Legal Business

Case study: Brodies

Case study: Brodies

With the expansion of UK and international firms north of the border, as well as the stepping down of former managing partner Bill Drummond, Scottish leader Brodies has for the past two years endured what was by its own high standards pedestrian growth. 2018/19, however, has seen a return to form and place in the top 50 for the first time. Revenue increased 12% to £76.9m while profit per equity partner jumped 16% to £708,000.

These year-on-year growth rates are much faster than last year’s 3% and 4% respectively for revenue and profit, while the firm’s five-year growth track sees the top line up 48%. For managing partner Nick Scott, the performance comes after his first full financial year in charge – some validation for the man who had the difficult task of replacing the highly-regarded Drummond.

Legal Business

Revolving doors: US moves for Baker McKenzie and Linklaters as Morgan Lewis makes City play

Revolving doors: US moves for Baker McKenzie and Linklaters as Morgan Lewis makes City play

US and City firms have extended their reach in key jurisdictions with Baker McKenzie making a move in Silicon Valley and Linklaters hiring in New York, while Morgan, Lewis & Bockius welcomes infrastructure partner from US rival Latham & Watkins in London.

In London, Morgan Lewis hired infrastructure partner Ayesha Waheed from Latham & Watkins. Waheed focuses on international energy and infrastructure transactions and has experience working through Europe as well as emerging markets in Africa and Asia. She has acted for developers and lenders in oil and gas, power generation, and infrastructure projects around the world and has advised on all aspects of international project financings and privatisations.

London managing partner Frances Murphy told Legal Business: ‘Our goal in the London office continues to be growth and concentrating on qualitative hires that move our existing practices on that base while also being very responsive to client demands, needs and expectations.’

‘As far as we’re seeing currently from client instructions and interests, there’s a deep appetite for strategic investments in strategic geographies. I can only anticipate from that, that we’re going to be seeing the corporate group move from strength to strength. We’ve already moved from seven to ten partners.’ Murphy added.

Baker McKenzie, meanwhile, bolstered its M&A capabilities in Silicon Valley following the hire of Leif King. He joined the firm from Skadden Arps, Slate, Meagher & Flom LLP where he was head of corporate and M&A.

Head of corporate & securities in North America Alan Zoccolillo told Legal Business: ‘As we continue to focus on building out core transactional practice, we saw a great need on the West Coast in the US to build out our tech practice. We hope [King’s] hire will be the first in building a more robust team on the West Coast to help augment our other M&A teams in New York, London and other key centres around the world.’

He added: ‘This is the busiest August I can ever remember. We’re seeing an uptick in work across all sectors, in both strategic M&A and private equity.’

The hire of King follows several recent hires, in line with firm’s strategy to grow its transactional practice in key business centers around the world. These include the hires of life sciences lawyers Randy Sunberg and Denis Segota and Wall Street M&A lawyer Mark Mandel in New York, as well as Peter Lu, Rob Mathews and David Becker in London.

In New York, Linklaters hired Jason Behrens and David Miller from Schulte Roth & Zabel. Behrens has experience in structuring, formation and negotiation of private closed ended funds and acts for sponsors raising funds in a variety of asset classes, including real estate and private equity.

Miller has experience in representing employee benefit plan trusts, funds of funds, foundations, endowments and family offices on their investment into funds and their secondary market transactions.

Linklaters global head of US practice Tom Shropshire told Legal Business: ‘One of the core tenets of the firm-wide strategy is to expand our funds capability and build out our relationships with key clients operating throughout the funds environment. The US market is a key market for both the upstream and downstream sides of funds activity. We want to expand the group to have a broader client base, doing a wider range of work than it had done historically.’

Global head of investment funds Matthew Keogh added: ‘Private equity, real estate, infrastructure and credit funds have raised a lot of money in last four to five years and there are a number of factors which drive that, some of those are macro. We’ve seen a trend for increasingly large funds for top sponsors and those funds to be raised in an environment of high demand.’

