Scottish LB100 firm Shepherd and Wedderburn has acquired out of administration the business and assets of 158-year old Tods Murray, in a deal closed late on Friday (3 October).
Tods Murray’s website confirms that Thomas MacLennan and Alexander Fraser of FRP Advisory LLP were appointed as joint administrators on Friday, the same time as around 170 partners and staff were informed that they would be joining Shepherd.
Shepherd chief executive Stephen Gibb said: ‘Whilst inevitably there will be a need to rationalise, I am confident that the arrangement will provide significant benefits to our staff and client base’. A firm statement added that a 45-day redundancy consultation would begin this week, with 50 jobs initially at risk.
Of the Tods Murray partners moving across, 18 will join as partners, five as directors and seven as consultants. Following the acquisition, Shepherd will have 564 staff, including 82 partners. The addition of Tods Murray will boost Shepherd’s top line to around £50m, putting it among the largest independent Scottish firms by fee income in the Legal Business 100.
‘Shepherd and Wedderburn has a debt-free balance sheet and a strategy for sustainable growth both in Scotland and across the rest of the UK,’ said Gibb. ‘ The opportunity to add to our excellent client base and secure additional high quality lawyers to bolster our expert teams is ideally timed for our business. It’s a further significant step forward in realising our clearly defined strategy for growth.’
‘We are very sad to hear that Tods Murray has gone into administration,’ said Lorna Jack, chief executive of the Law Society of Scotland. ‘It represents the loss of a long-established and very highly regarded Scottish law firm.
‘We are confident however that arrangements are being put in place to ensure that there is as little disruption as possible to the firm’s clients as there is to be a full transfer of business to Shepherd and Wedderburn, one of Scotland’s largest law firms.
‘Law firms were hit hard by the recession which, combined with the ongoing, significant changes within the legal services sector, is continuing to have an impact. While the profession overall has been robust in weathering the downturn, today’s announcement shows that we cannot take things for granted, even as the economy shows signs of recovery.’
The takeover by Shepherd brings to an end a period of steady decline for Tods Murray, historically one of Scotland’s most respected firms. In 2005/6, the firm posted revenues of £23.4m and the firm featured in the Legal Business 100. However, exposure to volatile property and finance markets took its toll post-Lehman, with revenues falling by 37% to £14.8m in 2009/10, while net income fell from a 2007 peak of £8.5m to just £2.9m in 2010. The firm fell out of the LB100 in 2008.
Its most recently published LLP accounts showed a fee income of just £12.6m in 2012/13 but the message coming out of the firm was robust. Tods Murray had acquired private client boutique Fyfe Ireland at the start of 2012 while just two weeks ago the firm was proudly unveiling the recruitment of property lawyer Caroline Shand from Nabarro, with executive partner David Dunsire quoted in the Daily Record as saying: ‘Confidence has been regained in the economy and clients are looking for opportunities…We have an unparalleled team and we are very much looking forward to the future’.
Tods’ financial performance was symptomatic of problems encountered by a number of Scottish firms during the downturn, with a handful succumbing to takeovers by English firms, while Semple Fraser went into administration in April last year.
This contrasts with the recent performance of Shepherd, which, while suffering declining turnover over the last five years, weathered the difficult post-Lehman period to remain alongside Maclay Murray & Spens as the last surviving members of Scotland’s original ‘big four’ independent law firms. In the latest LB100, the firm posted a 7% revenue increase for 2013/14 to £38.3m, while profits per equity partner were up 6% to £265,000.