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”.
View results 10 per page | 20 per page | 50 per page
Readers' comments (37)
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