this week.

Still, rumours of unhappiness persist. The commercial legal market is full of chatter at the moment about low cost hub staffing issues. One paralegal recruiter recently told me how much harder he finds it filling northern roles than London positions. Another admitted paying the travel costs for several London-based paralegals to staff a project in the Midlands after failing to find any suitable local candidates. Meanwhile, the recent decision of Mayer Brown to expand its UK volume business from London, rather than try its hand outside the Square Mile, has been noted as a signal to the possible future direction of travel at a time when a glut of new office space could place downward pressure on London rents.

So what will happen next? The most extreme scenario would be for some of the less established regional hubs to be scaled back or even abandoned. But perhaps a more likely outcome, given that most hubs have been broadly successful and not inexpensive to set up, is some form of rebranding. Working for a big firm’s Manchester office would be far more attractive to graduates than a gig at its Manchester low cost support centre (even if the terminology doesn’t quite send out the desired message to cost-conscious clients).

However, that may not go far enough. It’s an open secret among multi-office law firms which avoid the low cost hub model that some regional locations can be much harder to fill with graduates. At a time of unprecedented pay discrepancies between London and the rest — in some cases newly qualified solicitors in the City are paid, absurdly, more than three times those outside the M25 — could this graduate supply problem be about to force a wave of regional pay rises?

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45 Comments

HUR

I think simply in terms of remuneration, it’s a zero sum game. Even at 60k+ in London, more than half one’s income goes on rent, expenses and taxes. The only winners are the buy-to-let mafia and HMRC.

(34)(1)
Pantman

But in many cases working across time zones and cultures was more difficult than anticipated

There’s a lesson in there for the Brextremists.

(3)(6)
Jenny Frost

Starting salaries outside London are less than what you would get working in Tesco, noone wants that after studying for five years and getting yourself in over 50 grand of debt.

(42)(2)
Anonymous

‘And where they don’t succeed in this aim, many would rather use their still valued law degrees to pursue alternative careers in other high status fields like finance, PR and marketing for big companies or exciting start-ups’

Where do you get this nonsense? It’s just all made up. You have no evidence to back up this claim.

(9)(28)
Anonymous

Speak to any law student and they’ll tell you that they’d rather take a prestigious non-law job than work in a legal call centre

(66)(1)
Anonymous

Look at the retention figures for these roles. They are appalling. I used to work in one of them.

People question why they are doing trainee-level work (due diligence etc) and are receiving poverty pay. Many of my colleagues were using the job as a stop-gap whilst looking elsewhere.

(30)(0)
Anonymous

I think that only 30% of people who study law end up as qualified lawyers (about 17k law graduates every year competing for around 5k TCs and 1k pupillages). It’s certainly not made up that lots of law students end up in non-law careers.

(0)(1)
Anonymous

@Jenny Frost

Spot on. A lot of regional solicitors see firms like Shoosmiths as a back door to the City. I was told by one Shoosmiths trainee at a networking event that he chose Shoosmiths for ‘tactical reasons’.

Similarly, apparently the CMS Bristol office have a lot of issues with people training there and then leaving to London.

(5)(3)
Anonymous

Good luck being a regional trainee and trying to convince your firm’s London HQ that you should be given a NQ position in the London office ahead of a trainee already based there – won’t happen.

(3)(4)
Anonymous

The huge discrepancy in pay demonstrates that firms just do not value their centres outside of London. Clearly trainees want to feel valued and relevant. They should correct the pay to be at least comparative and see how that effects intake.

(11)(0)
Anonymous

@ Anonymous

The discrepancy is pay demonstrates that rent, insurance and support staff wages are a lot higher in London. There are also a plethora of US/Magic Circle firms paying vast sums, meaning all firms are forced to keep up.

It’s not a ‘choice’ that can simply be reversed. The business model of most London-centric law firms couldn’t accommodate paying trainees in Manchester £40k.

(3)(0)
Anonymous

Given that these offices are being sold to the world as low cost centres, the overwhelming impression to potential staffers is that they’ll be treated as second class citizens.

Being a trainee or a paralegal in private practice isn’t something anyone in their right mind would want to do unless it led to bigger and better things. The (reasonable) fear will be that a paralegal/training position at these low cost shops won’t lead to anything. Hence the reluctance.

(5)(1)
Irwin Mitchell Partner

It’s competitive out there – there will always be demand from somewhere to man these northern shops.

(2)(1)
Anonymous

It all depends on the work. Insurance work cannot be ran at volume in London, however £300+ transactional work can.

