A&O and Herbies share £3m of public funding for Belfast launches
Allen & Overy (A&O) and Herbert Smith will together receive almost £3m of taxpayers’ money to help fund their operations in Northern Ireland.
Belfast
Regional development agency Invest Northern Ireland (NI) will give A&O, which turned over £1.05bn last year, £2.5m to launch its support services centre, while £450m turnover Herbert Smith will receive £208,000 to open its due diligence office.
The sums are calculated specifically in relation to the number of jobs that are expected to be based in Northern Ireland as a result of the launches.
A&O aims to have 300 employees in Belfast by 2014, with the number including around 50 newly created fee-earning jobs and 250 support roles that will be relocated. On this basis each role is allocated around £8,000 in funding.
A spokesperson for the firm told The Lawyer that the firm would “propose to pass on the funding on a per person basis”, but given that global managing partner Wim Dejonghe has admitted that it is “unrealistic” that all London-based support staff concerned will want to relocate to Belfast, that “anything left over will be used to cover set-up costs”.
Herbert Smith is to open a local office in April to focus primarily on reviewing and analysing documentation relating to cases the firm is acting on. The office will employ 26 fee-earners. The firm has said there will not be any redundancies as a result. Each new role is allocated around £10,000 by Invest NI.
The financial backing comes as the Northern Ireland Office anticipates a cumulative 25 per cent real terms reduction in its resource budges and a 33 per cent reduction in its administration budget.
But a spokesperson at A&O said: “If they end up with 300 people receiving a salary in Belfast, renting or buying property, those salaries get spent locally, you have all those support services to the offices, then its good for the local economy.
“This is the normal course of business, governments around the world set up these agencies with a specific aim of attracting business. In the 20 locations we looked at around the world it was quite standard.”
A spokesperson at Invest NI said that in both cases the funding is “an offer of grant assistance which is only paid as the [firm] meets the targets and strict terms and conditions set out in their individual letter of offer”.
A&O considered locations in central and eastern Europe, Asia, the Middle East and Africa, including the cities of Budapest and Cairo, before opting for Belfast.
A spokesperson at Herbert Smith said that the money was “towards the creation of the 26 jobs”.
Readers' comments (37)
Hamish | 4-Feb-2011 1:10 pm
Cairo? Lucky escape there ay?
Unsuitable or offensive? Report this comment
Retirement ahoy!! | 4-Feb-2011 1:23 pm
Great to see our taxes being so well spent!!
Pass the champers Rodders!!
Unsuitable or offensive? Report this comment
anon | 4-Feb-2011 1:28 pm
I am shocked and ashamed by this. There was a time when you could take pride in being a member of a magic or silver circle firm. These days are clearly over. Greedy scum of the earth
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 1:31 pm
Wonderful, not only do these firms get away with the PR spin that they are only 'relocating people' when in reality it means London staff are going to lose their jobs - these firms are getting Government funding - part of our taxes - to sack these people.
This means, via the Government, we are paying A&O and Herbies lawyers to sack employees, who we will now have to pay benefits for as well, as there are no jobs out there.
Even better, the firms say this is nothing about cost-saving. Wow, and I thought the Halliwells scandal was bad public relations. This makes Ian Austin look like a Saint. Keep it up Wim.
Unsuitable or offensive? Report this comment
Bobby Smith | 4-Feb-2011 2:03 pm
Great! We, the taxpayers of the UK, have just handed
£13 500 to EACH London based partner of Allen & Overy in order to make their business more 'efficient' and thus more capable of making additional profits that will be paid to the PARTNERS OF ALLEN & OVERY. I know the bankers have taken most of the flack of late but for every dodgy deal done there is ALWAYS a lawyer in the background making the docs look good. Time for the partners at Allen & Overy to make a LARGE charitable contribution me thinks?
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 2:04 pm
Not quite sure what to think of this, a little too messy if you ask me.
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 2:29 pm
Sounds to me like Invest NI is gambling a bit on A&O not managing to persuade its staff to move - how many jobs will really be filled by Northern Irish people and how many by Londoners moving?
Unsuitable or offensive? Report this comment
Fat Catz | 4-Feb-2011 2:30 pm
First Vodafone doesn't avoids billions in taxes, and now A&O takes a handout from the government to move jobs from London to Belfast. There is something rotten in the City when a rich firm trousers yet more cash to make its London workers redundant. But it's all ok, 'cause we all live in a global economy, right?
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 2:35 pm
Its so easy to jump on the band wagon and cry 'tax payers' money!! But, Northern Ireland is country which went through considerable rejuvenation during the Nighties boom years and an area which will be hit hard by the cuts imposed on us by this government.
Such initiatives by regional development agencies are intended to keep jobs in the region, help it to thrive and stop it from slipping into the depths of recession, stop the brain drain and help the region to flourish.
If my RDA in the South West made some efforts to attract decent employers like these firms I think it would help keep young people in the region by offering them opportunities to progress in areas outside the usual low paid trade of tourism.
