It’s been a turbulent ride for the Scots legal market post-banking crisis, but with the independence vote settled, the region is feeling more buoyant.
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Described last year as both beleaguered and bleak, the Scottish legal market is this year seeing something of a revival as revenue at Maclay Murray & Spens (MMS) – one of the LB 100’s worst performers in 2013 – was last week revealed to have risen by 7% from £40.4m to £43.3m and profit per equity partner (PEP) jump by £50,000 to £261,000, a 24% hike.
The results – which follow Scots rival Shepherd and Wedderburn’s 2014 turnover increase of 6.7% to £38.3m and a PEP increase of 9.8% to £278,000 – came in the same week that Brodies, one of the standout performers among its Scottish rivals last year, unveiled a fourth consecutive year of turnover and profit growth, with a 13.2% increase in revenue to hit £52.1m.
Final leading Scottish independent Burness Paull, created out of the December 2012 merger of Burness and Paull & Williamsons, has yet to publish its results but is understood to have had another good year, after 2013 saw it unveil a turnover of £38.7m, up 59% on legacy firm Burness’ £24.3m revenue at the end of 2011/12.
Dundas & Wilson, which merged with CMS in May this year, is expected shortly to unveil its last independent set of results, after a poor financial performance saw its turnover drop by 35% post-2008 to £48.7m.
MMS has put its growth this year down to improved market conditions and strong performances in corporate, tax, real estate, construction and financial services work that allowed the firm to invest further in five lateral hires last year.
Chief executive Kenneth Shand told Legal Business: ‘There are generally improved market conditions and more confidence, with more investment available to businesses.’
Having last year seen revenue drop by 33% over the five-year period since 2008, the firm’s latest financial results don’t go as far as putting it back to pre-Lehman levels, but its drop over a five-year period has been reduced to 21%.
Shepherd’s latest figures mean last year’s drop in revenue of 16% since 2008 has fallen to 3% since 2009.
It is a substantial recovery and Shand added: ‘The legal sector has faced a period of considerable economic uncertainty and has also had to tackle structural change. We have by no means been immune to these challenges but I am confident we have a very strong platform from which to move forward. Continued investment in our London and Scottish offices, underpinned by our active role in Lex Mundi, the leading global network of independent law firms, remains at the heart of our strategy, which will allow us to support clients across domestic and international markets.’
MMS currently sees around a quarter of its income derived from London and plans further strategic growth, with a particular eye on its successful financial services practice.
For Brodies, meanwhile, since an 8% dip in revenue to £35.8m during 2009/10, the firm has grown its turnover by 45.6%; a compound annual growth rate of 12% over both the last three-year strategic period and the past decade.
Operating profits before partner distributions increased by 23% from £19.3m last year to £23.7m in 2013/14, a year that saw the firm take leases for new premises in Aberdeen and Glasgow, pushing up its costs by 6.2% to £28.4m.
The firm has also invested in outside talent, and in the 12 months to 30 April, the number of partners at Brodies rose from 75 to 80, boosted by seven lateral hires, including regulatory and competition lawyer Rod Lambert from Norton Rose Fulbright in London to its Edinburgh office and corporate lawyer Neil Burgess from DLA Piper in Glasgow. Over the same period, the number of lawyers and professional advisers at the firm increased from 326 to 348.
While some question whether this level of growth is sustainable in light of Brodies’ Scotland-centric focus, Bill Drummond, managing partner at Brodies, said: ‘Over the past year we have seen further sweeping changes in the Scottish legal market. However, this changing environment, and the slowly improving economic prospects present opportunities for Brodies and for our clients. We remain committed to our strategy of supporting clients within and from Scotland in all sectors that are fundamental to the continued success of the Scottish economy.
‘The improving UK economy and more stable conditions in the Eurozone have encouraged many clients to move forward with greater confidence in the long-awaited recovery and to invest in their businesses and ventures. This fed through into increased transactional activity for the firm, especially for our real estate, corporate M&A, energy and finance teams.’
