Firms look to futureproof

IT was spoken about for a long time before anything much happened, but now the pace of consolidation is quickening in the Scottish legal sector. Last week’s merger of Lindsays and Shield & Kyd was the fourth deal of its kind in well under a year, where a mid-sized or large firm has taken in a smaller partner.

However, the Shield & Kyd name will not disappear, unlike Bell & Scott, Bonar Mackenzie and Fyfe Ireland, which were subsumed into Anderson Strathern, Morisons and Tods Murray respectively. In Dundee and Arbroath, the new merged firm will trade as Lindsays, incorporating Shield & Kyd.

Alasdair Cummings, Lindsays managing partner, believes we have not seen the last of such activity in the sector. “I think there will probably be more. There are a lot of conversations going on between all sorts of firms,” he says.

“We are always on the lookout for opportunities, and we are determined to grow the business and make it stronger. I would be very surprised if this is the end of the story.”

Both Lindsays and their new friends to the north insist that this particular merger makes tremendous business sense. Cummings describes the union as “a perfect fit, both in terms of the expertise we will be gaining and in terms of the geographical footprint”.

Peter Tweedie, Shield & Kyd’s managing partner, uses a similar phrase – “a perfect cultural fit in terms of our people and the areas of expertise of our respective firms”. But what is a “perfect cultural fit”? What is the culture of these long-standing firms with proud histories? Lindsays dates back to 1815, with Shield & Kyd, founded in 1868, cast in the role of junior in the partnership.

“It’s about the kind of people we are and our attitudes towards client service and staff,” says Cummings. “There is a chemistry; we all spend a lot of time at work and my philosophy is to spend it with people you trust and respect. We went through a strategic exercise at board level to look at our client business and identify our DNA, to ask what kind of firm we are.

“The opportunity came to talk to Shield & Kyd. We are known to each other and have similar market places and a compatible client base. There were real synergies there.” So what do the firms stand for, what is the “cultural fit” that will see them merge formally on 28 May (with “negligible” job losses at support level, they insist)?

“We are always striving to give excellent client service and provide a good place for people to come to work,” says Cummings. “Part of it is serving clients through their life – whatever their needs – and having empathy with and an understanding of clients. There was a real longevity of relationship at Shield & Kyd too.

“It is not without its stresses and strains but we have a very different culture here.”

Cummings knows about “stresses and strains”. He became managing partner in January 2011 and in last year’s results turnover dipped from £11.4m to £10m.

He admits: “It’s been tough, no doubt about it. Every week brings new challenges and it has been a baptism of fire.”

He then uses one of the great euphemisms of the moment – “it is very competitive on pricing” (translation: clients want it done well, done now and done cheaply) – and says this has been an enormous challenge combined with lower levels of activity.

“Things have been very tough with corporate and deals, but Lindsays is a broad church and we have checks and balances. The skill is trying to put resources into the right place and to grow the bits of the business that will be successful in the long term. Are we delivering the right services as the market changes around us?”

Lindsays’ victories at the Scott+Co Scottish Legal Awards 2012 give a fair indication of its strengths – it picked up team awards in family law and residential property, where it is proud of its use of new technology, including pioneering QR (quick response) codes in the sector, while Stephen McGowan won the rising star prize for his high-profile licensing work. Cummings says the private client team is also doing well, while charities and renewables are also significant. (If I had a pound for every firm that says renewables are increasingly important, I’d be able to pay upfront for solar panels on my roof).

Shield & Kyd is also strong on private client, as well as commercial property and small corporate, and Tweedie insists both personal and business clients are “delighted” at the greater offering the firm will have after the Lindsays hook-up. But what about the “cake” question – is the new firm, even with its greater geographical and sectoral reach, just trying to retain its own slice of the ever-decreasing cake that is the Scottish legal sector?

Cummings responds: “Possibly, but you have to constantly look at the bit of cake you have got – and see what more you can do for existing clients. Also, Shield & Kyd brings in a whole new client base.”

He smiles when asked if Scotland still has too many lawyers – and answers carefully, but clearly: “It’s hard to say no given business levels at the moment.” However, he thinks Lindsays – and the sector generally – is prepared for the challenges that will be presented by continued economic uncertainty and alternative business structures (ABS).

“The profession is pretty well prepared and sees the changes coming,” he says. “These are interesting times as no-one has put their head above the parapet in Scotland and we are all on a watching brief. Shield & Kyd is a strong add-on and we are positioning ourselves pretty well for what is coming.”

Asked if the traditional partnership is the best management model for the modern era, Cummings admits to being a little wistful: “I have to say I really like the partnership model; we have a strong collegiate feeling and strong team spirit here in what are difficult times. That might be old-fashioned but it appeals to me.”

Lindsays has a flatter management structure than many, with an executive board of Cummings, chief operating officer Ian Beattie and two non-executive directors. “Our model allows us to react quickly and make strategic decisions,” says Cummings. “Other firms can get tied down by full partnership meetings and die by inertia. It comes down to trust – do the partners trust us? If not, they can convene a meeting and vote us out.”

The trust works both ways, says Cummings: “Trust and delegation lets our people get on with what they do best; dealing with clients and winning new clients.”