10:14, July 14 761 0

2017-07-14 10:14:07
Shepherd & Wedderburn down 5 per cent in “year of investment”

Shepherd & Wedderburn’s recent run of impressive turnover growth has come to an end, with total revenue falling by 5 per cent from £53m to £50.5m during the 2016/17 financial year.

Net profit was also down by a slightly more significant drop of 6 per cent, from £15.2m to £14.3m while, partly thanks to an increase in full equity partners (from 39 to 41.4 on a full-time equivalent basis), average profit per equity partner at the Scottish-headquartered firm fell by 11.5 per cent from £389,000 to £344,000.

Total headcount also fell in 2016/17, from above 500 to 462, of whom 275 are fee-earners, 223 are qualified lawyers and 78 are partners.

In 2015/16 Shepherd & Wedderburn posted a 10.4 per cent increase in turnover from £48m to £53m.

Shepherd & Wedderburn’s chief executive Stephen Gibb, now into his second term, said the firm had anticipated a softening of the results last year.

“We had our best years ever for two years in a row but last year we’ve been investing,” said Gibb. “We’ve invested in IT while several major client projects including in the offshore wind industry and a major piece of litigation slowed. But they have all come back since February this year, and we’re now 10 per cent ahead of where we were in the first two months of the financial year last year.”

Gibb highlighted a move to a new office in Glasgow, the expansion of its office in Aberdeen following its acquisition of the real estate and corporate-focused The Commercial Law Partnership, a deal that completed on 1 January this year, and the hire in April this year of a three-strong team of rural practice lawyers, including partner Hamish Lean, from Stronachs.

He said that while the Aberdeen market had slowed largely because of the collapse in the oil price the market was not just about the energy market or, indeed, Aberdeen.

“It’s a wealthy area with industries such as food and drink, fishing and also landed estates,” said Gibb. “We think there’s an opportunity there.”

Shepherd & Wedderburn’s Aberdeen office currently houses around 15 people and while Gibb confirmed he was not intending to “explode to 100 people”, the firm would “grow it as the business requires”. Topping the current list of investment priorities there was private client, Gibb added.

In 2014 Shepherd & Wedderburn bought smaller rival Tods Murray following its pre-packed administration. Gibb said that the larger equity partnership was partly the result of this deal.

“We said at the time of the deal that we would review where they should be in the partnership over a period of two years,” said Gibb, “and as a result a number have moved into the equity.”

The firm submission to this year’s UK 200 report reveals it had £7m in cash at year end, which Gibb said had now grown even higher.

“We’re prudent in the way we distribute our profit plus we also allocate funds for investment, the an amount of which varies from year to year,” added Gibb. “Having a good cash balance in the bank is helpful.”

Gibb said that strategically Shepherd & Wedderburn would continue on its path of strategic acquisitions rather than heading down the path of some of its former rivals and seek a larger merger.

“We have taken a positive and clear decision that it’s not what we want to do,” said Gibb. “We believe there continues to be room in the Scottish market for a few, strong, independent, Scottish-headquartered firms. Good luck to the firms that do go down the merger path but it’s not for us.”