So its £3m and the firms could afford it themselves, so what? This is an investment in the future of the country, one that could have been made by the firm without this incentive but one which probably would never have been made without it.
Unsuitable or offensive? Report this comment
Belfast exile | 4-Feb-2011 2:49 pm
To Anonymous | 4-Feb-2011 2:35 pm:
Sorry but I don't like my taxes being used to prop up regions which don't manage to generate business on their own.
Successive governments have been trucking other people's money into Northern Ireland for generations and it hasn't made a jot of difference.
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 2:50 pm
Wake up - just about every government around the world will offer investment incentives to entice decent employers and viable businesses to invest in their patch rather than someone elses. If a one-off £3m keeps all these jobs in the UK rather than India then it's a fair deal. And if that in turn entices more businesses to invest there rather than heading east then it starts to look like an astute investment.
Unsuitable or offensive? Report this comment
Thomas Hobbes | 4-Feb-2011 2:50 pm
Governments incentivise business to help economies grow.
How do they do that? They spend taxpayers' money because that is how everything is paid for.
It's an investment and, possibly, a very good one for e city that will benefit from having an extra couple of hundred jobs created.
Yes, A&O probably don't need the money, but then businesses that get tax breaks for coming to the UK probably don't need those either.
It's pretty basic free-market capitalism, something which I'd have thought most readers of The Lawyer would understand.
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 3:03 pm
Having originally applied for one of the Belfast roles at Herbert Smith, I was shocked at the salary they were offering. With these subsidies they are going to have hardly any salary outlay for the first year.
Unsuitable or offensive? Report this comment
Rousseau | 4-Feb-2011 3:16 pm
@Thomas Hobbes
First, don't be such a patronising tw*t, yes readers of the Lawyer do understand how capitalism works.
Second, you are forgetting the reason why people are getting angry here - this is about a firm sacking dozens of loyal staff not because they have failed, not because the firm is under threat, but because the partners want to boost PEP just a tiny bit more, while giving clients the spin about having made an effort to reduce costs - even though overall fees to clients will stay the same - or rise.
The whole process of gettting Government money just makes it worse. And as to creating jobs - that is bonkers - they are sacking people in London to hire the same number of people in NI. What good does that do the national economy? All it does it mess up a lot of people's lives.
Unsuitable or offensive? Report this comment
Terry Silver | 4-Feb-2011 3:22 pm
£3 million is just recompense if seen in the light of 40 years of spectacular underinvestment in the region (Derry for example is the only city (technically) in the UK with no motorway connections) and the associated oppression of almost 50% of the indigenous population by the British state.
Unsuitable or offensive? Report this comment
Thomas Hobbes | 4-Feb-2011 3:45 pm
Rousseau - I agree completely that people should be angry about staff losing their jobs while partners count their millions.
I think the way plenty of firms run their businesses is despicable in many ways and this is another example of it.
My only point was that it's missing the issue by a long way if you are going to get your knickers in a twist about tax money going to A&O - it's classic Daily Mail knee-jerkism.
And apologies for the patronising tone. Not intentioned
Unsuitable or offensive? Report this comment
Voltaire | 4-Feb-2011 3:47 pm
@ Rousseau | 4-Feb-2011 3:16 pm - hear! hear!
these are not high-end jobs that are being created, they are non-strategic support roles with a handful of commoditised legal roles to boot. They are not going to be super well-paid and hence making major contributions into the consumer economy. I'm all for government incentives to economic development, but why on earth does it have to go to a £1bn City business that has plenty of spare cash? What about investment in local SMEs or indeed social enterprises instead of the bloody fat cats?
Unsuitable or offensive? Report this comment
I hate IHate BPP | 4-Feb-2011 3:50 pm
@Terry Silver - please keep your antiquated provincial political views out of a serious debate about an issue that clearly affects many peoples lives
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 3:54 pm
To Belfast exile | 4-Feb-2011 2:49 pm
"Sorry but I don't like my taxes being used to prop up regions which don't manage to generate business on their own. "
Erm, excuse me but doesn't the City of London prop up most of the country? Wasn't that the reason we have enjoyed a boom bust?
lawyers like you are looking after their own, which is what everyone here is complaining about A&O doing.
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 4:07 pm
With revenues of £1 billion a year - I wonder how much A&O pays in tax a year? Probably a shed load more than the £2.5m they've been offered.
Guess that means you don't have to worry about it being your tax money then...
Unsuitable or offensive? Report this comment
FB | 4-Feb-2011 4:12 pm
Hmm, what a perverse world we live in. Labour gets trashed for diverting public spending to poorer parts of the country to create jobs, but when drippingly-rich businesses cream a few badly-needed millions from the public purse to do it, it's good old-fashioned capitalism at work.
I'm not usually one of those "think of how many nurses..." people, and this wouldn't pay for many, but when I read of Citizens' Advice Bureaux, youth clubs and rural transport networks closing down, this kind of thing really makes me wonder about what kind of country we live in.
