IT TAKES a certain amount of chutzpah to launch a business in the aftermath of a recession, but then chutzpah is something Glen Gilson, managing partner of three-year-old law firm Gilson Gray, is not short of.
No wonder, when you consider that before he had even celebrated his 30th birthday he had turned around his parents’ ailing airline, become an equity partner at HBJ Gateley and refused the chance to run a private bank.
Having trained under “genius” Douglas Connell at private client specialist Turcan Connell, Mr Gilson said he recognised early in his career the classic “a third, a third, a third” law firm model, which sees firms’ income divided equally between people costs, property costs and profit, left firms facing “difficult-to-change cost structures”.
“I decided there was an opportunity in the market to do something different,” he said.
“We’re trying to create an environment that’s more akin to private equity and a normal commercial environment than the lockstep environment that the traditional Scottish legal profession has always had.
“That seems critical and some might say sanctimonious but if you have to achieve critical mass you end up with certain costs that you can’t avoid, especially if you are growing and need office space.
“You end up with eight or 10 subordinates per partner and that partner is often a professional golfer. You need senior personalities in the market pressing the flesh but at the same time you need people there delivering the product.”
As a result, the firm’s 20 partners are all very much hands-on, allowing the firm to have a lower solicitor to partner ratio than many of what Mr Gilson terms “traditionalistic firms”.
While many firms have been forced to adopt a similar strategy in the aftermath of the financial crisis, Mr Gilson said because Gilson Gray did it from a standing start its staff costs are generally lower than other firms’. This in turn means it can charge less for the service it provides while giving clients access to partners who previously worked at firms including Brodies, Ledingham Chalmers and Morisons.
“If you don’t have that intrinsic stereotyped cost base and can get the partners on the tools you can sell some of the margin back to the market with top lawyers,” Mr Gilson said.
“They are getting them 15 to 20 per cent cheaper on charge-out rate but it’s the same people they used to use in the big firms.
“Clients are very aggressive when it comes to tendering – a third, a third, a third was under strain.
“The real financial win is that our partners are delivering the services so gearing doesn’t have to be quite so high. Profitability can be higher and we can put that back into the market to win more work.”
The model appears to be paying off, with the firm counting the likes of Cala Homes, KPMG, Sports Direct, First Mortgage and Your Move among its client base.
Mr Gilson said partners, too, “do very well” out of the arrangement.
“They get decent money from profitability but we also have interests in Gilson Gray Financial Management,” he said.
“We expect to have half a billion in funds under management in a short while. If a partner stays with the firm as an equity partner for a set period then they vest in that capital value.”
Although he said Gilson Gray’s turnover grew by 48 per cent last year and is expected to increase by a further 50 per cent in the current year, Mr Gilson will not be drawn on what the actual figure is or on whether the firm’s profit margin is greater than 33 per cent.
What he does say is that the firm has met the one clear objective it set out with at launch: “to be a credible, critically massed business that competes at the top end of the sector in terms of profitability and product”.
“We achieved that in two years when we had expected it to take five, six, maybe even seven but then started to find that it was harder to make decisions,” he said.
“I sat down with Rhona Shepherd of Red Sky Management, who coaches Olympic athletes, and she explained that high performance doesn’t go in a straight line.
“We’ve already achieved what we set out to achieve and we need to know where we are going from here. We have now set out our strategic ambition to be the best law firm in the country in the next six years.”
Mr Gilson admitted that being the best will mean the firm’s turnover and profit will have to rise significantly, although he stressed Gilson Gray will also be focusing on “a whole range of other stuff that law firms don’t pay much more than lip service to”.
“If you take the financial extrapolation that would be 300 per cent of what we have done so far but there are other things that are arguably more important, such as work-life balance, quality of work, quality of client, having a collaborative approach and being the best place to work in the sector,” he said.
How that will translate into growth for the firm remains to be seen, although with Mr Gilson taking a hard line when it comes to who fits the profile of a Gilson Gray staffer, it is unlikely that the firm will look to expand outside the central belt, where it has offices in Edinburgh and Glasgow, in the near future.
“We have looked at launching in two other Scottish cities but decided against those because we didn’t feel that the talent pool was there to match our model,” Mr Gilson said.
“Our expansion will unequivocally be dictated by the maintenance of our culture.”
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