Senior partners are largely feeling optimistic for the year ahead, although hanging over the recovery is the untold impact of the referendum on Scottish independence on business confidence and investment, with the summer months expected to see a slow down. However Shand said: ‘We have a lot of projects in the pipeline. At worst they will come about in the Autumn and we’re cautiously positive.’
Tom.moore@legalease.co.uk
Caroline.hill@legalease.co.uk
The past week was one for lateral hires outside the City, as Brodies boosted its oil and gas practice with the hire of former Transocean general counsel for Africa and the Mediterranean, Tom Hickey; Squire Sanders beefed up its construction team in Manchester with former head of construction and engineering and corporate services at Pannone, Sean McCay; and Bird & Bird bolstered its Brussels base with the second competition partner exit from Ashurst’s Brussels office in two months.
Dual-qualified in England and Wales and the State of California, upstream oil and gas expert Hickey is to join Brodies’ Aberdeen-led oil & gas team on 6 April but will continue to operate from Paris, where he has been based for the last 15 months while with Transocean.
While at Transocean Hickey negotiated drilling contracts and supported the firm’s operations, compliance and tax teams as mobile rigs were moved between jurisdictions along the north, west and east African coasts, prior to which he held the position of assistant GC at explorative energy company Hess Corporation between 2000 and 2012.
During that time, Hickey worked out of Hess’ London, Houston, Kuala Lumpur and New York offices, advising on a wide variety of upstream and corporate projects in Europe, West Africa, the Americas, Australia and Asia.
Bill Drummond, managing partner of Brodies, said: ‘Tom has an impressive track record working with cross-functional teams on the successful delivery of complex and challenging projects across the globe.
‘In addition to his proven ability to carry out proactive risk analysis, develop local contractual arrangements and offer innovative solutions to manage risk, his in-house experience has given him a deep understanding of the issues that matter most to corporate clients, whether political, commercial or cultural.’
Also joining the Brodies team, this time in Glasgow, is dual-qualified renewables lawyer Donna Kelly-Gilmour, who came across earlier this month as partner from Glasgow-based boutique Wright, Johnston & Mackenzie.
Meanwhile, below the border, former head of Pannone’s construction and engineering group and corporate services division McCay, returns to Squire Sanders as partner in its construction division in Manchester, where he trained and spent 16 years at the firm until 2006, serving as a partner for seven years.
With more than 20 years’ contentious construction and engineering experience, McCay advises private and public sector clients in the energy, utilities, waste management and engineering industries, with particular expertise in advising on nuclear decommissioning and large infrastructure projects and regeneration schemes.
Also joining Squire Sanders’ 21-lawyer construction team from Pannone is contentious construction associate Jody Kite.
This comes just a few months after Australian firm Slater & Gordon announced the acquisition of the consumer services and personal injury (PI) business of Pannone in November in a deal worth £33m.
Meanwhile, across the channel, Bird & Bird has appointed competition and EU partner Efthymios Bourtzalas from Ashurst’s Brussels outpost, where he has been a partner since 2007, having spent three years as a case handler in the European Commission’s directorate general for competition.
Greek-qualified Bourtzalas has been involved in several high-profile and complex competition law matters at an EU and national level, including in particular several phase I and phase II merger and State aid cases. His practice includes merger control, restrictive agreements, cartels and abuse of dominance cases, state aid, public procurement, external trade, internal market, EU regulatory and institutional matters, and litigation on competition and EU matters before the EU and national courts.
His exit comes just weeks after high-profile competition partner Julian Ellison left Ashurst’s Brussels office in February to join Mayer Brown’s Brussels base in February.
Co-head of Bird & Bird in Belgium, Anne Federle, said: ‘We are very excited to welcome Efthymios to our team. His extensive experience, in particular in the energy and communications sectors, makes him a great fit and his track record of working with clients in South Eastern Europe will support the development of our firm’s activities in this region.’
francesca.fanshawe@legalease.co.uk
Top 30 UK firms DAC Beachcroft and Stephenson Harwood today (15 July) unveiled growth in revenue for 2012/13, while Brodies last week revealed a third consecutive increase in turnover and profit and Morgan Cole has seen its profits drop significantly.
