A self-proclaimed disruptor bursts into the Scottish legal market, helps himself to an array of talent and signs up a clutch of big name clients. Four years later he can count 25 partners, around 150 staff and likely 12-month revenue of around £12.5 million. To him, his very practice ethos is disruptive; but has the sector really changed? And why in his book does it need to?
Private client solicitor and entrepreneur, Glen Gilson, managing partner of Gilson Gray, combines a predatory approach to business growth with a deep concern for looking after his own people in a profession that he charges with serious failings on the latter front. At 41, still relatively young in senior leadership terms, he has a story to tell.
Gilson trained and initially practised at Turcan Connell, where early on he spotted the commercial potential of private client work, at a time when “most people my age wanted to be corporate lawyers or litigators”. But financial difficulties in his parents' business took him away to sort that out, and having engaged HBJ he was then invited to build that firm's private client offering, which brought further board and management experience.
He left when he failed to persuade the firm over proposals for further growth, and after declining other approaches, while also feeling “very much driven by the cultural problems I saw in the sector” – of which more below – he saw “a real opportunity to capitalise on that phenomenon and start a firm that ultimately was culturally foot forward, with a culture that could create a level of performance and a differentiation in the market”.
Gilson soon uncovered a well of talent looking for a different law firm culture. The outcome was Gilson Gray's high profile 2014 launch with a dozen senior figures split between its Edinburgh and Glasgow offices.
“I was surprised that we were able to launch at such scale, equi-weighted east and west,” he acknowledges. “It had never been attempted before in the sector, let alone done, but I do think the timing was right to capitalise on this disconnect culturally and commercially that exists within law firms, and the number of partners who had learned during the recession that their so-called safety within the big brands just wasn't the case. It opened eyes to what constituted real risk.
“So we were able to launch at scale, which was, in retrospect, key, because the proliferation of growth that we've experienced since then obviously came from a sufficiently credible footprint to generate the financial returns from which we have then been able to compound grow.”
Predator with a mission
As he started, so the firm has carried on. A succession of senior hires, each accompanied by a press release in triumphal terms, casts Gilson Gray firmly in predator vein. Gilson does not dispute the label, but his answer reveals a concurrent strand to his approach that runs throughout our interview.
“To be fair, that word is absolutely apt. We see a need for aggressive expansion in the sector, for a disruptive brand that offers clients a more humanised and entrepreneurial product, a more approachable product, and provides lawyers with the type of corporate and cultural environment that other successful sectors more regularly enjoy. And in order to get that message across you do have to be forceful.”
So he aims to disrupt in order to “explain the problems as we see them within the profession, because by definition as a disruptor what we are looking for is people who share that contrary view, who agree that the way things are done more generally can be done better and in a more enjoyable fashion for the client and the staff member”.
Law firms as a breed, he is convinced, are “deeply unhappy places” running on a broken financial model. His mission is to avoid both failings.
On Gilson's perspective, the conventional revenue split of one third retained profit, one third direct expenditure and one third other allocation “is becoming increasingly hard if not impossible for most of the traditionally footprinted corporate and commercial firms to maintain”.
That impacts on how they treat their staff to shore up profitability, and on service levels and/or chargeout rates. “You end up with a cycle of clients who are unhappy with the charging levels or who are unhappy with the service level, coupled with cultural problems in terms of the staff not being happy at what they are being asked to do, so what we had to realise was a financial model that cut through that.”
How is his model different?
“One thing that doing a lot of merger and rationalisation work affords you is an insight as to how costs can be kept under control, and where most firms of our scale have been inherited by their current management teams, we had a blank canvas that allowed us to design every inch of the business. Everything you see in this firm is absolutely by design. The choice of colour scheme, of artwork, conveying a boutique and modern feel through to the choice of buildings, which are institutionally acceptable but compared to the other top 10 firms in the country, most of them are in glass towers at considerably higher per footage costs.”
Then he claims a “holistic revenue stream”: the revenues and margins from Gilson Gray Financial Management, alongside the firm's property business, help create a financial strength “that ultimately allows us to undercut our competitors. So if you look at our level of profitability it tends to be north of 50%, and we then sell some of that margin back to the client bank, which allows us to undercut our chargeout rates by up to 15%”.
