Legal Business

Tods acquisition helps boost revenue 26% to £48m at Shepherd and Wedderburn

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Scotland Shepherd and Wedderburn
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Shepherd and Wedderburn’s chief executive Stephen Gibb (pictured) has hailed 2014/15 a ‘cracking year’ as the firm posted a revenue increase of 26%, from £38m last financial year to £48m in the year to 30 April.

The £10m turnover increase includes seven months of trading following the acquisition of Tods Murray in October last year but, even without the acquisition, Gibb told Legal Business that organic growth would have been ‘close to 11%’ and would have pushed the firm’s revenue figures over the £40m mark. As it stands, the figure inclusive of Tods’ contribution puts the firm on a good footing to have annualised revenues of over £50m next year.

The Scottish firm also said profits per equity partner had made a significant increase, jumping 21%, from £278,000 to £335,000 as profits picked up to £18m.

Gibb said: ‘We had a cracking year actually because we had really good organic growth as well as the benefit of the revenues from the new people that have come in. The interesting thing is that when we talked about being stuck between £35m – £38m our revenue, just with the organic growth, would have been well over £40m. So that shows you that we had actually broken through that barrier organically.’

Revenue increases across all sectors was strong, with the firm’s largest sector energy and natural resources up 18%, real estate and infrastructure up 26% and financial services up around 21%. The corporate team generated an extra 24% in revenues, working on £5.2bn worth of deals in the last financial year, including the sale of Wolfson Microelectronics to US rival Cirrus logic.

Gibb added: ‘The delivery of the Tods deal was extremely strong, I am very proud of the management team in this business and that is excluding me because for example we migrated 3,5000 clients, 6,800 matters and 2.1m documents in ten weeks. We had the IT up and running, we had the people in our building by Christmas and that was quite a feat. Plus the attitude of the people who’ve joined us has been fantastic – they’ve really got stuck in and they’ve really integrated very well.’

Shepherd and Wedderburn acquired out of administration the business and assets of 158-year old Tods Murray following the latter’s falling revenues and exposure to volatile property and finance markets. It managed to migrate the offices over without making compulsory redundancies in December.

kathryn.mccann@legalease.co.uk

For more on the current state of play in the Scottish market see: When the hurlyburly’s done – nationalism, devolution and another turbulent period for Scots law firms

Legal Business

We need to talk… about technology

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Cyber security Shepherd and Wedderburn
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Shepherd and Wedderburn’s Stephen Gibb argues that the law must keep pace with change when it comes to connected networks

Innovation lies at the core of technology. Evolution and improvement in the ways we design and use basic utilities and infrastructure such as telecoms, water and energy are key to ensuring perennial and adaptable services for an ever-growing global population.

Legal Business

‘Quite a year’: Shepherd and Wedderburn posts 23% quarterly revenue bump after Tods acquisition

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Financial results 2014/15 Shepherd and Wedderburn
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Scottish LB100 firm Shepherd and Wedderburn has revealed a 23% increase in revenue to the third quarter (Q3) of this financial year following its acquisition of Tods Murray in October 2014.

Turnover at the firm has risen by £6.5m, from £28.1m for Q3 2013/14 compared to £34.6m for Q3 2014/15. Of the 23% percentage increase, 11% came purely from the existing Shepherd and Wedderburn practices, while the balance was made up by the acquisition of 158-year old Tods Murray.

The firm managed to avoid making compulsory redundancies following a 45 day consultation period and a consolidation of the two firms under one roof in December. According to the firm’s chief executive Stephen Gibb (pictured), there was double digit growth in all the key sectors of the firm: energy and natural resources, financial services, real estate and infrastructure.

Speaking to Legal Business, Gibb said: ‘It has been quite a year, with the acquisition of the people and business of Tods Murray in early October coming alongside a really impressive performance across the pre-existing business, with all key sectors showing double digit growth. We have consolidated our market leading position in the Scottish market, remained debt free by keeping a tight rein on costs and added some significant high profile lateral hires that will bolster our international reach. I am really optimistic about our future performance and we will continue to look for opportunities to grow the business.’

The firm, which boasts clients including Sainsburys, ScottishPower and Clydesdale Bank, has been working on its three pronged strategy since 2012. This plan for the firm includes growing its international reach, becoming a market leader in Scotland and competing with the top 30 firms in the UK in terms of deals and the quality of work.

