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London or not – Insider commercial law review

By Ian Fraser

Scottish Business Insider

May 4th, 2007

TO BOLDLY GO OR SAFELY STAY: There are two schools of thought about the wisdom of setting up shop in London

SCOTTISH corporate and commercial law firms have two distinct approaches to tackling the huge market for legal services in London.

Large ones – including the Big Four of Dundas & Wilson, McGrigors, Maclay Murray & Spens and Shepherd & Wedderburn – have established their own substantial London offices with a view to taking on the London firms at their own game. Most of these firms are devoting more attention to growing their London arms than they are to building up their established Scottish ones. Their goal is to become perceived as genuinely UK law firms, along the lines of DLA Piper, for example.

In January the mid-tier firm Morton Fraser declared it was following in their footsteps with the opening of a London office. Chief executive Linda Urquhart says the firm saw the move “as an ideal platform on which to develop new business” and bolster its reputation in the UK’s biggest legal market.

The biggest London office operated by a Scottish law firm is that of McGrigors. Opened in 1987, this was bulked up through its shortlived 2002 merger with KLegal. It employs a total of 197 staff and 22 partners.

D&W is not far behind – from a standing start in 2002, its London office now employs 132 staff and 24 partners. Maclay Murray & Spens, which has had a London office for longer, ranks third with 125 staff and 16 partners.

There are drawbacks to running a big London operation. One is that it can be a big drain on resources in the early days and can remain vulnerable even once established.

There is a danger that, no sooner has a Scottish-based firm’s London office developed a strong reputation in a particular specialism, then the relevant legal star is offered ‘shed loads’ of money to defect to a rival.

McGrigors has experienced this on several occasions recently and one lawyer tartly commented: “They [Mcgrigors] are never going to be able to compete with Slaughter & May, Linklaters, Clifford Chance and Freshfields”.

Michael Murphy, managing partner of MacRoberts, says: “If you were to catch a partner in one of the big four Scottish law firms at a candid moment, they would probably admit that for years they have been wasting their time in London. It’s only in the past couple of years that any of them have been able to produce any profits there.”

This may be explain why many other Scottish firms have preferred to stick to the devil they know, focusing on serving the domestic Scottish market. While not necessarily the most glamorous of approaches, it is at least profitable and ensures that Scottish-based clients do not begin to feel neglected.

Philip Rodney, chairman of Burness, says that his firm is strongly opposed to opening up shop in London, as he believes it would lead to a reduction of work back home as referrals from London law firms would pretty soon dry up. “It’s better to be really strong in one market than an also-ran in several,”

He says. “Some important Scottish clients – large organisations which are headquarted in Scotland – are beginning to feel slightly unloved because the Big Four firms are devoting so much of their attention to London. This presents clear opportunities to firms such as Burness.”

Simon Brown, corporate partner at Anderson Strathern, says: “I believe that firms such as D&W and McGrigors have a compulsion for growth, which is why they have been looking at other markets including London.

“The danger is they ignore their core market, which creates opportunities for firms such as ourselves and others.”

Kirk Murdoch, senior partner of McGrigors, says that firms such as Brodies, Burness, Macroberts and Anderson Strathern are effectively consigning themselves to slower growth through their stay-at-home position.

“Since Scottish economic growth is slower than that of the UK, ispo facto these firms are saying they don’t mind accepting slower growth.”

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