Scotland saw a busy week for lateral hires. Clyde & Co announced it was transferring its private client team, led by partner Nikki Dundas, to Scottish firm Gillespie Macandrew in Edinburgh.

The private client team of five, which will operate under Gillespie Macandrew from 2 September 2019, became part of Clyde following its merger with Simpson & Marwick in 2015. Clyde wants to focus on its core sectors of insurance, energy, trade & commodities, transport and infrastructure, while Gillespie Macandrew advises on all areas of land and rural business, private client, commercial real estate, tax and disputes.

Clyde & Co managing partner for Scotland David Tait commented: ‘Gillespie Macandrew is an excellent fit for Nikki and her team and allows them to carry on providing high quality private client work for their clients.

Leading Scottish independent Brodies, meanwhile, added to its employment and immigration practice with the hire of Elaine Mcllroy. Mcllroy has over 17 years of experience as an employment and immigration lawyer and previously led the UK immigration team and Scottish employment practice at Weightmans.

Head of employment Tony Hadden told Legal Business: ‘We wanted to service immigration law requirements from our clients as the seemingly never ending saga of Brexit continues. We’ve had huge number of queries from clients with EU nationals and as Brexit became less and less certain we realised we had to bring in a team to help with those queries.’

muna.abdi@legalease.co.uk

Legal Business

Getting on with it: resilient market provides growth for Scottish independents

Getting on with it: resilient market provides growth for Scottish independents

Scottish independents Brodies and Shepherd and Wedderburn have continued their strong growth tracks despite ongoing uncertainty.

Brodies, Scotland’s largest firm, had a particularly strong year, as revenue rose 12% to £76.9m and profit came in at £37.4m, up 14%. This was up on the previous year’s flat growth of 3% and 4% respectively, with revenue up 49% over the last five years.

It was the first full financial year under new managing partner Nick Scott (pictured), who told Legal Business client activity had proved resilient despite political and economic uncertainty. The firm’s practice areas – banking and finance, corporate and commercial, litigation, personal and family and real estate – had all grown, he said.

‘There’s no certainty in anything anymore, people have realised they just have to get on with it,’ he commented. ‘We did anticipate that there would be a point when everyone just sat on their hands – we thought that might be in the lead up to and immediate aftermath of March – but for us, client activity continued at a decent level all year.’

The firm added ten partners through six promotions and four lateral hires, pushing the overall number of partners past 100 for the first time. Key mandates included acting for private equity fund Accel-KKR on the £1.16bn sale of cloud software company Episerver Group, acting for Drum Property Group in a deal with Barclays to develop a new headquarters in Glasgow, and advising the Scottish Parliament’s Finance and Constitution Committee regarding Brexit.

Scott said the firm would look to invest further this year, adding further lateral hires, as well as taking new premises in Edinburgh from next year and rolling out a rebrand. While activity had remained strong because of client demand, Scott also pointed to increased market share as helping drive revenue.

‘There’s a limit to how much we can control in terms of the political and economic backdrop,’ he commented. ‘It’s a fool’s errand to make any predictions to be honest, you have to make the progress while you can.’

Meanwhile, Shepherd and Wedderburn had a relatively flat year, as revenue rose 4% to £55.7m and profits were up by the same percentage to £22.8m. Over the last five years, the firm has grown turnover by 45%: just behind Brodies’ growth trajectory.

The firm made several lateral partner hires, which included the expansion of its property and infrastructure practice with a trio of partners from DWF, as well as opening an office in Singapore.

Shepherd and Wedderburn managing partner Andrew Blain commented: ‘All divisions were busy and reported growth in 2018/19. Although we have yet to see what the outcome of Brexit will be, we remain cautiously optimistic about the year ahead.’

hamish.mcnicol@legalease.co.uk

Legal Business

Scotland: All our yesterdays

Scotland: All our yesterdays

Change always creates opportunities,’ says Nick Scott, the new managing partner at Brodies, when asked about this year’s departure of predecessor Bill Drummond. But he then quickly adopts a more cautious tone: ‘There will be no radical change to the way we will run our business.’

