It was once Scotland’s most revered firm but Dundas & Wilson continues to experience misery heaped upon misery, rounding off a second annus horribilis by announcing a successive double-digit drop in turnover today (19 July).
Turnover was down 11% at the end 2012/13 to £48.7m from £54.5m, with profit down 21% to £12.8m from £16.2m the previous year. Profits per equity partner have also fallen significantly, down to £164,000 from £210,000 – a fall of 22%.
A statement from co-managing partners Caryn Penley and Allan Wernham said: ‘The firm’s financial performance last year was bound to be impacted by the tough decisions we have taken to reshape our business and to build a platform for sustainable growth going forward.
‘The firm has already seen a strong start to it’s new financial year with results exceeding budgets in May and June. Our activity levels are strong and – combined with no external bank borrowing – we have a strong platform to build our business further in the next 12 months.’
This follows one of the poorest performances in the LB100 in 2012, with turnover dropping 12% from £62m at the end of 2011/12, falling 27% from 2008 to the end of the 2012 financial year. Taking into account the most recent results, Dundas has seen a 35% drop in the last five years, down from its 2008 high when turnover was £74.8m.
Eighteen months ago the firm was plagued by claims of strategic dissent following the collapse of merger talks with Bircham Dyson Bell at the end of 2011. Former managing partner Donald Shaw unexpectedly announced in March 2012 that he was stepping down from his post midway through his second term to return to client work. The reasons for this were unclear but suggestions from former partners were that partners were unhappy with his management.
Restructuring partner Penley and real estate partner Wernham were appointed to take over the firm’s management responsibilities on an interim basis and were elected to share the managing partner role in June 2012.
But the duo have been unable to arrest a slide in revenues and partner departures have been rife, with the most recent exits being private equity duo Simon Sale and Nadim Meer, who left for Mishcon de Reya in April. Other notable resignations include long-serving corporate partner Michael Polson in November last year, who has set up Ashurst’s fledgling Scottish operation; former Stephenson Harwood CEO John Pike, who left Dundas after less than a year to join Osborne Clarke, and Scots lawyers also point to the departure in February 2013 of well-regarded head of insolvency and restructuring Claire Massie for Pinsent Masons as a significant loss for the firm.
The number of departures meant that the firm had a bumper year of partner promotions, making up ten associates, a significant increase from the four promotions made in 2012. The firm also hired six partners in Edinburgh from Semple Fraser, which called in the administrators in March.
However, the financial strain experienced by Dundas means training contracts and vacation schemes have also taken a hit with 24 students due to spend two weeks at the firm’s London office this month told not to attend, which the firm blamed on its ‘strategic business objectives’, while eight out of thirteen trainees due to start their London training contract this September have been deferred until 2014.
In May, Dundas’ 11 London trainees due to qualify in 2013 were told just three positions would be available.
Dundas’ ill fortune reflects the increasingly tough Scottish market, which has been hit particularly hard over the last five years. The leading Scots firms have suffered from the diminishing status of Edinburgh as a financial centre since 2008, with the dramatic humbling of national champions like The Royal Bank of Scotland and Halifax Bank of Scotland and a move towards London in a bid to win more national transactional work has largely been a failed experiment. This pressure was a contributory factor in the decision by Dundas’ arch rival McGrigors opting to tie-up with Pinsent Masons a year ago.