The takeover by Shepherd brought to an end a period of steady decline for Tods Murray, historically one of Scotland’s most respected firms. In 2005/6 the firm posted revenues of £23.4m and the firm featured in the LB100. However exposure to volatile property and finance markets took its toll post-Lehman, with revenues falling by 37% to £14.8m in 2009/10. The firm fell out of the LB100 in 2008, and its last published accounts showed a fee income of just £12.6m in 2012/13.

kathryn.mccann@legalease.co.uk

Legal Business

The ‘big move’: Shepherd and Wedderburn avoids compulsory redundancies as it finalises Tods Murray integration

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Legal mergers Shepherd and Wedderburn
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Shepherd and Wedderburn has managed to avoid making compulsory redundancies as it looks to complete the integration of Tods Murray, which it acquired earlier this year, into one office.

The 45 day consultation period which kicked off following the acquisition has ended with the firm being able to make all the required redundancies through voluntary severance. From Monday, the firm will also have all of its employees under one roof, having finalised fit out works in Edinburgh and Glasgow as well as adapting IT systems and training.

In a statement, chief executive of Shepherd and Wedderburn, Stephen Gibb said: ‘All of the required redundancies have been achieved through voluntary severance and many of those who have left us have already secured new positions. We hope that in this more active market, the remainder will also secure new posts before much longer.’

He added: ‘The “big move” finalising the integration of our offices takes place this weekend. On Friday the enabling works will be finished in Edinburgh and by Monday we will have everyone under the same roofs, which is a tremendous achievement in such a short time.’

Scottish LB100 firm Shepherd and Wedderburn acquired out of administration the business and assets of 158-year old Tods Murray in October this year, following the latter’s falling revenues and exposure to volatile property and finance markets.

Although not ruling out further moves in Scotland, Shepherd is now looking to further increase its team internationally, as well as in London. Speaking to Legal Business in October Gibb said: ‘We are in discussions with a number of other people and teams in relation to further boosting the London and international business. Keep an eye out and watch this space because there will be more to come.’

kathryn.mccann@legalease.co.uk

Legal Business

‘We cannot take things for granted’- jobs at risk as Shepherd and Wedderburn acquires Tods Murray from administrators

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Scotland Shepherd and Wedderburn
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Scottish LB100 firm Shepherd and Wedderburn has acquired out of administration the business and assets of 158-year old Tods Murray, in a deal closed late on Friday (3 October).

Tods Murray’s website confirms that Thomas MacLennan and Alexander Fraser of FRP Advisory LLP were appointed as joint administrators on Friday, the same time as around 170 partners and staff were informed that they would be joining Shepherd.

Shepherd chief executive Stephen Gibb said: ‘Whilst inevitably there will be a need to rationalise, I am confident that the arrangement will provide significant benefits to our staff and client base’. A firm statement added that a 45-day redundancy consultation would begin this week, with 50 jobs initially at risk.

Of the Tods Murray partners moving across, 18 will join as partners, five as directors and seven as consultants. Following the acquisition, Shepherd will have 564 staff, including 82 partners. The addition of Tods Murray will boost Shepherd’s top line to around £50m, putting it among the largest independent Scottish firms by fee income in the Legal Business 100.

‘Shepherd and Wedderburn has a debt-free balance sheet and a strategy for sustainable growth both in Scotland and across the rest of the UK,’ said Gibb. ‘ The opportunity to add to our excellent client base and secure additional high quality lawyers to bolster our expert teams is ideally timed for our business. It’s a further significant step forward in realising our clearly defined strategy for growth.’

‘We are very sad to hear that Tods Murray has gone into administration,’ said Lorna Jack, chief executive of the Law Society of Scotland. ‘It represents the loss of a long-established and very highly regarded Scottish law firm.

‘We are confident however that arrangements are being put in place to ensure that there is as little disruption as possible to the firm’s clients as there is to be a full transfer of business to Shepherd and Wedderburn, one of Scotland’s largest law firms.

‘Law firms were hit hard by the recession which, combined with the ongoing, significant changes within the legal services sector, is continuing to have an impact. While the profession overall has been robust in weathering the downturn, today’s announcement shows that we cannot take things for granted, even as the economy shows signs of recovery.’

