Scotland to compete with Northern Ireland as low-cost law centre

The Scottish government’s economic development wing is courting London-based managing partners in a bid to emulate Northern Ireland’s success in enticing top firms to open low-cost bases in the country.

Scottish Development International (SDI), which is the international economic development arm of the country’s government, has been visiting managing partners at top 50 firms to urge them to open support service offices in Scotland in a bid to boost its economy.

The talks are part of SDI’s three-pronged plan, which started gathering steam in April this year, to bring more legal services work to Scotland. Under the plan, SDI is also targeting legal process outsourcing (LPO) providers, and corporates and banks with large in-house teams, as well as private practice firms.

SDI’s vice-president of financial services Philip Jones said the body was inspired by Invest Northern Ireland’s success attracting Allen & Overy and Herbert Smith to the country in return for public funding (4 February 2011).

Law firms and companies that open legal support centres in Scotland may also have access to grants through Scotland’s Regional Selective Assistance programme. The amount of money allocated to a firm or company depends on how many people it employs and how much it pays them.

“We’ve taken note of the success in Northen Ireland,” said Jones. “Now, we have a similar offering and a great background in shared services and a bigger pool of legal services to boot.”

Jones said that on top of offering firms savings of between 20-40 per cent on each employee, Scotland could offer a talent pool capable of doing more complex work, such as M&A due diligence. The country has 12,600 qualified lawyers compared with Northen Ireland’s 3,500. Jones added that big banks like Morgan Stanley and JP Morgan have employed large numbers of finance and IT staff in Scotland for around a decade.

The SDI has been liaising with the Law Society of Scotland about its plans, as well as with Scotland’s domestic law firms, which it believes are largely supportive of the proposals.

“[SDI is] consulting with London law firms as well as internationally, trying to do for legal services what they did for call centres by promoting Scotland as a go-to place for legal support work,” said Dundas & Wilson’s co-managing partner Allan Wernham.

“Firms are looking at cost bases in London and the idea behind it is to create a competitive alternative to sending work to, say, India or other offshore locations. The cost differential and savings are not the same but it’s easier to come and see people in Scotland, but more importantly there is a strong quality proposition to sell.

“There’s a lot of pressure on traditional employment opportunities in the legal sector and if they can find a way to provide wider access to the legal industry then I’m all for it.”

One law firm leader at top 10 firm based in London told The Lawyer that he would not be swayed by the idea, however: “I think we could find other ways of supporting our organisation than outsourcing to Scotland,” he said.

The SDI is a joint venture between Scottish Enterprise, Highlands and Islands Enterprise and the Scottish Government. Jones declined to comment on which firms SDI had approached so far.