Calm before the Scottish storm

The news [of an English lawyers' invasion] hardly sparks a rush of kilt-lifting mooning A la Braveheart by Scottish solicitors – more a weary yawn and the feeling that they have heard it all before. Scotland is witnessing legal changes across the board. But ironically it is English firms that may kickstart full-scale revolution, writes Chris Fogarty.

Just when Scotland thought it was getting rid of English interference by establishing its own parliament, along comes a Sassenach law firm to ruin it all. Senior sources at Eversheds have told The Lawyer that establishing a base in Scotland is one of the firm's top strategic priorities.

This news hardly sparks a rush of kilt-lifting mooning A la Braveheart by Scottish solicitors – more a weary yawn and the feeling that they have heard it all before. Rumours of the arrival of English law firms have swirled around the streets of Glasgow and Edinburgh for years. Aside from Masons opening up a small office in Glasgow and poaching a few local partners, none have successfully penetrated the local legal scene.

The arrival of Eversheds (or any other major foreign firm) into the market could hail the end to the phoney war that has existed in the Scottish legal market for the last year.

The decision of Dundas & Wilson to link up with accountancy giant Arthur Andersen in 1997 was expected to spark a shake-up in Scottish legal services. But aside from a few tremors such as the decision of Burness' private fee earners department to join Turcan Connell (itself a Dundas offshoot), the Scottish legal market has remained unshaken.

With the piloting of a public defenders scheme in Edinburgh, impending regulation of MDPs, the attempted introduction of fixed costs and the new Scottish parliament on the way, many local lawyers are certainly anticipating change. “We are waiting for things to happen,” says Burness chairman John Rafferty.

Despite this, it is the English who look likely to be the catalyst for change. Eversheds' usual modus operandi is to enter a legal market and absorb a firm into its network. One obvious target is McClure Naismith, an apparentlysuccessful 21-partner firm with Glasgow, Edinburgh and London offices.

The firm has an extremely strong consumer finance practice headed by leading lawyer Frank Johnstone. It is rated as one of Scotland's top employment firms, as well as having a top-rated private finance initiative (PFI) department which completed Scotland's first £65m PFI deal. Its strength in this region would tie it in nicely with Eversheds' Leeds office – an English leader in public sector work.

McClure partners Johnstone and Morag Campbell give a measured response when it is suggested that their firm and Eversheds are an ideal match. “We would be interested in any approach,” says Johnstone. Campbell coyly adds: “I think you just look at each situation as it arrives.”

But such a partnership would bring severe difficulties – including Eversheds' usual demand that its name hangs over the door.

“I don't think they will find it an easy market,” says one partner. Another comments: “Scotland is already a very competitive market and it is very well-lawyered.”

The role of patriotism cannot be underestimated in Scotland. Dundas & Wilson insisted on retaining its name when it linked up with Andersens. Eighteen months ago the firm's managing partner Chris Campbell and chairman Neil Cochran were faced with a dilemma familiar to many similar sized English firms – how to get an international capacity.

They say the decision to link with Andersens has been vindicated, with turnover now up from £17.6m pre-merger to £22m post-merger. Their rivals are not so sure. “When we look at the MDP that is currently in place we are not impressed by the way the market has responded,” says Maclay Murray & Spens managing partner Michael Walker.

Another Scottish senior partner says clients' best interests were not served by the Dundas & Wilson-Andersens deal. One former Dundas & Wilson employee comments that they would be “astonished” if there is no fallout from lawyers, whose billing performance they believe is monitored by accountants.

Dundas & Wilson denies that the bean counters are peering over its shoulder – but this begs the question as to the nature of the firms' relationship. “We did not want to sell ourselves to their clients or for them to sell their clients crudely to us,” explains Campbell. “We can go to the client and say this is the way we could solve this problem and we would always be overt if it was going to involve [using] Andersens.”

The Lawyer has learnt that Andersens and Dundas & Wilson are looking to move into the same premises in Glasgow next year – although they will operate on separate floors.

“Throughout we will apply the highest standards of client confidentiality and ethics,” says Cohran, who went as far as getting approval from the Law Society of Scotland for the plans.

The society has, so far, stayed away from regulating MDPs, but this looks set to change. “My personal view is that we have to bring in rules to govern MDPs,” says society president Philip Dry. “It is important we do that or we'll be left behind by the situation on the ground.”

Dry believes that in a small Scottish market conflicts of interests pose a problem. Cochran denies this and adds that the society must act in the best interest of the client.

But Dundas & Wilson's real problem may now be the next move. “There are very few people in the Scottish market now who we think can add a lot to our business,” says Cochran. “We believe we have got the best people here.”

Close rivals Maclay Murray & Spens and McGrigor Donald are concentrating resources on expanding in London. McGrigors, whose London office was set up 10 years ago, is seen by some as having taken too much space in the capital – which has had a detrimental effect.

While admitting that a London office is a drain on resources, managing partner Kirk Murdoch denies this. He points to the recent poaching of Reynolds Porter Chamberlain partner Mark Johnstone and Steven Scates from Nicholson Graham & Jones as testimony to the success of a London operation that is contributing 18 per cent of the firm's £20m annual turnover.

Maclays takes a different approach to its London operation, moving people in and out as needed. “We don't have it packed full of people twiddling their thumbs,” says Walker, in a thinly-veiled snub at his rivals.