The takeover by Shepherd brings to an end a period of steady decline for Tods Murray, historically one of Scotland’s most respected firms. In 2005/6, the firm posted revenues of £23.4m and the firm featured in the Legal Business 100. However, exposure to volatile property and finance markets took its toll post-Lehman, with revenues falling by 37% to £14.8m in 2009/10, while net income fell from a 2007 peak of £8.5m to just £2.9m in 2010. The firm fell out of the LB100 in 2008.

Its most recently published LLP accounts showed a fee income of just £12.6m in 2012/13 but the message coming out of the firm was robust. Tods Murray had acquired private client boutique Fyfe Ireland at the start of 2012 while just two weeks ago the firm was proudly unveiling the recruitment of property lawyer Caroline Shand from Nabarro, with executive partner David Dunsire quoted in the Daily Record as saying: ‘Confidence has been regained in the economy and clients are looking for opportunities…We have an unparalleled team and we are very much looking forward to the future’.

Tods’ financial performance was symptomatic of problems encountered by a number of Scottish firms during the downturn, with a handful succumbing to takeovers by English firms, while Semple Fraser went into administration in April last year.

This contrasts with the recent performance of Shepherd, which, while suffering declining turnover over the last five years, weathered the difficult post-Lehman period to remain alongside Maclay Murray & Spens as the last surviving members of Scotland’s original ‘big four’ independent law firms. In the latest LB100, the firm posted a 7% revenue increase for 2013/14 to £38.3m, while profits per equity partner were up 6% to £265,000.

mark.mcateer@legalease.co.uk

Legal Business

Scottish firms: Burness Paull awards staff 10% bonus while Shepherd and Wedderburn grows construction team

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Scotland Burness PaullShepherd and Wedderburn
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Scottish firm Burness Paull is awarding a 10% bonus to all its eligible employees across the firm’s three offices in Aberdeen, Edinburgh and Glasgow following a strong set of annual results which saw a 20% rise in turnover and a 25% increase in profit.

Chairman Philip Rodney said: ‘Our excellent annual results, which exceeded all expectations, have been achieved through the hard work, professionalism and commitment of our staff. In recognition of this and of their continued efforts, we are delighted to be in a position to award a 10% bonus to say thank you.

‘Already we are looking to the future and have ambitious plans in place which will see us focus on three increasingly important sectors – oil and gas, financial services and property and infrastructure – and growing our international presence. Our dynamic and talented team will play an integral role in Burness Paull achieving its aspirations, so it is right that they should be recognised and rewarded in this small way.’

The award follows the announcement of encouraging financial results as the firm posted a hefty 20% turnover increase to £46.3m while profits rose to £20.7m from £16.5m, constituting a 25% increase. The firm was named National/Regional Firm of the Year at the Legal Business Awards in February with highlight work including advising FTSE 250 company Wood Group on all UK employment related services such as pensions and employment tribunal matters.

The firm was formed in 2012 following the union of Burness in Edinburgh and Glasgow and Aberdeen’s Paull & Williamsons.

In other news across the Scottish border, Shepherd and Wedderburn has added partner Gareth Parry to its construction and special projects practice with an eye to growing further. Parry joins with 24 years’ experience in private practice at McGrigors and DLA Piper, where he was a partner and headed construction teams for 14 and three years respectively. He specialises in major energy, regeneration and infrastructure projects, both in the UK and overseas.

Shepherd and Wedderburn chief executive, Stephen Gibb said: ‘His [Parry’s] technical expertise and extensive knowledge of construction and large scale projects, particularly in the energy sector, will further strengthen our market-leading credentials in successfully advising clients in these areas.

‘In the last 12 months the construction and projects practice, has experienced tremendous growth across a wide range of sectors advising on projects worth over £2.6bn. The team has advised on many major energy and infrastructure projects throughout the UK and beyond ranging from numerous office, industrial, retail and leisure projects as well as new hydro projects, hospitals, colleges, wave and tidal projects, wind farms, light rail, bridges and waste schemes.’

He added that the firm is looking to grow the team further on the back of winning new mandates and projects.

Jaishree.kalia@legalease.co.uk

Legal Business

Scottish revival: Growth for Brodies, Maclay and Shepherd as Scots independence vote hangs over recovery

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Scotland BrodiesMaclay Murray & SpensShepherd and Wedderburn
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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