Legal Business

Mixed fortunes for mid-market in tough Scots climate

TLT’s recent takeover of niche Scottish firm Anderson Fyfe is the latest chapter in a flurry of movement among mid-market firms in Scotland trying to secure their futures amid pernicious market conditions.

The Bristol-based firm is set to acquire Anderson Fyfe’s Glasgow and Edinburgh operations from July, while simultaneously launching a Northern Ireland practice through the lateral hire of banking litigation partner Katharine Kimber from Belfast firm Wilson Nesbitt Solicitors.

The takeover gives TLT eight new partners and an additional £3m in turnover, while Anderson Fyfe’s managing partner Tom McEntegart will become operational managing partner for TLT in Scotland. Following the Scots deal and the Belfast launch, managing partner David Pester said that the forecasted turnover for the 80-partner firm would be £48m by 2013.

Both the Northern Ireland and Scottish practices will allow TLT to develop its existing financial services sector group on a UK-wide basis, specifically its debt recovery litigation for a number of key banks. Anderson Fyfe is one of the leading debt recovery firms in Scotland, ranked in the top tier in The Legal 500. The Royal Bank of Scotland is a key client, with the firm re-appointed to its litigation panel in 2010. Last year McEntegart successfully represented RBS in the Supreme Court in the landmark RBS v Wilson case. The move will complement TLT’s first-tier South West debt recovery practice for clients such as Nationwide and J.P. Morgan. More than 40% of TLT’s income is derived from its financial services clients.

‘The strategic rationale for establishing operations in both Scotland and Northern Ireland has been driven by clients in the financial services sector seeking a one-firm approach to the supply of litigation services in the UK,’ said Pester.

For Anderson Fyfe, the deal with TLT is all about securing the firm’s future. ‘This is not growth for growth’s sake, it is about achieving a level of scale whereby we can continue to compete successfully in the market,’ said McEntegart.

‘This is about achieving a level of scale whereby we can continue to compete successfully.’
Tom McEntegart, Anderson Fyfe

This is the second deal announced between a Scottish practice and a UK firm in recent months. In March DAC Beachcroft agreed to a joint venture with insurance litigation firm Andersons Solicitors, which will take effect in September. This follows an all-Scottish deal earlier in the year, when Tods Murray acquired private client boutique Fyfe Ireland in January.

However, other Scottish mid-market firms are doing well without the need for consolidation. Private client specialist Turcan Connell is defying convention in Scotland by avoiding the merger route and expanding organically. After 15 years as an Edinburgh-only firm, the firm said recently that it plans to open an office with room for 20 staff in Glasgow later this year. The decision to move into Glasgow came, according to joint senior partner Douglas Connell, following research undertaken at the end of last year where the firm approached several hundred people.

‘There was quite a positive demand we should be making our services directly available in the west of Scotland,’ said Connell. The firm had posted 11 consecutive years of revenue growth up until 2009 and has since managed to tread water successfully during a very lean period.

However, one Glasgow-based firm has reported outstanding financial growth, despite the gloomy messages emanating from elsewhere. Harper Macleod is one of the first UK firms to report its 2011/12 financial performance and the signs are very positive.

The firm reported in May that unaudited turnover for the last financial year was up more than £2m to £19.1m, representing a 14% jump from last year when turnover was £16.8m. Revenues have increased year-on-year since 2008.

Martin Darroch, Harper Macleod’s chief executive and a chartered accountant by training, took the reins in 2006 when the firm’s revenues were around £10m. Since then billings have doubled and Darroch said the firm hopes to break the £20m mark for the financial year 2012/13.

The firm has consistently performed well in a tough market thanks to a balanced portfolio of commoditised and non-commoditised work. Around a third of its revenue comes from its public sector group, while another third is generated by its insurance group. The firm has managed to keep its balance sheet healthy without resorting to slashing its workforce.

The healthy financial performance and the ambitious expansion of certain mid-market firms contrasts with the stories at some of the largest Scottish firms, specifically Dundas & Wilson and Maclay Murray & Spens.

While McGrigors’ Anglo-Scots merger with Pinsent Masons went live on 1 May, Dundas and Maclays have both walked away from UK tie-ups, with Dundas calling off talks with Bircham Dyson Bell (BDB) late last year and Maclays and Bond Pearce ending negotiations more recently.

Dundas announced a timetable for a leadership battle in May, with a new managing partner and chairman to be voted in over the summer. Current chairman David Hardie and acting interim managing partners Caryn Penley and Allan Wernham will leave their posts on 31 July.

This comes at the end of a turbulent period for the firm. The decision to walk away from talks with BDB was followed by partner dissent over the firm’s leadership and strategy, with managing partner Donald Shaw stepping down from his post in March.