Monday 6 June 2016 3:04 pm

Shell mulls offshoring its legal eagles to cut costs

I'm a reporter at City A.M., mainly covering law, professional services and banking

I'm a reporter at City A.M., mainly covering law, professional services and banking

Shell is considering offshoring its legal centre in a bid to cut costs and improve efficiencies, it was revealed today.

"We are operating in the reality of a 'lower for longer' oil price environment and to remain competitive, Shell is taking essential steps towards building a more sustainable and resilient company," said Donny Ching, Shell's legal director. "Shell's legal team is examining opportunities to offshore some specific parts of our work where it makes sense to consolidate services, increase efficiencies and reduce costs."

It is understood that the project is in its early stages, and no timetable or firm plan is in place.

Low oil prices have created significant problems for the industry as of late, with a report published by Bank of Scotland today finding that almost half (43 per cent) of oil and gas firms are now looking to cut costs and nearly a third (32 per cent) predicting that they'll need to resort to cutting down their headcount during the course of the year.

Read more: BP to kick off oil majors' worst reporting season yet

Earlier this year, Shell revealed that its earnings had slipped by nearly 60 per cent for the first quarter of 2016, while its income dropped by 89 per cent. The oil giant will be hosting an investment day tomorrow, where the state of its balance sheet is likely to be a hot topic.

Shell's potential moving of its legal department, which was first reported by the Law Society Gazette, would not be the first of its kind, as a number of firms have now shipped their back office operations off to a location with lower overheads in a bid to keep costs down.

Ashurst, which has a presence in London, opened up a Glasgow office in 2013 to offer business support functions.

Read more: Oil company forecasts aren't in line with reality

Meanwhile, last month, Dentons announced that it would be heading even further afield, setting up a business services centre in Poland. 

Dentons global chairman Joe Andrew said at the time the move was announced: "We are always looking for new ways to better serve our clients. After the firm's rapid expansion of the past few years it is a logical step for us to leverage our scale and resources more effectively, while continuing to invest in harmonization so that we can achieve our objective of building the law firm of the future now."