(4)(0)
Anonymous

£300 is de minimis M&A value threshold for Irwin Mitchel to take on work.

(13)(0)
Anonymous

100% agree with this article – spot on! I work for an inshore office and moral/retention is a massive issue. The key problem is that there is little respect for key experiance in other areas and therefore there is zero career progression unless you manage to get a TC! I know people who have a wealth of finance, operations, management or mental health experiance which they could put into good use whilst maintaining their legal work but because they’re not qualified they’re left out in the cold.

(7)(0)
Anonymous

The reason you aren’t progressing may have something to do with the fact that you don’t know how to spell ‘experience’.

(12)(3)
Anonymous

The reason why people are not keen on outside of London roles is because they are getting into £50k of debt (minimum) to complete university and then work for £32k-£40k in most regional NQ roles?

If the regions managed to set a higher NQ rate they could tease some of the talent from London. Until then, money talks.

(17)(1)
Anonymous

I think regional NQs would only need 45-50k to match the quality of life outside of London.

(8)(0)
Her Indoors, 25 Mornington Crescent

As someone who’s worked in one of these places and since moved on to a traineeship this is spot on.

Although I take umbrage at Legal Cheek’s continued assumption that all roads lead to London. Plenty of interesting rewarding careers in Scottish firms, public bodies and in-house.

(12)(0)
Anonymous

As trainees, yes, but NQ wages are comparable to English regions.

(1)(1)
Anonymous

Not everyone wants to live in London. There are plenty of excellent candidates who will make excellent lawyers but who want to live in the regions for a variety of reasons. These candidates will, however, go and do their training contracts at genuine regional offices rather than “low cost hubs”. It shouldn’t come as a surprise to anyone that if you offer low quality work with low pay, you will not get high quality candidates applying.

(10)(0)
Anonymous

I worked at a firm (circa 1000 headcount) and the annual paralegal turnover was 33%-35% per year. HR was constantly sourcing and handling exit interviews.

The main issues were:
(1) Pay
(2) Quality of work
(3) Lack of clear progression

1 – Pay was a major problem. Paralegal/legal assistant salaries remain poor. The only way to benefit is through bonuses or move firms. As people don’t want the role for long (see (3)) it sees them leaving.

2 – Quality of work was an issue. A lot of people wanted to boost their CV for training contracts and handling fixed fee LEI work or £300+ VAT pre-action disclosure (defendant) applications was nothing to brag about.

3- Lastly, lack of progression was an issue. Retention is difficult at the junior level unless you offer funded ILEX or a training contract that is attainable (i.e. they have seen colleagues obtain it at the same firm).

(23)(0)
Anonymous

Paralegal pay in London on the other hand is very good.

(2)(2)
Anonymous

Agreed, but you still need (2) and (3) to retain them otherwise they will move around London firms for incremental pay increases.

(11)(1)
Anonymous

Allen & Overy Belfast also offer up to 2 London based training contracts per year to their paralegals.

(1)(1)
Anonymous

The issue with offering TCs internally to paralegals is the workplace friction it creates. I’m a future trainee and currently a paralegal at a MC firm and this seems to be the case.

(1)(5)
Anonymous

They dislike you for reasons other than the TC, bro.

(24)(0)
Anonymous

I have a TC elsewhere bozo. And not towards me, amongst each other.

(1)(10)
Anonymous

Hopefully your grammar and punctuation will improve after 2 years of TC beasting.

(16)(0)
Anonymous

Well my spelling and punctuation didn’t stop me getting a first class degree, a distinction in the LPC and a training contract. So it’s good enough for me! Enjoy your next assessment centre.

(6)(11)
Anonymous

5PQE and on legal cheek? Sounds like you’re building a busy practice. Maybe you should pack your bags and suck my cucumber.

(3)(5)
Luke

Why can’t somebody setup one of these centre’s in the westcountry and plymouth for that matter? there are lots of legal graduates from the plymouth law school that would love to work in law and stay in the area after graduating!

(1)(3)
Anonymous

Why does everyone pretend that Bristol, Manchester, Birmingham are credible alternatives to London.

Lets be honest if you didn’t train in London your career will be a poor one.

(3)(14)
Yuppy McYupface

Plymouth is where people go to die, not study. Predominantly, it’s because it’s a shit ‘university’.

(4)(1)
Anonymous

Only on LC would non-qualled & trainees look down on qualified lawyers!!

(13)(0)

Comments are closed.