Looking at the client list, which includes the likes of KPMG, Sports Direct, Cala Homes and Brewdog, “they understand entrepreneurialism, which we represent to the Scottish business community – it's the first time that a firm has truly been started from scratch and at this scale; but they've also come to us because they are a business, they understand money and want to get value for money, and that's an attractive proposition, because we still make heavy profit on that number which allows us to pay our staff more”.
Us and them
It is easy, listening to Gilson, to get a sense that it's Gilson Gray v The Rest. But is the Scottish profession really as homogeneous as that?
“No, I wouldn't say that every law firm culture is identical,” he replies. “But I would say there are some absolutely stark similarities between most of the top tier firms. There is a compartmentalisation of junior fee earners. There is a financial requirement to keep people at certain stages of their career for as long as possible. That's become absolutely common in the sector over the last 20 years. We don't have those financial constraints because of the model we operate.
“Coming from a blank canvas we have been able to lead culturally forward: people have come to the business with a perspective of how can we be the best at what we do, as opposed to how do we deal with this inherited behemoth, fit into this infrastructure that's been constructed sometimes over hundreds of years to deliver a particular goal.”
I test whether he isn't basically talking down a profession which on most accounts compares and competes pretty well globally.
“In some ways I am, in some ways not. I've learned a lot in the law firms I've been in; I think they were fantastic examples of entrepreneurialism in part. But yes, I do consider the profession to suffer from a general lack of commercial acumen. You only have to look at the rise in English takeovers, a large proportion of which were driven through financial necessity, not through strategic planning. I do know that law firms are culturally generally unhappy, because we do our diligence on the people coming in: we ask them why they want to come in, and we hear the same thing all the time, that there is too big a disconnect between partners and staff, between management and the partnership.”
You might think a disruptor would force others to change; is there much evidence of that or are they just carrying on as before?
“I don't think everybody has continued much as before. There have been very notable problems in the legal sector over the last 10 years, sadly firms going south financially and a large number being taken over by English parents. That's not all as it was before, if I may – far from it. We've lost a lot of the leading brands in Scottish law and you have to ask, is that because Scottish law firms are being run better than their English counterparts or not?
“I don't think it's a coincidence, that when the general trend has been to be taken over by English parents amidst a recession and service and cultural problems within the firms, a firm that is trying to lead culturally and has its own sovereignty and has devised a financial model that allows us to react to client and staff need, is showing progress. And I think, if I may sincerely, that's the definition of a disruptive brand.”
If law firms generally are such unhappy places, how does Gilson Gray achieve the “humanising” element Gilson claims for it?
“We sat down as a senior management team and worked out what we felt defined the best firm in Scotland. We then sat down with the rest of the management board, then with the partnership and ultimately with every single staff member. And when we solicited all those independent parties' and groups' views on what constituted the best firm in Scotland, we came up with 20 measures, everything from profitability through to work-life balance, from the quality of the client product through to staff centricity. And because every human being has informed that process, they are invested in those concepts and they are then interested in delivering them beyond just their day-to-day job description. So we leverage our whole staff base into the ideas they have generated, and that's how we try to get staff engagement and close the gap.”
As for career progression, “It's simple in this place. If you're good enough then you will be promoted. We have a high threshold for joining the firm. We are absolutely looking for the very best of breed.”
Gearing ratios could influence promotion, but in a positive way. Again Gilson eschews the 1:10 or 1:8 common in large firms, which, he asserts, clients are no longer willing to accept.
“I do think that we are capable of creating very high profitability without requiring the kind of gearing effect that has been more traditionally acceptable in the last two or three decades. But that will be a challenge going forward, to keep that proportionality. I suspect the key is to promote more people to partner, increasing our partner count ahead of schedule” – not, it appears, for the first time.
