It is not difficult to spot that the Aberdeen economy is doing well compared with most of the country. The property market has, unlike most of Scotland, shown price as well as volume growth this past year. There are said to be more job vacancies than people looking for work. The council is planning for a major new business park to meet demand from international energy companies for high-quality accommodation.
The legal sector has not been left behind. Leading practices not only from the central belt, but among those who operate on the international stage, have established offices in the city. With some local firms choosing the merger route and others having disappeared from the scene, does the picture seem as rosy from the perspective of solicitors who have always practised there? The Journal approached a variety of firms; this feature is based on the views of those who responded.
No one seriously disputed that the oil and gas sector is the driving factor behind most local economic activity, even when not directly related to the sector. “We’ve always had a bubble here, a buoyant economy not just for legal work but for other things as well,” comments Gordon McCallum, a litigation partner at Peterkins. “It’s certainly boosted by the oil economy. I think that does underlie the economy for the whole area because it brings in so much.”
Ian McLennan, founder of The Commercial Law Practice, which operates across Scotland from an Aberdeen base, sees Glasgow and Edinburgh as more difficult places to get things off the ground: “It’s been like that for quite a while now, despite a number of initiatives that there have been, but Aberdeen is different: there is a bit of capital floating around, and people are prepared to take a calculated risk in relation to property transactions, because of oil companies in particular stimulating the market by expansion. So although we’re not geographically very big, there is more happening here probably than in most places.”
Alastair Wyper, who set up Maclay Murray & Spens’ Aberdeen office in 2003, and then his own niche practice (Blackwood Partners) in 2010, opines: “I think there actually is quite a lot of other stuff up here, but it is a spinoff from the economy of the oil and gas. You’ve got transport companies, logistics companies, property, technology, there is a lot round about the edges that you wouldn’t necessarily see as oil and gas, but they rely on that market quite strongly.”
But while, as Tony Dawson of J & G Collie remarks, “solicitors here must recognise that they are extremely lucky”, most warn that incomers cannot expect simply to walk in and pick up work. As Scott Allan, who as managing partner led Paull & Williamsons into the Burness merger and is now deputy managing partner of the combined practice, puts it: “You must be in the right market position; you must have the right people; and you must have the right relationships, and that’s much more difficult to build up. Particularly when so much of it is related to expertise. If you arrive in Aberdeen and say ‘I’m here’, you really can’t compete with someone who’s been doing oil and gas work for 40 years, because clients are coming through the door as much as for your oil and gas expertise or your property development expertise as they are for the fact that you’re a lawyer.”
Many of the incoming firms are focused on the commercial, and therefore the oil-related market, but views differ among the city-based firms as to whether they are in direct competition or have brought new types of work into Aberdeen.
In fact, even within oil and gas, there are different areas of work, with some focusing on actual drilling operations, while others deal with the “upstream” or shore based operations such as property services.
Bruce Craig, managing partner of Mackinnons, observes: “A lot of the legal work for the major oil companies was bypassing the Aberdeen legal market for London. From our perspective, for larger firms to have come in, these are not things we would say have really had any effect on our business. It’s maybe just a slightly different market they have been aiming for.”
“The great thing about Aberdeen is it’s recognised as an oil centre even though a huge number of people who live and work here also work all over the world”
Dawson adds: “The firms that have moved in from outside have created quite a lot of competition, but we don’t as a firm have a great deal of involvement. We have a corporate team but not in the specialist work. It has resulted in work being done in Aberdeen that used to be sent elsewhere. But we benefit from the spinoff from the oil and gas boom.”
Wyper, on the other hand, suggests that the ground is the same and that a small group of dedicated transactional lawyers can achieve similar results to the bigger players. Likewise, McLennan seems more surprised at the suggestion of new types of work coming in; but Scott Allan, at least, agrees that the merger has given his practice additional strength in depth, as well as some new service offerings not previously available “on the ground” in the city.
Keith Allan, managing partner at Raeburn Christie Clark & Wallace, offers another angle: the presence of the major firms is making it increasingly difficult to recruit and retain good staff – though, he adds, that has been a factor in Aberdeen for a long time because of the oil industry. “They’ve been able to pay much more attractive rates and offer packages that solicitors’ firms are unable to. So it’s maybe increased a bit with larger firms coming into Aberdeen, but we’re used to it.”
Find your niche
More than one respondent suggested that another effect has been that local firms have become more specialised – though sometimes from the perspective of eschewing that route themselves.
