My crystal ball suggests a tricky year ahead - Rob Aberdein

It’s the time of year when leaders of Scotland’s legal businesses assess the lie of the land, with the aim of identifying opportunities and threats along with strategies to maximise or mitigate these. So, what do I see in my legal crystal ball? 

Deals

The value of merger and acquisition activity with any UK involvement shrank by 33 per cent last year – the lowest total since 2009. My corporate lawyer contacts tell me a lot of deals didn’t get done in Q4 and there have yet to be any significant investments completed by a number of major Scottish-focused venture capital funds from Maven, Par Equity and Foresight. So, there might be some activity backed up in the pipeline. Top that up with more distress-driven deals and a desire by owners to close out a deal before a general election and it feels like 2024 could be very busy for deals and dealmakers. 

Corporate insolvencies 

​Rob Aberdein is Chief Commercial Officer, Progeny (Picture: Ian Georgeson)

Economists might say the world looks distinctly ‘frothy’ at present. Interest rates are north of 5 per cent, there’s a recession perhaps imminent, the first 25 per cent Corporation Tax bills will soon be landing for many businesses and the financial legacy of Covid is still with us, all against a backdrop of significant geopolitical instability. It’s tough out there. PwC has warned nearly 30,000 UK businesses are set to fail this year, the highest corporate insolvency levels since 2004. Most impacted are likely to be hotels & catering, manufacturing and transport & storage – all areas where Scotland perhaps punches above its weight. Restructuring, insolvency, debt recovery, dispute resolution and employment departments will likely see an uptick in instructions. 

Licensed Legal Services Providers and ‘new law’

The revised launch date for Licensed Legal Services Providers is projected to be ‘in the first half of 2024’, which means 49 per cent ownership for qualified non-lawyers will become a reality. This will be the first step to law firms being entirely owned by non-lawyers: something I believe is critical for the future of consumer-focussed legal services. Investment, enhanced access to funding, deployment of entrepreneurial expertise and the resultant improved customer journey for clients of progressive firms will see more ‘service stress’ experienced by ‘old law’ firms, who will continue to struggle to drive growth due to lack of available talent and limited access to funding. Law firms will fail. We will also see the continued rise of ‘new law’ firms adopting both consultancy and multi-disciplinary models. 

Property market 

1.5 million households will come to the end of their fixed mortgage terms in 2024 but with inflation falling faster than expected, we are seeing increasing optimism in the property market and mortgage rates reducing more significantly than forecast. I still believe we’ll see fewer sale transactions this year but expect house prices to rise (maybe by as much as 3 per cent).

Quality property in high-end city and rural locations with strong connectivity will remain in demand and we’ll see more buy-to-let stock from amateur landlords soften the flat and mid-level housing market.  Expect less sale and purchase conveyancing, higher levels of remortgages than last year and sadly, more repossessions. 

Despite the headwinds, I remain pretty upbeat about the Scottish property market, but mainly due to the mismatch between supply and demand. 

2024 will be a tricky year to navigate for many firms, with much more turbulence. However, there will be significant growth opportunities for firms with the appropriate strategies and focus.

Rob Aberdein is Chief Commercial Officer, Progeny