Northern lights – The trials and treasures of Scotland’s leading GCs

Outside the limelight of London’s legal community, Scotland’s GCs toil in low profile. Legal Business assesses the talent north of the border

The professional life of a public company general counsel (GC) in Scotland can feel isolated at times. As a member of a small club, opportunities to plug into the professional networks that their peers in the South East of England take for granted can be limited. ‘We do get a sense sometimes that we are a decreasing community!’ confesses Christopher Morgan, GC and company secretary at Glasgow-based engineering plc Weir Group. ‘Certainly the number of Scottish-based plc GCs is thin on the ground and it’s dwindling.’

He is not exaggerating. There are now just three Scotland-headquartered companies on the UK’s largest listings market – The Royal Bank of Scotland (RBS), Scottish and Southern Energy (SSE) and Standard Life – and the pull of the M25 corridor has seen two of their GC roles migrate, leaving Standard Life’s Rushad Abadan as the sole FTSE 100 GC based in Scotland.

Casting the net to the FTSE 350, Abadan is joined by Peter Kennerley of Aggreko, Lisa Brown of Alliance Trust, Duncan Holland of Cairn Energy, and Morgan at Weir. Until recently there was a sixth member of the club, but with Robbie Brown’s departure from Wood Group in early 2016 the Aberdeen-based oil and gas company’s GC role moved from Scotland to Houston, Texas.

For those who remember the days when the country was home to some of the UK’s most sought after plc legal roles, it feels like a lot has changed. As Martin Cooke, GC of international spirits company The Edrington Group – one of Scotland’s largest private companies – puts it, ‘being a GC in Scotland can be quite a lonely place’.

This is only part of the story, however. In broader terms, the in-house community in Scotland has much going for it. Almost 3,000 Scottish solicitors now work in-house, just under one third of the country’s legal profession, and although public and government services roles dominate there is a diverse collection of in-house lawyers working in the commercial sector and enjoying the quality of life, rich culture and spectacular landscape of Scotland.

Legal Business felt it was high time to give the country’s in-house lawyers the coverage they deserve.

Where have all the plcs gone?

In part, Scotland’s dwindling GC community has resulted from the decline in the number of public companies headquartered there. ‘Sadly, the number of listed companies in Scotland seems to have dropped in recent years,’ says Neil MacLennan, GC and company secretary of Edinburgh-based materials testing company Exova Group. Exova floated in 2014 with a market capitalisation of £550m. MacLennan believes this was the largest main-market flotation in Scotland since Standard Life in 2006, but there have not been many to compare it with.

MacLennan adds: ‘In the last three to four years the number of flotations has picked up throughout the UK but there have been very few in Scotland and, aside from financial services, there aren’t that many large international trading businesses here anymore.’

There have not been many flotations, but there have been a number of de-listings. In the past decade, four Scottish companies have dropped out of the FTSE 100: Scottish Power became a subsidiary of Spanish company Iberdrola in 2006; HBOS was acquired by Lloyds Banking Group in 2008; the same year Scottish & Newcastle was broken up following its acquisition by Heineken and Carlsberg; and in 2012 Cairn Energy decided to return around $3.5bn in cash to shareholders, meaning it joined Aberdeen Asset Management, Aggreko, Alliance Trust, Stagecoach Group and Weir Group in the FTSE 250.

In this same period, a number of FTSE 250 companies – including Forth Ports and Exova – slipped out of the listings, though they continue to offer substantial opportunities for career development in-house.

While Scottish SMEs are thriving, outside the main market the situation has been compounded by struggles in the oil and gas sector. Scottish-headquartered Alternative Investment Market (AIM)-listed companies in the sector fell by more than 30% in 2015.

As a result, those wishing to make the move from private practice to in-house have found the going tough in the last few years. Stephen Swan, now legal director at Edinburgh Airport, reflects on joining the Glenrothes offices of Raytheon in 2007. ‘It was a great role to land but it was a slog. There are very few suitable in-house roles up here now – even the North West and the Midlands have more opportunities than Scotland. If you decide to move in-house but want stay in Scotland it can be a hard trick to pull off.’

