THE SCOTSMAN THURSDAY 12 NOVEMBER 2009 SCOTTISH LEGAL REVIEW 5
2009 IN REVIEW
PLANTING
SEEDS OF
RECOVERY
L
EGAL firms may have seen an
increase in contentious work and
in other counter-cyclical parts of
their practice, such as insolvency
and corporate restructuring, but none
of this makes up for the absence of a
buoyant market. In many ways, while
not an utter disaster for many law firms,
2009 will not go down as many people's
favourite year.
Michael Murphy, senior partner at
MacRoberts, says that his firm had a
small number of redundancies, mostly
in the back-office function, at the height
of the downturn, but that MacRoberts'
head count has nevertheless increased,
year-on-year, as did the firm's turnover
and profits. "Though the general
economy was pretty grim we managed
to do all right through it. Litigation,
employment and private client work all
saw plenty of business, as did other
areas such as pensions, technology and
contracts," he says.
MacRoberts has a well-established
construction group and in a recession
contractors fight for every pound, so
there was an unsurprising large rise in
construction litigation, which helped to
maintain turnover.
However, Murphy admits that 2009
has been a tough year for graduates
coming into the profession and for
trainees. "We took on our normal full
complement of 16 trainees, which is our
usual level. However, we did not have
places for as many finishing their stint
with us as we would normally expect to
have," he admits. However, he feels that
MacRoberts has done a lot better than a
number of firms as far as its graduates
are concerned. "We hear stories of law
firms having confirmed places to
trainees, then pulling back, and there
are instances of them cutting back on
their intakes. However, we believe that
you cannot plan to be in a recession
forever," he says.
The trainees the firm has taken on
now will not qualify before September
redundancies, but these have been
relatively well contained and have been
driven in part by a move to a paperless
office approach with respect to the
firm's Edinburgh office, he says. Some
12 administrative staff were made
redundant as a result and earlier, in
March, the firm made some support
staff and a small number of property
lawyers redundant, recognising that the
commercial property market was going
to be stagnant for some time to come.
"There is a challenge with all property
going forward, since the banks are
sitting on a large amount of property
assets and how they manage this on
their books will have a major impact on
the market," Andrews says. If the banks
released all the property on their books
for sale now, lawyers and surveyors
would have a brief bonanza in deal
making, but the banks would only
realise a fraction of the value of their
assets. Similarly, if they hold on to the
assetsforawhilethenreleasethemallin
one go, that too, will have a major
impact on driving values down.
However, the banks have shown in
previous property crashes that they are
very good at playing the medium to
long-term game and managing their
property books to secure best value.
Andrews says: "In the 1980s, Bank of
Scotland did some sensible and creative
things in managing its property book
and that paid off well for the bank over
the medium and longer term. We expect
the banks to react in much the same way
this time round."
2011 and, as he puts it, "You have to
believe that by then the jobs market will
have recovered to a reasonable extent."
Taking on graduates and providing
places to trainees is a medium-term, not
a short-term decision.
Richard Masters, managing partner
at McGrigors, agrees that there were
compensatory uplifts from various
parts of the practice to offset substantial
declines in corporate transaction,
commercial property and banking
work. As a result, he judges that the
firm's revenues will actually end up
being flat with respect to 2008, rather
than showing a substantial decline.
"The views and attitudes that
businesses take in times like this are
very important. They set the agenda for
what comes next. Many law firms have
deferred their graduate intake and have
severely curtailed the number of
solicitors they are taking on at the end
of their training. We have not deferred
our intake and though the number of
new posts have reduced, we are still
taking people on," he comments.
For Masters, keeping a good team
together, as long as economic
circumstances permit, is the right way
to go. "We have a vast amount of
investment in our people and rehiring
once the upturn comes is not a cheap
exercise," he says. However, there is a
balance to be drawn and different firms
will find that balance lies in different
places, he acknowledges.
Masters expects dispute resolution
work to continue strongly into 2010.
However, he points out that the wall of
litigation that many were expecting as a
result of the financial crash has not
really materialised yet. "A lot of disputes
are being dealt out of court, and counter
party risk � the fear that the other party
will not survive for the length of a court
case � has to be carefully evaluated
before people begin actions," he says.
Patrick Andrews, chief executive at
Shepherd and Wedderburn, says that
2009 was at least better than 2008 in
that it has not so far contained anything
like the same shocks and surprises. "We
have faced challenges this year, but they
have been more obvious and easier to
plan around," he says. Shepherd and
Wedderburn has had two rounds of
We believe
that you
cannot plan
to be in a
recession
forever
Despitetherecession,theleading
law firms are still investing in the
future, discovers Garth Wood
GROWTH INDUSTRY
Scotland's top firms
are still sowing for
the medium-to-long
term, despite the
credit crunch
Scottish Legal Review
THE Scotsman's annual
Scottish Legal Review
provides a revealing
snapshot of the sector's
performance.
The UK Legal 500 and
Chambers UK, both
published annually, rate
and rank the nation's top
law firms based on client
experiences, and it is from
these respected journals
that we draw together
this informative survey
of the Scottish legal
landscape.

Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9Page 10Page 11Page 12Page 13Page 14Page 15Page 16Page 17Page 18Page 19Page 20Page 21Page 22Page 23Page 24Page 25Page 26Page 27Page 28Page 29Page 30Page 31Page 32 Produced by PageSuite