“We’ve always tried to be a full-service firm and it’s becoming fairly unique in Aberdeen to have that quality for different reasons,” Keith Allan claims, “but we pride ourselves that we cover the whole sector and a branch network as well.”
Dawson takes a similar line, commenting: “One effect of the oil and gas boom is that some very traditional firms have become more specialist. Being a full-service firm is actually something of a niche, but it is becoming much more popular again.”
Specialist practices are not confined to commercial players such as McLennan and Wyper. Mackinnons, for example, claims twin niches in the apparently unrelated areas of marine and shipping law, and private client. For Bruce Craig, that works because of the firm’s approach of offering a high-quality service in each sector, with partners taking a very visible role. He goes so far as to suggest that “the future may well be tricky for the typical law firm in the Aberdeen area which maybe doesn’t have a specialism”.
“Full service” is far from dead, however. McCallum is happy to claim the label for Peterkins, saying he is “absolutely comfortable that we can compete in the market we are in”. Over at Ledingham Chalmers, chairman Jennifer Young is also in no doubt that it has been a strength for the firm to aim at building client relationships through a full-service offering, alongside specialist and transactional work: “We still think there is a place for that quality service offered by what might be classed as the medium sized or middle ranking firms in Scotland,” she comments.
It may be the smaller size of the city compared with Glasgow or Edinburgh, but it is clearly possible for firms of almost any size to build a reputation if they find their market, even in heavy duty commercial work – if they can overcome the perceptions of some clients. As McLennan admits: “I think our biggest problem sometimes is to try to convince people that we have the range of service they need. But because we don’t have the trappings – we’re only a four-partner practice – we’ve got the size of department that would be associated normally with a pretty big firm in Aberdeen terms.”
Wyper similarly makes his pitch on the basis of reputation and of having the necessary specialisms for most transactions. Blackwoods has lower overheads than some larger practices and charges on a fixed-fee basis. “Ninety per cent of transactions are done with a relatively standard number of specialists involved, and it’s only in a fairly limited number that you would get really specialist advice,” he explains. “Our model is that instead of having somebody who would occasionally do that within the firm, we go and instruct the best specialist the client needs.” Scott Allan notes that Paull & Williamsons was the first firm to choose to specialise in commercial services in Aberdeen, as the oil industry began to develop, having 11 divisions by the time of the merger. “Whereas there is still a place for niche players, and for less complex work, generalists,” he states, “we strongly believe active commercial clients require a broad range of specialisms and strength in depth. We provide the specialisms that clients need and don’t compromise that by stretching people too widely or relying on ad hoc support.”
However it is not just the incomers such as Brodies or Pinsent Masons who are enjoying growth in headcount. Already this year, Raeburns have assumed six new partners (five promotions and one lateral hire), and promoted five solicitors to associate. “That followed a period of relative calm, which was down to the recession more than anything else,” Keith Allan comments, “but we honestly thought we were coming out of that and it was time to have some new blood in the firm. We’re confident about the future and that’s why we’re expanding our firm, because we think the worst is behind us.”
The largest practices based in the city are on the move. Aberdein Considine (who declined to be interviewed) have just opened in Edinburgh following recent expansion into Glasgow, Livingston and Bathgate, and last year, Ledingham Chalmers (four partner promotions and one hire since 2012, with a further lateral hire about to join) also ventured southwards to a new branch in Stirling. While Ledingham has long had an Edinburgh office, Young says the move does not represent any strategy of central belt expansion. Rather, being based in the business hub now developing within United Auctions’ premises, it was a case of seizing the opportunity to mirror the firm’s long-standing presence in the major local mart at Thainstone, Inverurie.
“The opportunity to do something similar in Stirling wasn’t a huge mind change for us,” Young explains, “but it came at a time when we were looking at the rural sector particularly as an area for growth. That’s a really active area, not just in the north east. When the opportunity arose in Stirling, it just tied in beautifully in terms of timing with our forward planning.”
Thus the strategy is principally a focus on the rural sector, which along with energy – oil and gas services and renewables – are her firm’s chosen growth areas. “In some respects that sounds like the two ends of a very long pole, but there’s actually a surprising level of crossover, particularly when we start looking at SMEs and business entrepreneurs, which have always been an important market for us, whether coming from a corporate/commercial or a private client angle.”
