Scottish practices set for £1bn PFI jackpot

A PFI boom in Scotland is providing a fees bonanza for firms north of the border, while PFI-style financing may also be about to take off in the Irish Republic.

In Scotland, research by Edinburgh law firm Henderson Boyd Jackson has shown that over the next three years more than £1bn-worth of PFI projects are set to come on stream.

Meanwhile, the Irish government has announced the setting up of a taskforce to investigate using private finance to fund infrastructure projects.

The research by Hendersons revealed that PFI contracts with a value of over £750m have already been signed in Scotland in the past 12 months alone.

The largest project – the £250m development of a new Edinburgh Royal Infirmary – is one of the UK's biggest deals to date.

The demand for PFI-style financing in Scotland was one of the reasons behind Masons' decision to open an office in Glasgow in May this year.

Masons, one of the leading UK PFI practices, took on leading construction partners from McGrigor Donald and Dundas & Wilson in a bid to grab a slice of the lucrative market.

But Hendersons partner Phil Myerscough said a number of Scottish law firms had developed strong PFI practices and had successfully fended off English firms looking to do the work.

“It has got to the point where there are almost exclusively Scottish legal advisers on the legal side of the deals,” he said.

Commenting on the PFI boom, he said: “The decision-makers in local councils are now embracing PFI as the way to deliver good, modern facilities in their communities.”

Although the cost of PFI deals has dropped significantly, including legal costs, Scottish firms are now benefiting from the use of PFI for projects worth as little as £2-3m – previously thought too small for this type of financing.

The new Irish taskforce is modelled on the UK's Treasury Private Finance Taskforce, led by ex-Linklaters partner Adrian Montague.

The Irish government has already invited tenders from firms to advise on the feasibility of funding a light railway infrastructure project in Dublin by way of a public-private partnership.

Irish law firms are gearing up to take advantage of any increase in PFI-style financing. Leading Irish firm A&L Goodbody last month hired the highly-rated Kevin Feeney from Linklaters to head its PFI team.

Earlier this month, The Lawyer reported that McGrigor Donald is planning to open an office in Belfast to compete for PFI work.