Scotland’s fourteenth largest firm by turnover, Tods Murray, has been bought out of pre-packed administration by Shepherd & Wedderburn after calling in FRP Advisory partners Thomas MacLennan and Iain Fraser to handle its administration.
The firm, which turned over £12.4m in 2013/14, has struggled in recent years, seeing turnover drop by 28 per cent over the decade from 2003/04, when it turned over £17.4m. In its best-ever year, 2005/06, turnover hit £23.4m.
As part of the Shepherd & Wedderburn acquisition all 170 members of Tods Murray’s staff have transferred. Of its 30 partners, 18 have kept that title, seven have become consultants and five have joined as directors.
It is understood that other firms in the Scottish market are considering making bids for a number of the Tods Murray teams and Shepherd & Wedderburn is also planning to shed up to 50 roles via a redundancy round.
A 45-day consultation period has begun and although it is not clear which roles or departments will be affected support functions are likely to take the largest hit. In the last financial year Tods Murray had almost as many support staff as lawyers, with 65 full-time equivalent roles across all business services groups and 72.2 qualified lawyers.
While the terms of the deal have not been revealed Shepherd & Wedderburn chief executive Stephen Gibb stressed that his firm has “a debt-free balance sheet and a strategy for sustainable growth both in Scotland and across the rest of the UK”.
The acquisition comes at the end of a positive year for the firm, which has a base in London as well as offices in Aberdeen, Edinburgh and Glasgow.
Having seen turnover flatline in the years since the recession began, the firm’s revenues were back to pre-recession levels in 2013/14. That said, at £38.3m the figure was still 10 per cent below the firm’s 2007/08 high of £42.6m.
Even with all the Tods Murray turnover Shepherd & Wedderburn will not be big enough to overtake Brodies as the largest Scottish firm, although it would leapfrog Burness Paull and Maclay Murray & Spens to take the number-two slot. In 2013/14 Brodies turned over £52.1m, Burness Paull £46.3m and Maclays £43.3m while the combined turnover of Shepherd & Wedderburn and Tods Murray was £50.7m (8 September 2014).
Tods Murray has been dogged by rumours of insolvency for years, with executive partner David Dunsire writing an open letter to the Scotland on Sunday newspaper in 2009 in a bid to reassure clients of the firm’s financial strength (30 March 2009).
While turnover continued to slide, the firm attempted to bolt on revenues with the January 2012 acquisition of two-partner private client firm Fyfe Ireland (23 January 2012). A year ago Dunsire told The Lawyer he had plans to do further similar deals (14 October 2013).
Like Tods Murray, Semple Fraser took on hefty property liabilities in the up-market that became unmanageable in the years following the 2007 crash (1 April 2013).
Tods Murray was the first of the Scottish firms to take on costly office space on the back of a booming Scottish banking sector, taking on 41,000 sq ft in Edinburgh’s Fountainbridge development, where its client Bank of Scotland was already based. The deal, which was agreed in 2004 and saw the firm take occupancy in 2005, was for an annual cost of just over £1m.
In 2007 Semple Fraser signed a deal to take on 30,500sq ft of office space in a development on Glasgow’s St Vincent Street, taking up a 15-year lease with a break option for 2018.
Although the terms of the off-market deal were not made public, the firm’s LLP accounts revealed its impact. In 2006/07, when the firm’s turnover was £15m, the firm’s leases on land and buildings with a term of up to five years totalled £394,000, the equivalent of 2.5 per cent of turnover.
By the year to April 2011, the last year for which the firm filed accounts, turnover stood at £12.2m but lease commitments had risen to £1.24m – 10 per cent of turnover – with £865,000 of that being long-term.