She adds: “We have had opportunities to look at growth through scale, effectively becoming part of something that would be much bigger, but our view is that there has to be more to that vision than pure size.”
Keith Allan believes the enlarged Raeburns will continue to focus on its city and local branch market. “We’ve always regarded ourselves as being a traditional high street, all-service firm in Aberdeen and the north east, and that’s probably our game plan for the immediate future anyway.”
His namesake at Burness Paull & Williamsons also denies that the Aberdeen firm’s motive for merger was a response to the influx from the central belt. “Obviously we were very conscious of who is in our marketplace, what they are doing and what they are offering,” Scott Allan explains, “but it wasn’t a case of ‘If you’re going to be here, we’re going to be there’. That as a strategy is a race to the bottom, because you just end up creating more competition for the sake of it.”
Rather, the aim was “to create the leading indigenous Scottish commercial law firm”. He continues: “If we were going to create something different from just the Aberdeen offering, we wanted to make sure that it was something that would be distinctive in whatever market choices we made at that time… when we saw Burness, whose Glasgow and Edinburgh offices are the same size as our Aberdeen office, there was a very complementary set of skills, albeit with additional synergies around services that they did more than we did and vice versa.” In the result, “it’s actually a truly Scottish-wide firm in which each office plays an equal role… it didn’t feel like any loss of identity with them being the larger partner”.
What has it meant in terms of position in the local market? “The expression we used internally was ‘the same but better’, and it’s proved to be that – the clients get the same strength as before, but with the extra depth of skills and complementary expertise, for example capital markets expertise that Burness brought, which was something we didn’t do a lot of at Paull & Williamsons it’s something that we can now add as additional services to oil and gas AIM-listed companies.”
Will it ever end?
The big question, for everyone operating in Aberdeen, is what happens when the oil starts to run out? To this, most responses were optimistic. Quite apart from the time factor – even the known reserves appear sufficient for a good few years yet – Aberdeen is already a centre of expertise such that it can continue to act as a global hub even when local oil and gas exploitation declines.
“The great thing about Aberdeen is it’s recognised as an oil centre even though a huge number of people who live and work here also work all over the world,” Keith Allan states. “That to me will continue even when the reserves start to run out. But there’s no sign of that yet, and there’s always news in the media about new discoveries.”
Renewables, not surprisingly, are mentioned by some as the sector to watch; Dawson puts more emphasis on the fact that Aberdeen is now also a world-leading centre for subsea technology.
Craig cautions that the market is generally becoming tighter, “and especially if we get to the stage that, heaven forbid, maybe the oil starts to run out, I would fear for all of us but certainly for firms that are not just that bit different.” Wyper, however, thinks that the post-mature oil and gas market “will open up quite a lot of interesting opportunities in terms of the marginal fields: if the big guys can’t make any money out of it, I think the small guys will still be able to… That does still generate opportunities for smaller companies to be doing more innovative things in terms of technology and joint ventures.”
He adds that a lot of these other companies are trying to internationalise themselves, anticipating domestic decline – something his firm can help support.
McLennan points to the attractions of the city as underpinning its hub status: “Oil companies like living and working in Aberdeen, that’s the big thing: the geographical situation of us being slightly dislocated from the rest of the country and having good educational services, a high reputation for living. People like a good quality of life, having a decent hub in the airport – you can strike out to different parts of the world. People relish bringing their families here rather than having to decamp them all around the world and into some politically extremely violent places, and so Aberdeen has grown as a good place to bring up family but has got great connections from a transfer point of view. And that’s not just a line: I think it’s true.”
Apart from the merged Burness Paull & Williamsons, legal firms headquartered elsewhere in Scotland with offices in Aberdeen now include Dundas & Wilson, Maclay Murray & Spens, Brodies, Shepherd & Wedderburn, Thompsons, Balfour & Manson, and Simpson & Marwick. They line up alongside the UK and international firms Pinsent Masons (following the merger with McGrigors), CMS Cameron McKenna, and Bond Dickinson.
Expansionist moves or not, many north-east firms are used to doing business beyond their immediate area. The Commercial Law Practice claims to operate throughout Scotland, and indeed abroad, in part having followed clients who extended into the central belt: McLennan regularly travels south for meetings or negotiations. Dawson at J & G Collie has developed a line in helping people across the country who want to buy property in Spain, and elsewhere overseas.
