As featured in The Herald today:
Neil Kennedy, who replaced John Macmillan as managing partner of MacRoberts at the start of this month, is very clear about what he wants to achieve in his first four-year term in charge of the firm he joined nearly two decades ago.
“I want to see increased turnover, increased profitability and less of a reliance on third-party debt,” he said.
This is unsurprising, given that the firm’s turnover has hovered around the £17-18 million mark for most of the past six years, while in 2016/17 profits fell to their lowest level since the firm converted to an LLP a decade ago.
However, with MacRoberts managing to bolster its cash position in the past year, Mr Kennedy believes it is now in a strong position to invest itself out of the stagnation.
“Our cash position is looking great and our net debt position reduced by about £800,000 in the last year,” he said.
“Cash is important because it’s about investment. Using your own money is a much more efficient way to run a business because it’s much cheaper.”
The firm has already started investing some of its cash, taking on debt recovery specialist Yuill + Kyle at the start of this year.
Having given MacRoberts its first foothold in the volume litigation market, it is the type of deal Mr Kennedy said the firm is keen to do more of.
“There will be consolidation and for us that means adding teams as well as other law firms,” he explained.
Noting that there are “some obvious gaps” in the firm’s existing offering, Mr Kennedy said a top priority is to add private client capabilities to MacRoberts’ Edinburgh office.
“For a law firm that’s been around for 160 years, and for the last 30 or so has been in Edinburgh, to not have a private client offering in the east is a gap we’d like to fill,” he said.
A private client offering is also on the cards for the firm’s five-year old Dundee office, which currently focuses on real estate, banking and employment work.
“We’d like to be less opportunistic than we have been in the past and more strategic,” Mr Kennedy said.
Even without these additions, Mr Kennedy believes Yuill + Kyle, which will continue to trade under that brand, gives the firm the scope to add significant revenues from existing clients, which is why MacRoberts is planning to invest in upgrading the software the smaller firm brought across with it.
“We’re looking at upgrading the platform that came with Yuill + Kyle, which is a volume litigation practice management system,” he said.
“I’d like to grow volume litigation from existing clients. We did some of that but what we really needed was skilled people and software to do it properly.”
Though Yuill + Kyle, which was turning over just under £1m as a standalone firm, was small in comparison to MacRoberts, Mr Kennedy said he would not rule out doing a deal with a larger outfit.
“I’m always happy to talk to other law firms about where they see their strategy but I don’t think we need to merge to become an enormous business,” he said.
“I’d like the size of MacRoberts turning over £20-25m so I don’t think we need to merge with a bigger international or indigenous Scottish business.
“There’s room in the market for a few owner-managed, successful independents. I think the market has moved towards us.”
While he is confident that his growth strategy is achievable, Mr Kennedy said there are a number of external challenges that MacRoberts will have to face in the coming years.
“The political landscape is uncertain,” he said. “We are all sitting trying to figure out what Brexit will mean for the UK.
“There’s also an increasing regulatory burden on all businesses.”
In the meantime, as he begins his first four-year term in the management position, Mr Kennedy is already looking ahead to how he and the firm might want to proceed at the end of that period.
“Something we’ve been missing is consistency of leadership,” he said.
“That’s because people have gone for all kinds of different reasons but I think we’ve lacked that consistency that Brodies and Burness Paull have had.
“If we can bring that back it would be a real advantage. We need consistent and enduring leadership.”