Merger fever continues to grip the Scottish legal market after veteran firm Biggart Baillie announced in June that it would be joining forces with ambitious Major UK firm DWF on 1 July.
The merger between Biggart Baillie, a Scottish blueblood which can trace its origins back to 1894, and LB’s 2011 National/Regional firm of the Year DWF, is the fifth Anglo-Scottish union since the start of the year. It follows a joint venture between DAC Beachcroft and Andersons, which was announced in March; the acquisition of niche Scottish practice Anderson Fyfe by TLT, which takes effect in July; the announcement in June that Shoosmiths would acquire Archibald Campbell & Harley; and the high-profile merger of Pinsent Masons and McGrigors, which went live on 1 May.
Andrew Leaitherland, managing partner at DWF, said: ‘We have ambitious growth plans and are always looking for ways to enhance our offering for clients and strengthen our UK-wide presence. Similarly, Biggart Baillie was keen to continue to expand and provide increased services for its growing client base outside of Scotland.’
The announcement caps off another successful year for Manchester-based DWF, which saw it take over Newcastle firm Crutes and launch a new office in Birmingham. The firm has just announced its 2011/12 financials which, according to the firm, saw revenue grow for the 19th consecutive year to £102m, a 24% leap on 2010/11. By breaking the £100m barrier for the first time, the firm would enter the top 30 of the LB100, based on last year’s figures. According to the firm, PEP was up to £415,000 based on a 21% leap in net income.
The addition of Biggart Baillie, which should roughly add another £17m to the top line, could put DWF among the upper quartile of UK law firms by revenue next year. The deal represents a significant coup for DWF, which saw merger discussions with Manchester neighbour Cobbetts fizzle out in January.
However, the merger with Biggart Baillie, which will see the 150-lawyer Scottish firm dwarfed by its 480-lawyer English suitor, could see yet another major Scottish name disappear from the market, as happened when McGrigors was consumed by Pinsents.
‘We are always looking for ways to enhance our offering for clients.’
Andrew Leaitherland, DWF
Other firms, such as Morton Fraser, have been making merger noises. In a recent press statement announcing the firm’s profits, chief executive Duncan Murray said: ‘Our vision and ambition is to create a UK-wide business. We believe mergers will be key to building scale and brand and we are actively seeking the right merger partners.’
Douglas Connell, founder and joint senior partner of Scottish private client specialist Turcan Connell, said the recent moves were ‘a major turning point for the Scottish legal profession’. He predicted that up to half of the top 20 Scottish firms were either in the course of completing merger talks or seriously considering mergers.
Millions of pounds have come out of the domestic legal market since the Scots banks shifted their operations south of the border following the collapse of Lehman Brothers. This has materially affected transactional work for the major Scots firms and has had a trickle down effect on the mid-market. Those millions are unlikely to ever come back.
With financials at many Scots firms flat at best, now would not be the best time for firms to make major strategic decisions. But many do not have the luxury of choice. According to Connell, some banks are believed to be looking hard at their exposure to the Scottish legal market in terms of overdrafts and off-balance sheet lending. It appears that some Scots firms are simply being pragmatic in a crisis and surrendering sovereignty.