McGrigors and Maclays are Glasgow-based firms. But with the Scottish parliament opening in May 1999, the city to watch is Edinburgh. Firms are already shifting resources into the city, although for the time being Glasgow still sees itself as Scotland's legal capital.

“The property market will be different, but I don't really see a shift of legal services from Glasgow to Edinburgh,” says Morag Campbell of McClure Naismith.

However, now that the idea of a Scottish parliament has bedded down, there is mounting concern about its legal role.

Many lawyers are happy that the new parliament may lead to a reform of the Scottish feudal land system and succession rights. As Dry points out: “The difficulty with Scottish legislation is that it tends to be an add-on to English legislation.”

But the new parliament also brings new fears. Dry cautions: “One general concern of lawyers is that the Scottish parliament doesn't become gung-ho, churning out legislation just for the sake of it. We don't want law being churned out every 10 minutes.” This fear of going from a legislative “famine to feast” is shared by an increasing number of lawyers.

As debate continues over the impact of a semi- or fully-independent Scotland on business, lawyers have no wish to see company headquarters move from Berwick North on their side of the border to England's Berwick-on-Tweed.

Alan Boyd, who heads McGrigor Donald's parliamentary unit, believes the bulk of commercial law will be retained at Westminster, with fiscal, employment and social security law all beyond the Scottish assembly's remit.

“To that extent, a Scottish parliament can't just get up and legislate in a way that is going to hurt business,” says Boyd.

Despite this, it is inevitable that Scotland will forge its own legal culture. “As the laws begin to diverge it is going to be important not only for people in England, but also in Europe, to know what is going on here,” says Boyd.

That being the case, it is unlikely that English firms will sit back and let Scottish rivals advise a host of English, European and international clients with business interests in manufacturing areas such as “Silicon Glen”. Nor will large Scottish firms be able to or want to operate at a purely local level.

Take-overs, mergers and alliances are set to be forged. Scotland's phoney legal war is at an end. Let the battle begin.

Scottish firms square up for lobbying battle

US-style political lobbying is set to come to Scotland. Maclay Murray & Spens, Shepherd & Wedderburn and McGrigor Donald have all initiated units to deal with the arrival of the new Scottish assembly in May 1999.

While lobbying has not been a characteristic associated with English lawyers, the Scottish parliament opens up the opportunity for local lawyers.

Unlike Westminster, lawyers will get the opportunity to come in at ground level, so they will not have to compete against well-established lobbying firms.

Furthermore, the Scottish Assembly has promised an earlier flow of legislative information. This means lawyers have a greater chance to interpret and influence bills in the interests of their clients.

The three Scottish firms which have so far dipped their toes in the often murky lobbying waters, are each taking a different approach. Maclay Murray & Spens has linked up with PR company Beattie Media to set up a lobbying company headed by Jack McConnell, a former secretary of the Scottish Labour Party.

McGrigor Donald has set up a parliamentary unit headed by former Law Society of Scotland president and firm partner Alan Boyd. Shepherd & Wedderburn has set up Saltire Parliamentary Consultants, whose executive director David Nash was formerly at the Scottish Office.

Shepherds partner James Will was unconcerned by potential conflicts of interest where Saltire could be lobbying against the interest of another of the firm's clients. Will says law firms are used to dealing with such conflicts and will govern themselves by the same professional rules.

Nor do the Scottish firms see their new lobby arms as a short-term punt. “We see this as something that is going to build up,” says Will.

Other firms are not so sure. Burness, which has studiously built up contacts throughout the Far East, Europe and the US, says its own research shows there is little international awareness or interest in the new Scottish parliament.

Chairman John Rafferty says his firm will be staying out of the lobbying game. “We think there is a risk of lawyers dabbling in other disciplines where they don't have the skills to handle it,” he says.

The Public Defender solicitor's office

From this October, all suspected criminals in Edinburgh who were born in January or February and appear in the equivalent of England's county and magistrates court will be represented by a appointed lawyer from the Public Defender Solicitor's Office (PDSO).

A six-strong team, headed by criminal solicitor Alistair Watson, will handle up to 1,500 cases a year in this five-year pilot. The proposals have failed to impress Gerry Brown, a no-nonsense Edinburgh criminal solicitor and convener of the Law Society's legal aid committee. “There should be independent representation. That representation should be selected. There should be choice,” he says.

Client concerns aside, what upsets many Scottish solicitors is that the PDSO, whose accommodation and overheads are paid for by the Government, is not playing fair. Watson argues that there are holes in that argument. “Our rent and rates will all go into the equation at the end of the day,” he says.

As for so-called justice by astrology – matching defendants to lawyers by birthdate – Watson says that for swift research purposes a suitable cross-section of the community had to be found. He admits that if public defender clients are not granted legal aid, they will not be represented. Edinburgh lawyers say they would often represent such clients on a pro-bono basis. But Watson argues that private solicitors do such work as a “loss leader”, banking on the client coming back.

Although the pilot is five years, the first independent evaluation of the PDSO will appear in three years' time.

But Brown warns: “The solicitors in Edinburgh will be carrying out the perhaps more day-to-day monitoring.”

And what of the meat in the sandwich – the suspects who, through accident of birth have no say about who their lawyer is? In a straw poll of defendants coming out of an Edinburgh court, The Scotsman newspaper found little enthusiasm for the scheme. Said one accused criminal: “If some guy is going to cock up in court and land me in prison, I would like to decide who it is, thank you.”