This article originally appeared in The Herald on Wednesday 14th December 2016.
Scottish law firms are at a disadvantage to those operating south of the Border because they still cannot adopt alternative business structures, according to the chairman of private client firm Turcan Connell.
Simon Mackintosh, who replaced firm founder Douglas Connell as chairman a year and a half ago, is following in his predecessor’s footsteps by highlighting the need for different ownership models in the Scottish market, although he said the firm’s reasons for supporting this have changed.
Almost a decade ago Mr Connell, who has now retired from the firm, wrote to the Law Society of Scotland stressing the importance of allowing non-lawyer professionals to join firms’ partnerships. Specifically, the firm wanted to be able to give an ownership stake to the investment professionals in its asset management arm.
While a form of alternative business structure was approved by the Scottish Government in 2010, the legislation governing their implementation has so far not been written. In the meantime, firms in England and Wales have been able to accept external ownership for the past five years.
This, said Mr Mackintosh, puts “the Scottish profession at a disadvantage”.
“When you look at the number of English firms coming into Scotland then it must make some firms more vulnerable [to takeover] if they can’t diversify in that way,” he added.
Although Turcan Connell Asset Management (TCAM) spun out of the law firm last year in a management buyout backed by veteran hedge fund manager Crispin Odey, Mr Mackintosh said the firm still wants to be able to add non-lawyers to its partnership.
“We were very keen on alternative business structures so the investment management arm could have integrated with the law firm,” he said.
“For various reasons TCAM was set up as a separate company and outside capital came in – it’s still associated with us but it’s not a subsidiary.
“We wanted those investment professionals in the partnership. That won’t happen but ABSs are still on the table and we want non-lawyers in the partnership.
“A lot of what we do is tax advice so it could be appropriate to have a chartered accountant in the partnership. That’s the sort of ABS I could see us developing.”
The make-up of the firm’s partnership is something that Mr Mackintosh gives a lot of thought to, which is hardly surprising given the firm’s focus on private client work. Unlike in a commercial practice, where the technical skill with which a lawyer can complete a transaction is generally seen as their most important attribute, Mr Mackintosh said that in the private-client world “soft skills are absolutely critical”.
“We’re dealing with people who are sometimes in times of great stress,” he said.
“The ability to listen is pretty important. When clients come in and say they want to talk about a will they do but somewhere in the background is something that has triggered them to come in as well, whether it’s to do with their children’s state of marriage or grandchildren’s habits.”
He added: “We talk to clients about long-term succession planning a lot and that’s been part of our ethos too. We need to know we’ve got a strong group of people coming through.”