As Rousseau and Voltaire (love it!) point out, this is subsidising business cost-cutting, not stimulating growth in any meaningful sense.
Unsuitable or offensive? Report this comment
Geographic Tick | 4-Feb-2011 4:37 pm
"(Derry for example is the only city (technically) in the UK with no motorway connections)"
Er, St David's? Elgin? Bangor? Ely? Brighton? Armagh? Newry? Norwich? Inverness? Etc. etc.
Unsuitable or offensive? Report this comment
howard | 4-Feb-2011 4:41 pm
@Anonymous | 4-Feb-2011 4:07 pm
And just how much of the firm's revenues are managed through "tax-efficient" arrangements? My guess is not an insignificant amount
Unsuitable or offensive? Report this comment
IHateBPP | 4-Feb-2011 10:29 pm
I wouldn't be so opposed to these Belfast sausage factories if they were actually offering a realistic career path of any kind. Instead, as many people have pointed out, the salaries are rock bottom and the opportunities to progess are non-existent. These offices are very analogous to a certain blue NI conveyancing factory.
As for spending the salary locally, once taxes, student debt and travel costs are paid there won't be much of that ten grand a year to go around.
Unsuitable or offensive? Report this comment
IHateBPP | 4-Feb-2011 10:42 pm
Herbert Smith's recruitment ads proclaimed "invest in yourself", seems like they don't want to follow their own advice.
Unsuitable or offensive? Report this comment
Anonymous | 4-Feb-2011 11:00 pm
The management at A&O have sold their soul for a fistful of dollars - what are they going to sell for a few dollars more? I think it's time the fat cats had a heart attack - if this goes on there will be an uprising.
Unsuitable or offensive? Report this comment
Anonymous | 5-Feb-2011 1:16 am
So now they have launched the new "brand" and spent thousands promoting it and training London staff in all the ins and outs they're outsourcing to Belfast - nice one. Note to all BS staff - "go the extra mile" -you'll be rewarded with redundancy.
Unsuitable or offensive? Report this comment
Anonymous | 5-Feb-2011 12:41 pm
How very sad that a firm such as A&O that once had such high principles when it came to looking after its staff,now sees fit to betray people who have given years of hard work, loyalty and expertise for the sake of adding couple or so thousand to the pockets of those who may not even notice that it's there.
Unsuitable or offensive? Report this comment
john | 7-Feb-2011 2:58 am
Money well spent! Much better than funding LSC help for benefits scroungers and so called "disableds".
Unsuitable or offensive? Report this comment
A&O Partner | 7-Feb-2011 7:32 am
Oh dear, this is a bit of a mess. Are our PR people on strike? Are we northshoring them as well? Somebody please do something!
Unsuitable or offensive? Report this comment
hal clarke | 8-Feb-2011 4:00 pm
When A&O and Herbies let a tax-payer-pound subsidy influence their location/recruitment decisions they cease to be a businessman's choice of legal advisor. These days there is better value to be found in the niche practices set up by ex-City partners in Mayfair, Belgravia etc with their web of connections. And for the ubergeldesladen there is the 'floating' practice moored off Monte Carlo! (Is it true that the SRA licensed it?!)
Unsuitable or offensive? Report this comment
bucklies | 8-Feb-2011 10:19 pm
They are just greedy corporate ass*s who are getting rid of some very loyal workers in return for what they call "saving the business a few million" (in the short term) some of these staff have worked at A&O for over 15 years and more - I know because I am one of these "expendables" who will be looking for work come autumn. They make me sick.
Unsuitable or offensive? Report this comment
Anonymous | 10-Feb-2011 10:21 am
"Sounds to me like Invest NI is gambling a bit on A&O not managing to persuade its staff to move"
Gambling? Who on earth wants to move to NI?
Unsuitable or offensive? Report this comment
Ashley Balls | 11-Feb-2011 0:35 am
This would be funny if it weren't so serious. Quite why highly profitable businesses need a subsidy for this is hard to fathom. Why not apply a means test as with other state benefits? it is highly likely there are millions of additional profit that both firms could achieve through some minor changes in working practices and no one would have to work a 'unit' longer. Perhas the partners involved are secretly bankers at heart and feel a sense of entitlement.
Unsuitable or offensive? Report this comment
IHateBPP | 11-Feb-2011 12:47 pm
@Ashley Balls | 11-Feb-2011 0:35 am
At least the banks who opened up offices in Belfast offer salaries that are above the national minimum wage.
Unsuitable or offensive? Report this comment
Anonymous | 11-Feb-2011 3:23 pm
You really don't like Herbert Smith, do you hate IHateBPP? I've seen quite a few posts by you about their Belfast Office on a couple of websites.
Unsuitable or offensive? Report this comment
IHateBPP | 11-Feb-2011 4:57 pm
@Anonymous | 11-Feb-2011 3:23 pm
It's nothing personal, I just find that the salaries they're offering and their spin doctoring of their new offices are offensive to any right thinking person.
Unsuitable or offensive? Report this comment