Finding a suitable role in the commercial sector is only the first challenge lawyers in Scotland face. A related difficulty is the lack of opportunities to network with peers. Even a FTSE 100 GC like Abadan has found it hard to meet relevant contacts. ‘I would like to do a bit more networking,’ says Abadan, ‘but it can be difficult to find appropriate forums in Scotland. That naturally means you’ve got a diminishing pool of senior people with relevant experience based north of the border [to interact with].’

For those facing the growing challenges of advising a large plc, that can be a real issue. ‘There is a large and diverse in-house community in Scotland,’ says Morgan, ‘but a significant component is representing public-sector, AIM-listed companies, private businesses or subsidiaries and divisions of global plcs. That means you’re not getting into the listing or listing-related issues in the typical GC discussions; and sometimes it’s not the same type of discussion you’d get from a meeting of plc general counsel.’

Forum shopping

In 2009, Scots lawyer Cooke decided to address the need for more interaction among Scotland’s commercial-sector GCs by starting GCScot (a play on the GC100). At that time Cooke was the only lawyer employed by Edrington, the distillers behind some of the world’s best-known brands of Scotch whisky, including The Famous Grouse and Cutty Sark blends and The Macallan and Highland Park malts. In 2008 the company had acquired the Dominican rum brand Brugal. The following year its international drinks distribution joint venture, Maxxium, was restructured after two of the initial partners, Vin & Sprit AB and Rémy Cointreau, decided to exit. This period of intense cross-border activity made Cooke acutely aware of his professional isolation.

‘If you get in a taxi in Glasgow and say you work for Weir Group, everyone knows what you do. There’s a great deal of pride.’
Christopher Morgan, Weir Group

‘I had been to some of the in-house events organised by the Law Society and while they did well to meet the needs of a big population of lawyers most of them did not work in a private company with international business. What existed didn’t address the needs of my specific constituency and I felt it would be worthwhile to have a forum for lawyers representing primarily Scottish-headquartered organisations with significant turnover and of significant size.’

GCScot has since become one of the best-known forums for Scotland’s lawyers. Although there is no website – ‘people use the internet too much these days’, Cooke asserts – and attendance is by invitation only, it has around 50 regulars, including most of Scotland’s top commercial-sector GCs. A group of acolytes have even started a spin-off for up-and-coming counsel – GCScot NextGen.

Membership of forums like GCScot has become a sought-after way of getting practical advice for Scotland’s GCs. As Shauna Powell, partner and group legal director at Clyde Blowers Capital – a private equity firm specialising in the mid-market industrials sector – points out: ‘External firms are great at telling you what the law says in a particular jurisdiction but they don’t need to make money in that market and they’re not faced with the issues our staff face on the front line in high-risk areas. You need to go beyond knowing what the law says and have a conversation about what it means to implement advice in practice, which you can only really get by discussing things with other GCs.’

Scotland’s somewhat balkanised legal community – financial services and tech in Edinburgh, oil and gas in Aberdeen, and manufacturing in the central and western belt – can make such note-swapping awkward, however. This has led in-house lawyers to experiment with new ways of sharing ideas. Greg Bargeton of William Grant – another of Scotland’s large private distillers that would comfortably make the main market if it were to float – says: ‘Because of the relatively low numbers of GCs and the physical difficulty of organising meetings there is an attempt to do something slightly leftfield and innovative. We’ve been focusing on forming very small groups with like-minded individuals to test our thinking on issues around compliance, modern slavery, and bribery. The results have been very positive. Within those small forums there’s a fantastic opportunity for trust to be established quite quickly and that gets things out in the open.’

A smaller legal community also has the advantage of creating a sense of professional bonhomie. Euan McVicar, GC and company secretary of The Green Investment Bank, certainly felt the benefits when he moved in-house. ‘When I came into the role I was surprised that a lot of senior people at large plcs were prepared to give up their time to help me. There’s a very collegiate atmosphere up here and even people you don’t know will tend to help.’

Law firms are also becoming adept at facilitating networks. Burness Paull runs its own GC club for senior lawyers in the financial services sector, and a number of other firms, including Brodies, Eversheds, DLA Piper, and Shepherd and Wedderburn were credited for making efforts to engage with GCs. Bargeton comments: ‘Firms in Scotland are getting quite sophisticated in the way they organise events now. They’ve moved on from the traditional CPD events to helping you build networks.’ Nevertheless, some GCs argue that Scots law firms are still well behind their English counterparts in facilitating such networking.

