A year after CMS Cameron McKenna first crossed the threshold of Dundas & Wilson with its tantalising proposal, the merger between the two firms has gone live.
What comes next will be an intense tussle over banking and energy clients as the two firms play tug of war over the institutional client list.
It was Dundas’ client list that first piqued CMS’ interest. “On the power side there was National Grid, then SSE, the general household names of power companies,” says CMS energy head Stephen Millar. “A number of those were common clients and some of them were Dundas’ clients.” Millar was key to the tie up talks.
The list continues: “On the power side there was National Grid, then SSE, the general household names of power companies. A number were common clients and some of them were Dundas’ clients.”
Then there were the banks, the former heartland of Dundas’ business. Millar sums up the attraction: “Even though some of the names are not so big in Edinburgh any more there is still about a trillion of assets managed in Scotland and financial services remained a big sector for us.”
With CMS vying for a bigger adviser role with the likes of Royal Bank of Scotland (RBS) it will be interesting to see how the scrummage for client relationships plays out post merger, especially as CMS has a preference for single client relationship partners. “We will be doing will be consistent with our current attitude,” says Millar.
CMS sits on the tier two transactional panel for the bank with partner Will Meredith leading the relationship but Dundas partner Kenneth Rose handles the tier one relationship with the bank. CMS is understood to be hoping to make the client its own.
The next review will kick off next year and Rose is believed to have been in meetings with key in-house counsel already, including former Dundas partner Chris Campbell (26 May 2005). It isn’t the only relationship in flux and the merged firm is deeo in a flurry of joint panel pitches and intense client negotiations.
Millar insists that conversations with clients were one of the reasons for the merger. “The main feedback they [clients] always gave was ‘that fits’,” he says.
The two firms have already attended client pitches together, something that is intended to get the integration of the two firms underway. Millar believes this will allow one relationship partner to emerge.
Shared clients like National Grid pose an interesting question for the merged firm. CMS sits on the utility’s commercial panel after being elected in 2011, while it sends Dundas key property and planning work in London. Both also sent partners to pitch for a spot on Scottish and Southern Energy recently though the outcome of that, and control over the coveted mandate, remains unknown.
As well as client matters the two firms has been attempting to deal with the combination of two equity structures. Millar reluctantly admits that for some full equity partners at Dundas, it means a step down the ladder.
“That’s right,” he says when faced with the assertion that some of Dundas’ majority full-equity partnership will have to become fixed-share partners at the merged firm. “But they don’t feel like a different category of people.”
CMS overhauled its partnership model during the merger talks, scrapping its salaried partner band and streamlining the route to full equity, which Millar claims that made it easier to slot in the Dundas partners. He stresses that the new model means that “everyone has an element of equity. There’s still full equity and not full equity but everyone has a buy in”.
What does that all mean for partner contributions? It has been hot topic at CMS in recent years with the figure fluctuating. Last year CMS partners injected capital of £1.2m into the firm, in 2012 94 members contributed it was £7.7m (21 January 2013).
Compare that with Dundas, where 28 members put £740,000 into the firm in 2013. He confirms that the Dundas capital is being subsumed into the merged firm but admits “there are some issues that need to be dealt with”. Exact numbers, he says, is a ”private thing”.