Bingham McCutchen announced late Wednesday that it plans to move 250 back-office jobs to Lexington, Kentucky, starting next spring, investing $22.5 million in a new operation meant to streamline administrative tasks.
Bingham’s current employees will be given the opportunity to relocate and take the new positions, which include jobs in the finance and accounting, human resources, information technology, marketing, and risk management departments. The firm will turn to the local market to fill the rest, says Tracee Whitley, Bingham’s chief operating officer.
The number of current staff members who may be affected is still being analyzed, Whitley says. Bingham has roughly 900 staff in 14 offices around the United States, Europe, and Asia.
With the move, Bingham becomes the latest major law firm to outsource back-office jobs to a low-cost domestic market. Orrick, Herrington & Sutcliffe started the trend 10 years ago by opening an office in Wheeling, West Virginia, the hometown of longtime firm chair Ralph Baxter. Wilmer Cutler Pickering Hale and Dorr followed in 2010 with an office in Dayton, Ohio, and Pillsbury Winthrop Shaw Pittman opened an outpost in downtown Nashville earlier this year.
Bingham’s looming arrival has been met with great fanfare in Lexington, a city of 300,000 people known more for horses, bourbon, and college basketball than legal work. In a press release issued by Kentucky Governor Steve Beshear, Lexington Mayor Jim Gray heralded the city’s newest employer as “easily the biggest economic development achievement we’ve had since the recession began in 2008.”
While Lexington’s unemployment rate is 6.6 percent, well below the national average of 8.1 percent, the Lexington Herald-Leader notes that the addition of jobs in the area is particularly welcome given a recent announcement by Lexmark International, which has a large campus in the city, that it is eliminating 350 full-time jobs and 200 contract positions there.
“This is high-octane for Lexington,” Gray said in both the governor’s press release and a separate release issued by the city. Bingham is expected to pay its Lexington employees $37 an hour, including benefits, according to agenda notes from a Tuesday meeting of Kentucky’s Economic Development Finance Authority. By choosing to move to Kentucky, Bingham has been preliminarily approved for up to $6.5 million in performance-based tax incentives contingent on certain job and investment targets, according to the state’s press release.
Bingham has already selected office space in the University of Kentucky’s Coldstream Research Campus business park, a decade-old building formerly occupied by IBM. The firm expects to begin operating there in April 2013 and to complete its move into the space with a year. The $22.5 million cost of launching the location includes building improvements, start-up costs, and rent for 10 years, according to the firm. Whitley declined to specify projected savings that might come from the consolidation.
To help the firm execute the project, Bingham turned to Deloitte Consulting, which also worked with Wilmer and Pillsbury in setting up their back offices. Deloitte consultant Mark Klender says they started with a list of 300 metropolitan areas and whittled it down over a “rigorous” process lasting a few months.
Kevin Atkins, Lexington’s chief development officer, said in an interview that they responded to a request for proposals issued by Deloitte earlier this year. Though the RFP did not name Bingham as the potential employer, simply referring to the firm’s move as “Project Star,” Atkins says the number and quality of jobs mentioned made city officials eager to respond.
“The people were very warm and engaging right out of the gate,” Whitley says of working with Lexington. “But I would say more importantly, what we saw here confirmed data we had talked about, in terms of the quality of the businesses and corporations in the area and the education level of the workforce.” The quality of life and cultural match were also essential, Whitley says.
“This has been a really hard thing for us to think about doing in terms of the transformation and changes with our staff,” Whitley adds. “But at the same time, we felt very strongly it was a good decision for the business for the long term. We needed to think about how best to really reengineer the service platform to continue to serve clients the best we can not only in the U.S., but around the world.”