Morisons, which had offices in Edinburgh and Glasgow and employed 90 people, faced a number of partner resignations in the weeks leading up to the firm entering administration. The partners informed Morisons that they intended to join other legal practices at the end of their six-month notice period.
According to the report by administrators from FRP Advisory, the departures “would have resulted in a significant loss of both clients and turnover” at the firm which can trace its roots back to the 1860s. The remaining partners had concerns that these departures would result in the business no longer being financially viable due to the level of fixed costs in the business,” it said.
After the remaining partners took advice and reviewed the financial position it became clear that without significant further investment the business would not be viable.
A rival firm was approached the weekend after the partner resignations in February with a view to Morisons being acquired, but those discussions ended without a deal and administrators were later called in.
The report said that when FRP was appointed three Glasgow partners had already agreed to join a rival firm and that the partners at the Edinburgh office had also held discussions with a practice with a view to joining it.
The work in progress at the firm, which is expected to leave a shortfall owed to creditors of around £1.6 million, was sold for around £236,000.
Some of the firm’s assets were bought by rival firms Thorntons and Blackadders. Eight Morisons partners and 41 staff transferred to Thorntons, and three partners and 30 staff transferred to Blackadders. A further three partners moved to Gilson Gray, Weightmans and Alan MacDougall.
According to Morison’s management accounts for the period ending 28 February, the practice made a net profit of £950,000 on a turnover of £4.9m. At the time the administration was announced Lorna Jack, chief executive of the Law Society of Scotland, said it represented the loss of a “highly regarded Scottish law firm operating in Glasgow and Edinburgh”.
“There has been ongoing, significant change within the legal services sector which, combined with a challenging economic environment, continues to have an impact on law firms,” she said.
Morisons became the latest in a string of Scottish law firms to fail in recent years.
Factors including a significant drop-off in corporate work carried out in Scotland following the financial crisis have been blamed for tough times for many in the legal sector.