Promoting Mackinnons’ credentials as a leading shipping practice, Craig and a colleague visit Houston every year to see clients and develop links with Texas lawyers who may need to refer business to Scotland; the firm has also worked to develop links with English and continental shipping law firms. Blackwood acts for US-based private equity providers investing into the Aberdeen market, as well as clients looking to make overseas acquisitions: one recently established a joint venture with an Australian company, based primarily in Australia.
Ledingham Chalmers and Burness Paull & Williamsons both regularly field teams at Houston’s annual Offshore Technology Conference, building on links with local lawyers there as well as supporting the energy sector operating from Aberdeen, and each claims active involvement in commercial and corporate work in locations in almost every continent. For the latter practice, Scott Allan says: “Around 30% of the firm’s business has an international character; hence we see the firm very much as an international business but based in Scotland.”
“One effect of the oil and gas boom is that some very traditional firms have become more specialist”
“The great thing about Aberdeen is it’s recognised as an oil centre even though a huge number of people who live and work here also work all over the world”
The Journal also spoke to Roger Connon, head of Pinsent Masons’ Aberdeen office and of the corporate department there. As “indigenous” as any Aberdeen lawyer, he has lived in the city all his life, working in turn for Ledingham Chalmers, McGrigors and Pinsent Masons through successive firm restructurings.
While becoming Pinsent Masons has put the Aberdeen team “on the radar” of even larger corporate clients who would otherwise have placed their business elsewhere, Connon believes that “Because we badge ourselves as an international firm, we sometimes fall off people’s radar screens here in Aberdeen when they’re analysing the local market” – but in terms of a number of measures, including the value of work undertaken, he says, Pinsent Masons is the biggest firm in Scotland.
“We’ve got a big office of about 60 here on the ground, and firms like ours are doing a huge amount of really good work in Scotland including in Aberdeen – this office is really busy not only in terms of work that we’re doing, but international work that we’re putting out to other parts of the business in places like China, Singapore, Dubai, even Turkey. That’s where our clients are going – my neighbour in Aberdeen is currently building a business in Dubai.
“So I think we’re following a different model, one that still includes being pre-eminent in our own backyard and selling all the skillsets of the firm into that market, but also taking those skills, going further afield with them and generating work for other parts of the business, and undertaking work for those other parts in different oil basins around the globe.”
Pretty much all the work done in Aberdeen involves the energy sector, looked at broadly, and combines the lower end M&A work for developing companies in the sector which the firm always handled, with bigger ticket work coming in as a result of the merger. This, Connon explains, has helped the firm follow its clients as they expand their interests abroad, as well as attract new work in.
“One of the really important things, and I’m sure everyone will have been saying this to you, is that you can’t play at being in Aberdeen. You’ve got to be here with a good number of people on the ground, people who want the postcode. If you have folk coming in and out, then as long as you have a critical mass of people here, you can use this office as a way of selling other skillsets that exist elsewhere in the firm, into what is a very dynamic marketplace and one that is prospering just now.”
And when the oil runs out? “Who knows when it will run out, but the great trick is to take the skills that we have developed here and sell those into the other basins. So for instance some of the work that I’m doing now is for Nigerian clients who are going into complex joint ventures with some Western companies – companies who are sitting not two miles away from me here in Aberdeen! So in that respect we’re taking our expertise and skills and we’re doing what the country wants, which is developing them internationally... So the trick here in Aberdeen is to be like Houston, and become a centre of energy excellence and develop those skills that you can then export as well, and that’s not just the technical skills of the oil and gas industry, it’s hopefully the legal skills that we’ve developed around them.”
In this issue
- Risk and the duty to inform
- Decrofting back on track
- The long road to qualify
- Scotland scores on “Themis” debut
- Equality and regulatory reform
- Reading for pleasure
- Opinion column: Martin Crewe
- Book reviews
- President's column
- What right of way?
- Gas in the tank
- Scotland on the world stage
- Up there with the best
- The Significant Seven
- Out on 65?
- Gatekeeping the experts
- Fairway failings
- Beware of solvent liquidations
- Passing off update
- Scottish Solicitors' Discipline Tribunal
- Holyrood out of bounds
- DPAs: cross-border confusion?
- The road to land reform, but where is it going?
- How not to win business: a guide for professionals
- Information security: raising the bar
- Waste: help sort it out
- Where there's a will
- Ask Ash
- "Reply to all"
- Law reform roundup
- Incidental financial business: amendments ahead
- Times are tough