Scott’s reticence to herald a new era with a major pivot reflects the predicament of a leader inheriting a 20-year legacy of success. Drummond presided over a striking 122% revenue growth between 2007 and 2017, ending with a slow (by Brodies’ standards) 2% increase for the financial year 2016/17, with turnover up to £66.7m, while profit per equity partner (PEP) dropped 2% from £597,000 to £585,000.

Legal Business

Growth for Scottish independents Brodies and Shepherd Wedderburn as uncertainty looms

Growth for Scottish independents Brodies and Shepherd Wedderburn as uncertainty looms

Scottish independents Brodies and Shepherd and Wedderburn have continued to grow despite a backdrop of what both describe as political and economic uncertainty.

For Brodies, a 3% uptick in turnover for the financial year represents its eighth consecutive year of top-line growth, while Shepherd and Wedderburn reported record revenue and profit of £53.5m and £22m respectively.

Revenue at Brodies rose to £68.59m, relatively flat year-on-year but up more than 31%, or £16.5m, since 2014. Profit this year increased 4% to £32.9m, and has risen nearly 40% over the same timeframe. This period represents the firm’s previous strategic cycle, which normally runs for three years but was extended to four following the Brexit referendum.

Managing partner Nick Scott (pictured), who took the role from longstanding incumbent Bill Drummond in April, told Legal Business the sustained growth validated the firm’s approach of having a strategy and sticking to it.

‘We don’t look at the growth rate from one year to the next, we need to look at the trend. We still see plenty of opportunity for us to grow.’

Highlights included advising the shareholders of Barrhead Travel Group on its acquisition by US travel company Travel Leaders Group and advising Craig Group on the sale of North Star Shipping in one of Scotland’s largest M&A deals. The firm also disposed of its personal injury business, which it said meant overall revenue was up £4m, or 6%, on a like for like basis with last year.

Scott’s appointment to managing partner brings with it a fresh three-year strategic cycle, which he said focused on there being growing opportunities for Scotland-based clients, clients investing in Scotland, and Scotland-headquartered law firms.

The oil and gas sector was turning around, while real estate and corporate and commercial activity was strong. Brodies had promoted five new partners in construction, private client services, real estate, corporate and litigation to reflect where it saw potential for growth. It also recently hired Tony Jones QC in its advocacy unit, the firm’s 98th partner, and added an office in Dingwall over the last year.

Scott said the political and economic uncertainty presented opportunities alongside the challenges: ‘One must never assume any particular event is good or bad, it’s never that black and white. That’s the lesson people in Scotland have learned over the last decade.’

Meanwhile, fellow Scottish leader Shepherd and Wedderburn’s record year saw revenue and profit rise 6% and 10% respectively. The firm has 78 partners across Edinburgh, Glasgow, Aberdeen and London.

Highlights from the year included advising FanDuel on its proposed merger with Paddy Power Betfair, as well as becoming the first top 100 UK law firm to offer funded litigation in partnership with litigation funder Burford Capital.

Chief executive Stephen Gibb said it had been a busy period and Scotland was an attractive target for UK inward investment following the fall in the value of the sterling after the Brexit vote.

He commented: ‘Despite uncertainty over the outcome of Brexit negotiations and global macroeconomic trends, our UK and overseas clients have continued to be active, particularly in sectors in which we have market-leading expertise such as clean energy, real estate, construction, food and drink, technology and regulation. We remain cautiously optimistic about the year ahead.’

hamish.mcnicol@legalease.co.uk

Legal Business

He took the high road: Brodies ushers in next generation as veteran leader Drummond steps down

He took the high road: Brodies ushers in next generation as veteran leader Drummond steps down

Hyperbole and cliché over the end of an era can be justifiably deployed this morning (5 January) with news that Brodies’ figurehead Bill Drummond is to step down in April after 20 years as managing partner of the Scottish firm he joined as a trainee in 1980.

Drummond (pictured) will make way for current real estate head Nick Scott, representing a handover to a younger generation of leadership after a hugely successful run that has seen Brodies emerge as the most successful independent Scottish firm. After driving some phenomenal financial growth as managing partner, Drummond’s immediate plans include taking a break and spending time with family.

