Legal Business

Scottish round up: Brodies and Morton Fraser achieve record breaking revenues, Freeths expands into Scotland

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Financial results 2022/23 BrodiesFreethsMorton Fraser

Brodies has become the first independent Scottish firm to pass the £100m revenue mark.

The LB100 firm posted a turnover of £106.25m, marking an 8% growth compared to last year’s figure of £98.5m.

This is the firm’s thirteenth consecutive year of growth, while operating profit also increased by 6% from £46.1m to £48.6m

Managing partner Nick Scott (pictured) told Legal Business: ‘This year’s figures are the result of all our practices making progress, but the fastest growing practice area here was our personal and family practice.’

He added that reaching this milestone came at a time of a ‘constantly changing backdrop’ citing events such as the war in Ukraine, high inflation, and uncertain financial markets.

‘But it’s our job, of course as a firm to set ourselves a plan of making sure we’re making progress, whatever the backdrop,’ he continued.

The firm’s headcount has also grown by 3% from 771 to 794 and all eligible colleagues received a bonus of 6% in June, adding to bonuses paid throughout last year.

Earlier this year the firm launched its first Middle East office in Abu Dhabi, which coincides with further plans to upgrade its Scottish offices later this year.

Speaking about the Scottish legal market more broadly, Scott continued: ‘We are anticipating that transactional markets will pick up as the year goes through. We’re anticipating there being more activity on that side of the business, but disputes services generally are also in strong demand.’

Later this year the firm will reveal its strategic plans for 2024 to 2027.

Elsewhere in Scotland, Morton Fraser has also reported its highest-ever annual revenue of £25.7m.

The firm said this is an increase of 8% year on year and an increase of 25% over the last two years.

Chief executive Chris Harte told Legal Business: ‘We’ve had a growth rate across the business which has been consistent, with particular spikes in corporate, employment and private client practice areas. It’s encouraging that we’re having broad growth, which is not overly dependent on one area.

‘We compete with a range of firms, including large international firms and local firms, and our focus is making sure we are focusing on those service lines. This has helped drive our success.’

All staff will receive a bonus of 6%, which is not limited to just fee earners.

Finally, national UK firm Freeths has announced the opening of a new office in Glasgow, marking the firm’s first expansion outside of England.

Addleshaw Goddard real estate partners Paul Ockrim and Nick Taylor have joined Freeths as part of the expansion, which will be the firm’s 13th office in the UK.

Freeths has also revealed a 15% growth rate in revenue, taking its turnover to £129m, up 220% from £40.2m in 2014.

National managing partner Karl Jansen told Legal Business: ‘The move into Scotland came at the right point and right opportunity. We are seeing increasing demand from our clients for Scottish work, allied with more energy work up in Scotland which is a key area of growth.

‘We are starting out in Glasgow with a real estate practice, but we plan on expanding into other areas such as construction and planning, and obvious areas like corporate, litigation and employment. We fully plan to build a full service offering in the country.’

Elisha.Juttla@legalease.co.uk

Legal Business

Financials 2021/22: Strong year for Scottish independents while Stewarts’ profits balloon 93%

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Financial Results 2021/22 BrodiesBurness PaullStewarts

As financial results season enters the home straight, Scottish leaders Burness Paull and Brodies, as well as London-based disputes firm Stewarts, have announced strong increases to their top and bottom lines.

Burness Paull has unveiled a bullish set of financial results, with a 9% rise in turnover to £78.6m and a 7% hike in profit to £35.7m. Employees in particular will welcome the news, as the numbers are sufficient to trigger an all-staff bonus worth either 5% of their annual salary, or £2,500, whichever is higher.

Two years into a three-year strategy to attract and develop top talent, much of the growth is thanks to strong years for the firm’s staple practice areas of finance, real estate, dispute resolution and employment, though restructuring, technology, tax and public law also fared well. Standout transactions included Incremental Group’s £175m takeover by Telefónica Tech, and repeat instructions from tech giants such as Amazon and Comcast.

While positive, these results could not match the growth in 2020/21, when the revenue jumped 19% and profit 39% across the Edinburgh, Glasgow and Aberdeen offices.

Speaking to Legal Business, chair Peter Lawson (pictured) said: ‘We did experience a slight softening in the market following global inflation and the war in Ukraine. So we were delighted to come in pretty much what we budgeted. It’s just a slight softening, work continues to come in and we are still very busy.’

While profit and revenue were up, profit per equity partner (PEP) only saw a negligible increase from £725,000 to £729,000. Lawson said: ‘We took a strategic decision to allocate some equity points to the non-equity partners this year. We felt it was the right thing to do, to incentivise and reward all of the partners across the firm and we were pleased that we triggered our all-staff bonus’.

Over the last 12 months, the firm has brought in eight lateral partner hires, including immigration lawyer Grace McGill. The firm has also looked to move into family law, having hired former Brodies lawyers Richard Smith and Jennifer Wilkie earlier this year.

For its part, rival firm Brodies last month announced a twelfth consecutive year of growth which saw revenue reach £98.5m, up 20% on the previous year, as well as a boost in profit of 18% to £46.1m. The latest numbers will be particularly welcome given a static 2020/21, which saw both profit and revenue rise by just £0.5m.

