The planned DLA and Bird Semple merger has prompted me to look back at the economic drivers behind our decision to open a London office.
In 1987 McGrigor Donald was one of the first firms to establish a presence in two UK jurisdictions – England and Scotland.
The opportunity we had identified was threefold. Firstly, we had already established a strong position in the Scottish market. Our clients were growing with us and were increasingly looking to expand south of the border. We could see that cross-UK border corporate and commercial activity was generally on the increase.
Secondly, compelling research conducted by one of our major banking clients demonstrated that the market for corporate and commercial legal services in the City of London was 23 times greater than the entire Scottish market. Regional firms were experiencing a similar differential, although the proportionate difference was smaller – a well-known factor behind DLA’s decision to open its own London office.
The third motivation concerned our international ambitions. We realised that foreign clients would turn to London by default as an entry point to the UK markets and on the whole they did not appreciate the legal differences between the three UK jurisdictions.
But how much are these strategic drivers identified in 1987 still relevant to the markets and our business today? Certainly the proportionate difference between the legal markets in Scotland and London has, if anything, increased – as has the gap between regional and City markets.
As to the incidence of cross-UK border activity, more and more businesses are operating throughout the UK – or planning to. Look, for example, at the expansion trends of the retail sector. We receive instructions both from clients looking to expand northwards from an English base and southwards from Scotland.
With cross-UK border activity on the increase, we opened a Northern Ireland office at the beginning of the year to take further advantage of the trend.
One new aspect of this is work coming from venture capitalists, known as business angels.
Mirroring the US experience, the UK has seen a phenomenal rise in the number of angels backing business start-ups over the past 10 years.
Significant amounts of money comes from Scottish angels backing transactions in other parts of the UK.
As to work from abroad, foreign clients continue to look to London when entering UK markets and still prefer to conduct meetings out of London for any English-based transactions. Only last week our London office received a referral from a US firm concerning a transaction in Newcastle, which will be run almost entirely from London – a point that is no doubt familiar to DLA and Bird Semple.
Robert Glennie is senior partner at McGrigor Donald.