Scott – who was chosen following an election process that took place last summer – trained with Clifford Chance before joining Brodies in 1999 and becoming a partner in 2001.  He has been a member of the firm’s strategic and operational boards since 2004 and head of the real estate practice since 2010. Last year he represented Brodies at our Legal Business 100 round table, which brings together management figures from the leading firms in our annual survey.

Scott takes the helm of a firm that under Drummond’s leadership is one of the fastest-growing firms in the UK for organic revenue growth over the past ten years, growing 122% from £30m to £66.7m between 2007 and 2017. During that period and since his appointment as managing partner in 1997, Drummond has established himself as the most successful Scottish law firm leader. Brodies was named National/Regional Law Firm of the Year at the Legal Business Awards in 2017, an award that the firm also won in 2015, and has also been shortlisted for the title an additional four times since 2010. Drummond himself was named Management Partner of the Year in 2013.

Scott said: ‘I have worked closely with Bill for over a decade.  It is therefore with pride, and an appropriate degree of humility, that I take on this new role within our firm.  My immediate priority will be to focus on the things which have earned this firm its reputation under Bill’s leadership.’

Brodies’ chairman, Christine O’Neill, added:  ‘In overseeing our election process this summer our board has been keen to ensure that Bill’s successor as our managing partner retained the same ambition for our clients and our people that Bill has brought to every board and partners’ meeting for the past 20 years. Nick has that same approach and his extensive involvement in our strategic and operational management, coupled with his track record of success for clients and development of partners and staff made him the ideal candidate.’

Scott’s key challenge will be maintaining Brodies recent momentum – the influx of UK and international firms into Scotland in recent years has made the market more competitive as former domestic rivals have been taken over by bigger firms with larger resources.  Revenue growth, while at 56% for the last five years, finally slowed to 2% in 2016/17, while PEP fell by the same amount.

mark.mcateer@legalease.co.uk

Legal Business

Financials 2016/17: Growth slows for Brodies as Scottish independent posts 2.4% revenue increase

Financials 2016/17: Growth slows for Brodies as Scottish independent posts 2.4% revenue increase

Scottish independent firm Brodies has posted slower growth for the financial year 2016/17, with turnover up 2.4% to £66.7m, while profit per equity partner (PEP) has decreased slightly, down 2% from £597,000 to £585,000.

However, profits before partner distributions rose by 2.6% to £31.7m and the firm’s cash balances increased by 14.4% to £18.2m in the seventh consecutive year of revenue and profit growth for Scotland’s largest law firm.

Last year, turnover at Brodies, which has offices in Edinburgh, Glasgow, Aberdeen and Brussels, was up 12% to £65.1m, while PEP was also up 12%. Revenue had grown significantly over the last five years.

Highlights for the firm over the last year included acting as head legal adviser to Aberdeen City Council on its £370m index-linked bond issue on the London Stock Exchange and advising Scottish Water Business Stream on its acquisition of Southern Water’s non-domestic business. The firm also acted as an adviser to Abellio on the sale of 40% of the Greater Anglia rail franchise to Mitsui & Co.

Brodies managing partner Bill Drummond Legal Business that the firm would now embark on updating its current strategy to adapt to new market conditions in Scotland as a result of Brexit.

‘We will have a strategic review this year with a very informed position about market and client reaction to the current situation to see where our next round of investment should run.’

He added: ‘All in all, it has been a very busy and at times quite dramatic year for Brodies and our clients, which underscores our satisfaction in recording another year of enhanced business performance for the firm across a number of measures.’

kathryn.mccann@legalease.co.uk

Legal Business

A Brexit veto? The best-laid plans for Scotland’s future in the UK and in the EU

A Brexit veto? The best-laid plans for Scotland’s future in the UK and in the EU

Brodies’ Christine O’Neill looks at the constitutional and legal position north of the border

It might be premature to say that the dust has settled on the result of the EU referendum. Although the initial shock of the outcome has worn off, there has been ongoing upheaval with a change of prime minister, the abrupt ending (and revival) of several political careers and the launch of a leadership challenge within the opposition.

