Tods Murray: death by real estate

When Tods Murray moved into shiny new offices in Edinburgh’s Fountainbridge development in 2005 things couldn’t have been going better for the firm.

With trophy client Bank of Scotland, also a Fountainbridge tenant, providing a steady stream of work, 2005/06 was a standout year, with turnover soaring to £23.4m.

Then the financial crash of 2007 happened. Bank of Scotland, which had been bailed out by the UK Government, started to procure its legal work out of London. With Tods Murray’s turnover taking a nosedive, the £1m-a-year rent on Fountainbridge became a little harder to fund (see Behind the Law).

As revenue continued to slide, in October 2009 the firm took out a £2m loan, granting a floating charge to the bank in case it couldn’t meet its repayments. Although the bank loan would be Tods Murray’s final undoing – the firm filed for administration last week, with Shepherd & Wedderburn buying its assets in a pre-pack deal – it was its large property liability that ultimately sealed its fate.

It is ironic, then, that the firm paid a six-figure sum in the last financial year to refurbish its Glasgow office, moving from a cellular to an open-plan set-up.

There’s nothing like throwing good money after bad.

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