Managing partner Nick Scott said: ‘Throughout the year, investments continued to be made in people, with the recruitment of colleagues in legal and business services teams, the payment of bonuses, and the introduction of new reward structures more closely aligning individual performance with reward. These measures represent the single largest investment in colleagues and colleague reward the firm has, to date, made.’

The last 12 months have seen the firm focus heavily on its office premises. A new Edinburgh office in January 2022 followed the opening of a London branch last summer, with a new Inverness outpost set to open its doors later this year.

Elsewhere, litigation specialist Stewarts has continued its striking financial run, today revealing a 43% jump in turnover and an eye-watering 93% uplift in profits. Total revenue grew from £79.7m to just over £114m, while net profit rocketed from £30m to £58m. Profit per equity partner (PEP) has shot up 86% from £1.4m to £2.7m.

On a four year track, revenues are up by 83%, however this includes a couple of shaky years where revenue  and PEP  plummeted as a result of Stewarts’ volatile contingency-fee reliant model.

The firm also announced its equity spread – Stewarts’ top earner took home £3.4m last year, while its lowest equity payout still easily broke seven figures at close to £1.2m.

Managing partner Stuart Dench, who replaced the long-serving John Cahill on 1 August, said: ‘During the year, we litigated ground-breaking cases, resolved disputes and achieved excellent outcomes for our clients. In previous years, we have indicated that our revenue and profit patterns will be “non-linear”. That remains the case, as these results demonstrate.’

Dench added that Stewarts plans to invest in new areas of work, announcing the launch of a policyholder disputes practice in September. A significant financial boon would have come Stewarts way this year, after Tesco settled a long-running shareholder dispute, paying out £193m. The dispute related to an accounting discrepancy in 2014 that saw the retailer post incorrect profits by a margin of £263m, with Stewarts partner Sean Upson leading a team representing a group of 112 claimants.

Charles.avery@legalease.co.uk

Tom.baker@legalease.co.uk

 

Legal Business

‘A fair bit of progress’ – Brodies withstands year-end turbulence to increase revenue and operating profit

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Financial results 2019/20 Brodies

Scottish leader Brodies is the latest firm in the LB100 to display its fiscal resilience, growing revenue and operating profit despite a significant Covid-19-induced slowdown during the closing months of 2019/20. 

Revenue at the Scottish independent was up 7% to £82m from £76.9m last year, making it 10 years of consecutive growth at Brodies and a 20% increase over the last two years. Operating profits, meanwhile, underwent a more muted 3% rise to £38.5m while profit per equity partner (PEP) suffered a 4% drop to £680,000 amid headcount increases. ‘Like many firms, we made a fair bit of progress until February,’ managing partner Nick Scott (pictured) told Legal Business. ‘We were up more than 7% up until the last couple months of the year when we were impacted by Covid.’

The 2019/20 performance is something of a slowdown on the previous financial year, when Brodies returned to form with a 12% hike in revenue following a period of more pedestrian growth. This year’s turnover was driven by mandates including acting for Chevron North Sea on the sale of ten Central North Sea assets to Ithaca Energy and acting for Accel-KKR on a series of international acquisitions to the private equity fund’s European portfolio. The firm also increased its cash balances from £21m to £25m in 2019/20. 

Meanwhile, Brodies also grew overall headcount over the financial year by 6%, including 29 additions to its corporate and commercial practice and 33 to its litigation practice. Throughout the Covid-19 lockdown Brodies has continued with new hires, with Scott attributing the firm’s minor slide in PEP to this investment in people.  

Despite the pervasive economic uncertainty due to Covid-19 and a potential no-deal Brexit, Scott is sanguine about the firm’s prospects in 2020: ‘Like most firms we made projections throughout this period and we’re currently a bit ahead on cash collected and client activity,’ he added. ‘There is an opportunity there; there is a lot of demand and clients asking for our help with their operational difficulties but also their wider difficulties in their lives. There is an opportunity for lawyers to help clients make sense of it all. There will be many existing clients who will need our help but also new clients entering the market.’ 

thomas.alan@legalbusiness.co.uk 

 

Legal Business

Sponsored briefing: Seeing
litigation through many lenses

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Dispute resolution Brodies

Stephen Goldie discusses Brodies’ growing litigation practice and the increasing popularity of ADR

Brodies’ position as the leading independent law firm in Scotland is well established. The only Scottish firm in the UK top 50, Brodies continues to employ more lawyers, increase revenue and has achieved more directory rankings than any other firm in its jurisdiction. But, like other firms in the UK, there are any number of new challenges, changes and uncertainties shaping the climate in which we live and work.

Legal Business

Sponsored firm profile: Brodies

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Dispute resolution Brodies

‘Brodies’ expertise and knowledge within the Scottish litigation arena is second to none. They provide a high level of service and succeed in putting their clients’ best interest at the forefront of their advice.’
Chambers and Partners UK 2020

Stephen GoldieStephen Goldie
Head of litigation and partner
+44 (0) 141 245 6226
stephen.goldie@brodies.com

Legal Business

Case study: Brodies

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Financial results 2018/19 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

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Strategic recruitment Baker McKenzieBrodiesLinklatersMorgan, Lewis & Bockius

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

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Financial results 2018/19 Brodies

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

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Scotland BrodiesBurness Paull

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

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Financial results 2017/18 BrodiesShepherd and Wedderburn

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