Allen & Overy (A&O) and Herbert Smith will together receive almost £3m of taxpayers’ money to help fund their operations in Northern Ireland.
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”.