Since last spring, Sean Whelan has taken 12 round-trip flights between Dulles International Airport and Nashville, racking up some 13,000 miles in the air.
Whelan, the McLean-based chief financial officer for Pillsbury Winthrop Shaw Pittman, is a year into an 18-month-long process of moving the firm’s IT, human resources, billing and other administrative jobs from Washington, New York and other cities to Nashville, site of the firm’s professional services center slated to open this summer.
Whelan and Pillsbury’s chief information officer, Martin Metz, are interviewing prospective employees to staff the office in the Music City, as well as house-hunting. Metz has already relocated from Los Angeles, and Whelan plans to make the move himself in July.
Moving non-lawyer jobs to one location is not new — Orrick Herrington & Sutcliffe was the first major law firm to pioneer the movement, sending back-office operations to Wheeling, W.Va., in 2002. WilmerHale, one of the District’s largest firms, opened an office in Dayton, Ohio, to serve similar functions in 2010. But Pillsbury is the latest firm with a major Washington presence to venture down the path, and industry watchers say it won’t be the last.
Some firms are taking it a step further, sending support staff functions to outside service providers altogether: O’Melveny & Myers cut 75 support staff firmwide last year in its move to outsource the jobs to Williams Lea. Paul Hastings shed 45 positions, mostly in Los Angeles, after reaching an outsourcing agreement with R.R. Donnelley for document processing services.
As law firms continue to face pressures to become leaner and more efficient, options that will reap long-term savings on labor and real estate are becoming increasingly attractive.
“From a business perspective, it’s hopefully a good thing,” said Mark Young, president of ShiftCentral, a market intelligence firm that tracks trends in the legal industry. “From a talent perspective, it creates all sorts of dynamics ... a risk [is] you’re not going to get people moving and have to tap into a new workforce. But firms are discussing it and taking it quite seriously.”
Pillsbury plans to have 150 employees in Nashville, and only 26 of them are current firm employees who will be relocating — which means the loss of local jobs in Washington, New York, San Francisco and Los Angeles. Pillsbury is headquartered in New York, but its largest concentration of attorneys is in the Washington region, with about 220 lawyers in the District and Northern Virginia (Pillsbury Winthrop merged with District-based Shaw Pittman in 2005 to form its current iteration, Pillsbury Winthrop Shaw Pittman). Of the two dozen local employees whose jobs will be affected by the move, only five are relocating.
The vast majority of employees were offered a relocation package, but those who chose not to relocate, or whose positions will be eliminated as part of the consolidation, were given almost a year notice and will receive severance with greater health care subsidies and job placement services compared to the firm’s standard severance package.
The firm settled on Nashville because of its relatively high level of education, proximity to universities, professional sports teams, cultural attractions and overall quality of life. It is also, Whelan said, a “long-term labor play.”
“If you look at the salary cost differential between the various markets ... you’ll see the Nashville market is 4 to 6 percent below the national average but the places we have [offices with professional services staff] are 30 percent above the national average,” said Whelan, who declined to provide specific cost savings figures. “We saw the same thing in rental rates.”
A spokesperson for WilmerHale, which has 200 employees in its Dayton center, declined to say how many local jobs were eliminated when the firm consolidated IT, human resources and other support staff there. All but a handful of employees in Orrick’s Wheeling office are from West Virginia or Pittsburgh, which is a 45-minute drive away, an Orrick spokesperson said.