Legal Business Blogs

‘A game of jenga’: Market reaction as 200-year old McClures enters administration and partners join raft of other firms

McClure Naismith appointed joint administrators on Friday (28 August) just twelve days after the firm’s executive chairman Robin Shannan told the Sunday Herald the firm ‘had not been enjoying the easiest of times.’ Market views agree, putting the failure of one of Scotland’s oldest law firms down to a loss in momentum that led to ‘a game of jenga’.

Shannan had mooted the possibility of a merger with another firm, and is understood to have approached a number of more sizable outfits including Bond Dickinson. Instead the now defunct firm has seen partners and staff join a raft of other firms including Maclay Murray & Spens, Harper Macleod, Burness Paull and Wright, Johnston & Mackenzie.

Despite what is indisputably a more benign market for home-grown Scottish law firms, the last three years have also seen the collapse of commercial law firm Semple Fraser in 2013 and more recently Tods Murray – acquired by Shepherd and Wedderburn in a rescue deal last October. According to Lawrence Ward, CMS Cameron McKenna’s senior partner Scotland, smaller and medium sized firms like McClures aren’t getting much respite from better market conditions as a result of general consolidation and changing client demands.

‘I have no details on the specifics of the McClure situation, but I would be surprised if it was the last. It would seem to me, that particularly for the smaller commercial law firms, this is quite a difficult market. The Scottish market in general has picked up, there is more activity and it is as good as it has been for some years but clients are looking for bigger firms with bigger networks and more specialist skills. For smaller and more medium sized firms it will remain quite challenging.’

Although it was a combination of high real estate costs and an overreliance on banking which led to the eventual demise of 158-year old Tods Murray, the contributory factors for the failure of McClures, which had offices in Glasgow, Edinburgh and London, are not as clear cut.

One partner at a rival Scottish firm suggests that the firm, founded in 1826, had suffered a number of departures over the last three to five years which had a cumulative effect on its momentum: ‘At one level it is a game of jenga, you keep taking the blocks out and at one time you take a block out, and it’s not the most obvious block, that is going to topple the tower. They got to the point where the number of departures got the momentum going the wrong way. And once that happens it can be hard to get it back in the right direction. It has been a slow recede rather than a sudden fall from grace.’

Another suggested that the firm, which was best known for its projects and commercial property practices but failed to create a best-in-class offering, had failed to adapt to the challenges the modern legal market is facing.

‘The firm hadn’t changed over the last twenty years. They were just business as usual, and hadn’t adapted to the world we are living in now. It wasn’t high real estate costs or practice areas failing. It was just very tired, same people in charge, lack of new ideas and they hadn’t kept up.’

Some fallout from the collapse still remains as though the majority of McClure’s partners have managed to find new homes (see list below), there are still four – Ewen Brown, Alistair Croft, Mark Parkhouse and David Thomson – who have yet to be confirmed at new firms and while administrators said that 80 staff had found new places and 14 were being kept on, 42 had been made redundant.

Yesterday, City firm Marriott Harrison, which Legal Business revealed was looking to take on McClure’s corporate team, confirmed it had hired four partners in London, with three in financial services and one partner in disputes.

Full list of partners to find new homes:

Harper Macleod

John McHugh, litigation

E-Ming Fong, litigation

Suzanne McGarrigle, litigation

Philip Sim, real estate

Scott Kerr, corporate

Maclay Murray & Spens

Morag Campbell, corporate

Robin Shannan, corporate

Wilson Aitken, property

Frank Johnstone, consumer finance

Philip Sewell, litigation

Marriott Harrison

Andrew Williamson, financial services

Kit Stenning, financial services

Nils Reid, financial services

Jim Mackie, disputes

Burness Paull

Steve Scott, property

Bob Binning, property

Colin Brown, property

Wright, Johnstone & Mackenzie

Colin Millar, head of corporate

Stewart King, commercial property

HBJ Gateley

John Blackwood, banking

Morton Fraser

Paul Kenneth, property finance

Excello law

Ashok Ghosh, project finance