Where does Gilson Gray go next? Gilson's 20 “best firm” measures are top of his list; but these can embrace strategic aims like significantly bolstering the firm's real estate and corporate offerings. Private client has already had a boost, with the firm luring two of the Addleshaw Goddard team originally due to transfer to Morton Fraser, and taking over Lindsays' North Berwick office.
How does that last move fit in with the strategy of an equal presence in Glasgow and Edinburgh?
“That's a really fair question,” he says. “Personally I'd never been predisposed to branch operations; it wasn't my experience in the legacy firms, and I think that firms of our scale are almost pre-programmed to be dismissive of regional or smaller town practice. However we are about cultural fit and we are about entrepreneurialism: effectively we run the business like a business and that was an undeniable business opportunity.”
Part of it was the opportunity to sign up head of office Dorothy Kellas, whom Gilson rates highly; part was the chance of a presence at the centre of the projected highest growing population area in Scotland in the next decade. “It makes perfect commercial sense for us as a disruptor brand to (a) show an interest in those local communities, (b) take advantage of the growth curve there, and (c) follow the trend on some of the leading corporates, the builders, that are moving into that space.”
Blood, sweat – and satisfaction
Entrepreneur and disruptor though he may be, and he makes no apology for it, Gilson insists that he will not pursue business expansion at the expense of his more humanised practice model. “I've put blood, sweat, tears, my money, my reputation and everything behind the business. I absolutely believe in it. But at the same time I'm not blind to the fact that this only works so far as you maintain that culture and bring in likeminded people and educate people into your shape, and I do think therefore there is a ceiling on growth.”
That could conceivably mean tough choices ahead, but Gilson doesn't say how high the ceiling might sit. “Do I think a firm can maintain that USP up to 500, 600 people? No, I don't. I don't think there is the depth there in the Scottish legal recruitment market. But I do think you can produce a firm that competes at the very top end, with objective or subjective measures.
“When I say subjective I mean best place to work: that's only going to be opinionated, based on what staff say. When I say objective I'm talking about client satisfaction surveys, profitability, the type of clients, the geographic spread, the quality of service spread, that type of thing. These are all measures that are real.
“I'm really not saying that we are perfect. This is not utopia. But I don't think it's a coincidence that our progress in the past four and a half years has been among the leading examples in the country.”
Predatory creatures can also be good parents. Perhaps that metaphor defines Gilson as well as any.
As we conclude, he returns to the question of which side people see. If they regard him as combative, so be it, “but I would actually prefer to see it as that we are representing the profession's best interests by trying to secure some of the best and brightest and trying to present our very best front to ultimately the people who keep the lights on, who are the consumer”.
Consumers, he remarks, have long complained that lawyers' fees are too high, that they don't understand the commercial drivers, or what their clients are trying to achieve as people or as businesses.
“What we have seen in terms of the fallout from staff interviews and client feedback that we do, is that yes the Scottish legal profession offers a brilliant technical capability and some of the brightest people you could hope to find, but I don't think it's particularly clever to ignore our proven failings over decades. And ultimately that is what Gilson Gray is seeking to address.”
In this issue
- Brexit: looking to the future
- Trusting the specialist tribunal
- The single surrogacy saga
- Payment notices and strict forms
- Land registration errors: an owner's view
- Reading for pleasure
- Opinion: Mhairi Snowden
- Book reviews
- Profile: Caroline Court
- President's column
- Discharges made simpler
- People on the move
- Taking on all comers
- Crowdfunding: changing the legal landscape
- Salaried but not employed
- Putting customers at the heart
- Interviews and the minimum criminal age
- Data breaches and the damage test
- Steering away from breakdowns
- IT: the great leveller
- Admissible hearsay?
- Vicarious liability and the vindictive employee
- Upholding copyright or breaking the web?
- Smallholdings are different
- Avoiding bias in sports law disputes
- Scottish Solicitors' Discipline Tribunal
- Progress at the expense of accuracy
- In-house for initiative
- Have you completed your AML certificate?
- Public policy highlights
- A blurred vision
- Millennials: a new age for managers
- Into uncharted waters
- Lost will – what then?
- 2018: a paralegal view
- ... and the SPA looks back, and ahead
- Ask Ash