Legal Business

Financials 2015/16: Scottish independent Brodies continues strong form with double-digit revenue and PEP growth

Financials 2015/16: Scottish independent Brodies continues strong form with double-digit revenue and PEP growth

One of the big four remaining independent law firms in Scotland, Brodies has continued its strong form announcing revenue growth of 12% from £57.9m to £65.1m, while profits per equity partner (PEP) is up 13% from £532,000 to £602,000.

In addition, profit before partner distributions rose by 14.2% to £30.9m and cash balances rose 7.3% to £15.9m as the largest law firm in Scotland continues to grow its ranks.

Speaking to Legal Business, Brodies managing partner Bill Drummond said the result was consistent with the sort of financial performance that the firm had sustained over a lengthy period of time, however he added that numbers were affected negatively by macroeconomic conditions, particularly in the last quarter.

‘As managing partner I am always keen to see the business perform to its full potential and if market conditions had been a bit buoyant in the fourth quarter of our financial year when some of the market concerns were starting to kick in we would have done better than that the way things were going.’

In a statement Drummond (pictured) added: ‘It is clear that we have entered a period of uncertainty, however we stand ready to support organisations and individuals, whether in Scotland, the rest of the UK or overseas, in facing the challenges that the Brexit vote will present as well as the opportunities that will undoubtedly emerge.’

During the last financial year the total number of lawyers and staff at Brodies grew by 4.6% from 603 to 631, while the number of partners rose from 82 to 91.

Last November the firm took its private equity offering up a notch by hiring Freshfields Bruckhaus Deringer partner Karen Fountain as part of a double hire into its corporate group. Alongside Fountain, Brodies recruited CMS Cameron McKenna partner Douglas Crawford.

In February, Brodies re-elected Drummond as well as its chair Christine O’Neill to another term in each role.

Drummond was first elected in 1998 and has served the firm for 35 years. As the firm’s head, he takes on strategic development, hands-on management and the job of bringing greater transparency to professional development across the firm.

The only other major Scottish firm to release financials so far this year has been rival independent Maclay Murray & Spens which had another disappointing year financially, with a 12% drop in PEP from £283,000 to £248,000, while turnover is up 3% to £44.8m.

kathryn.mcann@legalease.co.uk

Legal Business

Seventh term for Drummond at the helm of Brodies as Scots indy continues its emphatic form

Seventh term for Drummond at the helm of Brodies as Scots indy continues its emphatic form

Brodies has re-elected both its chair Christine O’Neill (pictured) and managing partner Bill Drummond to another term in each role.

The Scottish firm’s partnership unanimously re-elected O’Neill to serve a second consecutive term as its chair having first been elected to the position in 2013.

Litigator O’Neill will continue to work closely with Drummond who has been re-assigned as managing partner for the seventh consecutive three-year term, in what is one of the UK’s longest-serving managing partner roles.

Drummond was first elected in 1998 and has served the firm for 35 years. As the firm’s head, he takes on strategic development, hands-on management and the job of bringing greater transparency to professional development across the firm.

The firm was in growth mode last year and in November took its private equity offering up a notch by hiring Freshfields Bruckhaus Deringer partner Karen Fountain as part of a double hire into its corporate group. Alongside Fountain, Brodies recruited CMS Cameron McKenna partner Douglas Crawford, who starts in May.

This came after the firm hired a 15-strong family law team including its head from rival firm Simpson & Marwick in May.

It wasn’t a bad year in terms of financials either, after the firm turned in a strong financial performance, reporting a double-digit growth in both revenue and profits per equity partner (PEP) in its audited accounts for the 2014/15 financial year. Gross revenues rose 11% at the firm to £57.9m for the 2014/15 financial year from £52.1m in the previous year, while PEP jumped 12% to £532,000, up from £474,000 the previous year.

jaishree.kalia@legalease.co.uk