City exit risks profit

Law firms relocating from the City face paying out almost one-third of their gross annual profits to replace staff who leave as a result, new research has claimed.Property advisers GVA Grimley surveyed 50 lawyers earning an average of 75,000, and found that one-fifth would consider leaving their firm if it moved to a less central location, with transport concerns the most commonly cited reason.This could leave firms channelling 30% of their annual gross profits into replacing staff, which could cost an average-sized London firm12 million, GVA Grimley estimated.Most unpopular would be relocation to a business park inside the M25, with 75% of those surveyed saying such a move would make them consider leaving, at a cost of 112% of a firm's annual gross profit.But the final cost of a relocation could be even higher when hidden costs, such as lower staff productivity and loss of clients, are considered.City-based Clifford Chance is scheduled for a move to Docklands, with Allen & Overy possibly following suit.Nick McCalmont-Woods, agency partner in GVA Grimley's City office, said it was 'ironic' that law firms considered improving working environments by moving to more spacious offices as a way of retaining staff.'As our study shows, in London there are considerable risks, as well as benefits, to staff retention in making a move of this kind,' he added.

'As a result, there are potentially increased costs as well.'Paula Rohan