The Law Society of Scotland has made moves to improve its representation of the country’s in-house solicitors. In 2015 it established a new in-house lawyers committee (ILC), run by Graeme McWilliams of Standard Life, and recruited Beth Anderson as head of member engagement for in-house lawyers.

 

‘Scots GCs don’t operate in a bubble. You get exposed to a much wider range of backgrounds.’
Martin Nolan, Payfont

 

 

While its in-house membership remains dominated by government and public-sector lawyers – almost two thirds of Scottish counsel are employed in non-commercial roles, compared to just under one third in England and Wales – the ILC is trying to respond to the growing diversity of the profession. Says McWilliams: ‘There is a greater variety of in-house roles now and we need to differentiate between them when we hold events. We’re all feeling the pinch at the moment in terms of economic restraint and we need to fight the in-house corner as a group. We’re keen on promoting the future of the profession and helping companies develop in-house traineeships. The in-house commercial role is becoming so specific that it makes no sense to rely on people coming out of private practice all the time.’

The Scottish Empire

‘What makes Scotland different,’ says Martin Nolan, GC of Edinburgh-based Payfont, a yet-to-launch cyber security company that has already been valued at nearly £200m, ‘is simply the fact that the GC community – and indeed the legal community as a whole – is much smaller. You tend not to have that level of sector-specific familiarity with GCs that you would get in London, but that’s an advantage because you end up not operating in a bubble. You get exposed to a much wider range of backgrounds and concerns when you’re bouncing ideas around.’

While a smaller legal community gives Scotland-based interactions a distinctive feel, most of the country’s GCs are also plugged into London’s legal network. As Standard Life’s Abadan points out: ‘Being based in Scotland isn’t something I am conscious of as a day-to-day matter. Most large Scottish plcs have substantial operations down south. Ultimately, [interaction] is driven by the origin of your work, and for a lot of larger listed companies, it tends to be driven from London.’

Scotland’s GCs may not be particularly conscious of their location, but they often find that their counterparties are. As Powell comments: ‘People underestimate the talent that there is in Scotland. When we started raising our first formal fund in 2007 we were using a Scottish law firm. The placing agents asked if we shouldn’t consider using someone in London. We politely declined. There doesn’t seem to be a recognition of the depth of talent there is in this market.’

The M25-isation of the professional services market has made these views of lawyers based outside London the norm and, in truth, Scotland’s clout as an independent legal market has been weakened somewhat since the 2008/09 banking crisis with a string of City law firms taking over Scots practices and Edinburgh’s position as a financial services hub being challenged.

Perhaps the question we should ask is not why there are so few GCs based in Scotland, but why so many fight to find positions there. Quality of life plays a big part, but it is also the case that much of Scotland’s legal diaspora wants to return. ‘It’s quite common for lawyers trained in Scotland to move to London or elsewhere but many of them eventually want to move back,’ says Exova’s MacLennan.

Morgan, who was divisional GC of rail at Balfour Beatty in London before joining Weir, explains why he was among those looking to return. ‘There are a lot of quality of life issues associated with living in Glasgow, so to be able to hold an internationally-focused legal role here was a great opportunity. Working for Weir was also a big lure for me. If you get into a taxi in Glasgow and say you work for Weir Group, everyone knows what you do. We have been operating for 146 years. From a history point of view there’s a great deal of pride working for a company like this.’

Above all else, it is this internationalism that defines Scotland’s GCs. ‘The fact that there are fewer of us doesn’t make a difference,’ says Powell. ‘The issues GCs in Scotland are facing are no different to those faced in any other market. They’re operating at the same level as GCs based in London and probably with a broader mind.’

Morgan agrees: ‘What you lack in the network of potential peers you gain in the outward-looking viewpoint of the business community. Scottish companies have had to look outwards for hundreds of years. Their markets are not on their doorstep and you tend to have a very global outlook if you’re based in Scotland. Certainly the experience I’ve had of discussing things with other GCs here is that we all, as a community, have a very global outlook when it comes to legal issues.’ LB

james.wood@legalease.co.uk