Scottish Legal Review: Sailing successfully on

Over the last 12 months, the Scottish legal sector has been kept busy with work in the renewables sector as this continues to be a growth area for the country.

Another trend is for law firms to be involved in deals attracting international investments, and solicitors are grasping the benefits of technology, including artificial intelligence (AI) to work more productively.

In terms of challenges, law firms north of the Border face increasing competition from London-based legal organisations, including the “Magic Circle”, to attract and retain talent.

Firstly, looking at activity around renewables – as net-zero deadlines get closer – more focus is being placed on sustainability.

Murray McCall, managing partner at Anderson Strathern, says: “Within our own practice, we have seen our renewable energy team engaged in numerous projects and significant growth in the private equity sector. Our IP/IT and data team has gone from strength to strength with more SME clients getting to grips with AI. We have become known for our work in GDPR [General Data Protection Regulation] and cybersecurity, as well as supporting clients in securing patent and IP licences as we continue to see Scotland’s burgeoning tech sector grow.”

He adds that the firm has delivered record growth across its various practice areas.

“We have also been involved in major inquiries, including the Post Office Horizon Inquiry in London and the Scottish Covid Inquiry.

“One of our fastest growing areas is contentious employment law and we anticipate this trend continuing to rise on account of restructuring driven by AI, as well as the employment relations reforms on the horizon,” says McCall.

The Caledonian Waldorf Astoria Hotel, Edinburgh | Ian Rutherford

Robert Forman, partner in the built environment sector at Burges Salmon, identifies this area as one of the fastest growing parts of the firm. He says green buildings and renewable energy integrations are at the forefront. He also pinpoints the hospitality sector as performing well.

He adds: “In Scotland, our hotels team has been involved in numerous high-profile transactions this year, including the acquisition of Edinburgh’s iconic Caledonian Waldorf Astoria Hotel and, most recently, the financing for an £49 million acquisition of The DoubleTree by Hilton Edinburgh for international hotel owner Pandox. Elsewhere, we led on deals for Virgin Hotels and NUMA, as developers and investors target new ventures to boost tourism into the UK.”

Contemplating the last 12 months, Jacqueline Law, managing partner at Aberdein Considine, reports: “We have seen a significant uplift in debt recovery work on a UK level. The changing political and taxation landscape means there is a growing public appetite and opportunity for expert advice on lifetime planning, in particular, so we have invested in our private client team and legal services in general.”

According to Laura Irvine, managing partner at Davidson Chalmers Stewart, her firm has continued to focus on its key strengths providing commercial real estate and corporate legal support services. It is also particularly active within the renewable energy and healthcare sectors.

Andrew Blain, managing partner at Shepherd & Wedderburn, says: “Scotland boasts a highly skilled workforce in various sectors, particularly in energy, including renewables, real estate, infrastructure, technology and life sciences. These sectors are our areas of focus and growth, and we are highly active in them.”

He explains that over the last year, his firm has made significant investments in key sectors and practice areas. “It is rewarding to see our strategic initiatives yield positive results, particularly in our clean energy and real estate practices, as well as our employment, pensions and private wealth teams,” says Blain.

Looking at highlights of the last year, Claire Armstrong, managing partner Scotland at Dentons, comments that clients looking to consolidate legal panels have brought opportunities to law firms.

She points to a lot of inward investment coming to Scotland, with the firm’s real estate and corporate teams seeing this as a trend.

Giving examples of areas where Dentons has been active, Armstrong refers to construction and disputes, such as those arising out of high-value real estate projects across the Central Belt.

She adds: “Going forward, one of the trends will be a spike in Public Private Partnership [PPP] ‘handbacks’. This is the return of expiring PPP projects like hospitals and roads to government bodies and authorities. Most of these projects were set up for 25 to 30 years. We have dealt with a few already, such as Kilmarnock Prison. Some of the bigger hospitals will be ready for handback soon and that will involve a detailed and lengthy process of getting those facilities up to the standard that the PPP contracts require them to be in, with the potential for substantial disputes.”

The other big area of legal work in construction is insolvencies, according to Armstrong. “Due to the economic climate, supply chain disruption from Covid-19 and war, Brexit and, consequently, labour shortages, contractors are really struggling and we are seeing big Scottish companies like Stewart Milne and GHI going under,” she says.

Armstrong has also seen changing types of court action which is impacting the work of law firms, including more class actions, or group proceedings as they are called.

“Scotland is catching up with London and much of Europe where class actions are becoming a big feature of the legal market and are the focus for some of the top litigation funding providers,” explains Armstrong. “In Scotland, group proceedings were slightly slower to take off but we have had a number recently, including against a Scottish company who had tea leaf picking operation in India and the Volkswagen NOx Emissions Litigations. Many firms are adapting their practice to have teams who specialise in these actions.”

Also on the increase is the availability of litigation funding in Scotland, according to Armstrong. “This has had knock-on effects in the type of claims that we see in this jurisdiction. Funders didn’t really understand Scotland given the differences to litigation in England and Wales, but they are now looking at the market more given group proceedings are recognised. Insolvency practitioners are also now using litigation funding far more over the last few years to pursue claims they wouldn’t have before.

“Professional negligence claims provide a good opportunity for funders where the defender is insured and, therefore, a return guaranteed in the event of success. These sorts of claims, against a broad range of professionals, have long been a feature of the funding market in England and Wales, but we may see it emerge in Scotland this year too.”

Kilmarnock Prison | TSPL

Magnus Miller, partner in the dispute resolution team at Burges Salmon, says: “The past 12 months have seen significant developments in dispute resolution in Scotland, with an increase in the use of alternative dispute resolution methods – particularly mediation.

“This is, in part, being driven by a noticeable increase by the Commercial Court to use its case management powers to encourage parties to consider mediation. Looking ahead, we anticipate this trend will continue to gain momentum.”

Turning to technology, AI is increasingly being used by the legal sectors, partly to improve their service to clients.

McCall observes: “The advancement of AI over the past year has presented our sector with incredible opportunities. Harnessed correctly and with appropriate protections in place, it offers huge potential to streamline and automate simpler tasks, allowing us to focus on more complex areas of the law. This helps ensure clients are receiving help in the most efficient and cost-effective way.”

Turning to challenges, finding the right people continues to be an issue many law firms are trying to address, while trying to ensure the workforce becomes more diverse.

McCall says: “Our market is competitive – attracting and retaining top talent will always be a challenge, particularly as global firms expand their reach into Scotland. We do however offer fantastic client work, flexibility and a great

culture – which should never be taken for granted.”

And Blain agrees that talent remains a challenge. “There is a noticeable supply and demand imbalance, especially among experienced professionals. Despite this challenge, we are pleased to have increased our number of lawyers.”

According to Armstrong, there is still some movement between firms but it is slowing and the past 12 months have not been as prolific as prior years.

A move towards more flexible working can also present difficulties. Law says: “Another issue facing law firms is addressing the post-Covid drive towards a better work/life balance, with a lot more remote, flexible, hybrid, core hours and home working across all levels from trainee solicitor to partner. This is a welcome development, of course, in terms of mental health and wellbeing, and avoiding burnout, and it is something we actively promote at Aberdein Considine. However, the traditional model where lawyers typically worked outwith core hours undoubtedly gave firms much added value, so the adjustment to a new ‘normal’ has inevitably had an impact.”

Irvine agrees, explaining: “Although we have made great progress since the Covid crisis, there are still legacy challenges for law firms to manage including changes to the way that people work and the expectations, particularly of younger people, in striking the right work/life balance.”