In a move that makes it the latest large law firm to rein in expenses by moving back-office jobs to a small city, Kaye Scholer said Monday it will relocate some 100 support staffers from a range of departments to a new stand-alone operations center in Tallahassee.
Kaye Scholer's decision to shift the jobs—most of which are currently held by employees in its New York headquarters—to the south comes on the heels of last week's announcement by Allen & Overy that it was transferring some of its U.S.– and Europe-based support service teams to a Belfast office the Magic Circle firm opened in 2011. Bingham McCutchen said last September that it was transferring its administrative operations to Lexington, Kentucky, while Pillsbury Winthrop Shaw Pittman launched a back-office center in Nashville in October 2011.
For Kaye Scholer, moving the jobs out of New York will help the firm reduce the amount of space it leases in Manhattan when its New York office changes addresses next year. The firm confirmed in July that its partnership had voted to sign a letter of intent to move from the 325,000 square feet it currently occupies at 425 Park Avenue to an estimated 250,000 square feet in a new building at 250 West 55th Street that is scheduled to open in 2014.
"We've been working on this [new operations center] for a while because it affects how much space we'll take in the new building," Kaye Scholer chief operating officer Jeffrey Hunter tells The Am Law Daily.
The Tallahassee employees will work in the firm's accounting, document services, graphics, technology, library services, docketing, human resources, and marketing services divisions. The current employees whose positions are slated to move—besides the New York contingent, several staffers in Los Angeles and Washington, D.C., are also affected—will be offered the chance to transfer to Florida. Qualifying staffers who decline to make the move will be provided with job placement services and severance packages, Hunter says.
Even after the transfers are complete, Kaye Scholer will still have 200 employees in operational roles in New York. And while Hunter says the New York office move gave the firm an opportunity to rethink its approach to administrative service, he stresses that the launch of the Tallahassee outpost is not an attempt to downsize the firm's back-office head count. "Everyone working now has a job if they want it," he says.
The new operations center should help Kaye Scholer respond to the continuing push by clients to control costs, with Tallahassee's lower cost of living allowing the firm to save on real estate expenses and staff salaries. Hunter also views the move as promoting efficiency: "We think that we can provide timelier and more responsive services to partners and—in turn—their clients by centralizing those services instead of having them scattered across our New York, Washington, D.C., and Los Angeles offices," he says.
The firm is still in the process of scouting office space in Tallahassee, says Hunter. As of now, Kaye Scholer is looking to rent between 25,000 and 30,000 square feet of space and hopes to launch the new office by June 1.
Without going into specifics—except to say that all the contenders were in either the Central or Eastern time zones—Hunter says Kaye Scholer considered several other locations for the operations center before settling on Florida's state capital, which is home to about 183,000 people and had an unemployment rate of 6.7 percent as of November 2012—below the nationwide rate of 7.8 percent—according to the Bureau of Labor Statistics. The firm ultimately selected Tallahassee, he says, because of its quality-of-life, affordable housing, and proximity to the state government. Having Florida State University and Florida A&M nearby as potential sources of employees with backgrounds in finance, technology, library science, and graphic design was another draw, Hunter adds.
Kaye Scholer is working closely with the Tallahassee Economic Development Council and the city's Chamber of Commerce on its new office plans. Karen Moore, chair of the Tallahassee/Leon County Economic Development Council, says the operations center is just the kind of business the city is hoping to attract: one that offers good paying jobs and employees who will benefit from and contribute to the surrounding community. "We're looking forward to welcoming the staff members who decide to move here, and we have a work force here that can fill open positions in the office," Moore says.
Moore also confirmed that the firm worked with the city and county governments and Enterprise Florida, the state's organization for economic development, to access government incentive programs, but declined to discuss specifics. Hunter also declined to elaborate on the details of the government incentives that helped woo the firm to Tallahassee.
According to the most recent Am Law 100 data, 427-lawyer Kaye Scholer had gross revenues of $420 million and profits per partner of roughly $1.4 million in 2011. Information about the firm's financial performance in 2012 is not yet available.
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