DAC Beachcroft’s revenues have increased by 14.2% to £188.2m, up from £164.8m in 2011/12. Net profit at the 1079-lawyer firm also increased by 42% to £31.8m at the end of the last financial year, up from £22.4m the previous year. However, profit per equity partner (PEP) is down by 11.5% from £321,000 in 2011/12 to £284,000.
The firm merged with Davies Arnold Cooper in October 2011 and in January this year became the first European firm to launch in Chile by acquiring two local firms. Managing partner Paul Murray said: ‘Year-on-year comparisons continue to be distorted by the merger mid-year in 2011/12 but these numbers will provide a baseline for next year. Overall the results are acceptable in what continues to be a challenging and changing economic environment.’
Also unveiling its revenue figure today is UK top 30 firm Stephenson Harwood, which announced a more modest growth of 2% to £112.3m at the end of the 2012/13 financial year, up on last year’s figure of £110.2m.
The firm has attributed the growth to ‘some major investments including the recruitment of 12 new partners and the opening of offices in Dubai and Beijing’, chief executive Sharon White (pictured) said.
The firm now has nine offices across Europe, Asia and the Middle East and has acted on a number of high profile international deals over the course of the year, including for Indonesia-based Lion Air for the world’s largest commercial aircraft order, comprising 234 Airbus – A320 and A321 aircraft, with a price list value of $24bn. The firm also advised Hitachi on its bid to provide the rolling stock for London’s Crossrail, with a total contract value of around £1.8bn.
Meanwhile, Scottish firm Brodies has seen its revenue grow for the third year in a row, posting a 7.5% increase to £46m, up on £42.8m last financial year. The firm has credited the successful implementation of the second year of its three-year strategic plan, following on from a revenue increase of 16% in 2011/12, up from £36.9m.
Over the course of the year, the firm, which has four offices across Scotland and in Brussels, has continued to expand its Aberdeen office, which has grown from 34 to 46 staff, including 28 lawyers, as a result of three partner hires and six new lawyers.
Legal Business Management Partner of the Year, Bill Drummond, said: ‘The targeted investment that is being made across the business – in people and infrastructure – positions us well to benefit from stabilising market conditions and our strong balance sheet means that Brodies’ management team can continue to seek suitable investment opportunities to further enhance the service we deliver to our clients.’
Elsewhere, national top 75 firm Morgan Cole has posted a drop in revenue and profit, posting a turnover of £35.4m, down 3.3% from last year’s £36.6m, while PEP also dropped 34.7% to £162,000 from £248,000 in 2011/12.
Managing partner Elizabeth Carr said the firm has spent the past year considering its future business strategy ‘to ensure the right structure to meet the needs of the evolving market’ and subsequent changes to that structure and investment in the firm’s property portfolio means the reduction in revenue and profit are ‘entirely as expected.’
Highlights of the year include growth of £1.7m in the public sector and appointments on the Government Procurement and NHSLA panels.
Carr added: ‘Consolidation, competition and pricing pressures will continue through 2013-14 but we are confident that exemplary service to clients, focused sector marketing and an open approach to merger and acquisition opportunities will result in new clients and increased revenue in 2013-14 and beyond.’
francesca.fanshawe@legalease.co.uk
Our Management Partner of the Year, Bill Drummond, begins his fifteenth year running Brodies in May. We track his firm’s success amid a turbulent Scots market and ask if Brodies’ rise signals the decline of the country’s traditional elite
Bill Drummond wore his trade mark kilt as he stepped up to be named Management Partner of the Year at the Legal Business Awards in February. The attire was fitting, not because Brodies’ longstanding head is a staunch nationalist, but rather because Drummond has led his firm to startling success on the back of an unashamed focus on his home field.
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