Editors' Blog

A very long Citi break

Posted 24/05/2007 by Alex Novarese

Much has been made of late of the desire of the banking community to recruit lawyers from private practice but the ongoing restructuring at Citi is a reminder that life at a major company brings different kinds of uncertainties.

Certainly, the US banking giant’s decision to set up a legal and compliance team in Belfast (see story) will make its legal staff uneasy. Though the move has been presented - not entirely convincingly - as a big-thumbs-up for the Belfast economy, some London-based legal staff are expected to face the option of relocation or redundancy.

The move is the latest development in the sweeping restructuring announced by Citi chairman Charles Prince in March, which is expected to cut costs by either relocating or cutting no less than 26,000 jobs globally. Of those, the bank has indicated that it is aiming to move as many as 9,500 jobs to lower-cost regional centres and legal is clearly in the firing line.

The bank has form for this in Europe, having initially set up its self-proclaimed Belfast Centre of Excellence in 2004 to house some of its technology staff. The 400-strong operation is forecast to rise to 700 staff within two years, with legal and compliance - which will initially work as a 39-strong team - operating alongside IT and operations.

The move is also bound to promote some nervousness in the wider in-house community should other companies start getting similar ideas, particularly among the banks that are among the largest employers of lawyers. Perhaps that explains why a less dramatic restructuring at Morgan Stanley, an overhaul of its equities and fixed income division, has sparked unrest and claims that the bulge bracket bank’s legal staff will suffer.

Morgan strongly denies that any redundancies or job cuts have or will be considered at the legal function – even stressing that it is still hunting for fresh law recruits. Still, such cases are a reminder that one problem of going in-house is that you are often regarded as a cost centre and therefore something to be restructured and minimised.

Likewise, if a business with 100,000 staff has a shake-up, the chances that the legal team will get caught in the crossfire are considerable even if, like Citi, your company employs enough lawyers globally to staff a top 10 UK law firm.

Not that law firms should be feeling too smug; Citi has indicated that it is to centralise its procurement – which could quite likely include legal services - by 2009.