LAW firm HBJ Gateley has revealed plans to recruit three lawyers to its new banking and finance operation, amid signs lending prospects are improving for businesses in Scotland.
The firm is looking to appoint two solicitors to its Glasgow office and one in Edinburgh in light of improving economic conditions, a move that will grow its current banking and finance team to 19 north of the Border.
The recruitment drive comes as the firm says banks and newer sources of corporate lending such as business angels and challenger banks are easing the flow of investment into Scottish companies.
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Heading up HBJ Gateley's banking and finance division is Graeme Henry, who built up its corporate recovery division from scratch to "the largest in Scotland" in partners and lawyer numbers after joining in 2008. He said: "My role will be to grow our banking and finance team. We are trying to recruit three banking and finance lawyers. The role will be to grow the team and grow the book of business, and ultimately get to where we got to with the corporate recovery and restructuring team, [and] become the number one banking and finance team in Scotland."
Mr Henry said there was a need for the firm to rebalance its corporate activity more towards lending to businesses as the economic picture improves, citing a raft of indicators that suggest recovery is underway. These include the latest Bank of Scotland Purchasing Managers' Index, the upward growth forecast on the economy from the Confederation of British Industry, improving figures on retail sales, business confidence and business lending.
The lawyer, who spent 15 years at Dundas and Wilson, said: "We think the economy is on the up. I do not think there are many commentators who are saying it is going to go into reverse. I think the debate is how flat or rapid the recovery is going to be. Our view is we are moving into a growth phase."
Noting that banks are downsizing their support teams for distressed businesses, Mr Henry explained that, as a bank-led practice, there was a need for HBJ Gatelely to mirror what was going on at their biggest clients.
He said: "All the banks, Bank of Scotland, Royal Bank of Scotland and Clydesdale, in terms of moving their property group to NAB, have made significant progress in deleveraging and reducing their balance sheets, so there is a need for us to rebalance the HBJ Gateley business.
"We are still confident we will have a very strong presence and market share within corporate recovery and restructuring, [but] I think we see the better, larger growth opportunity on the positive lending side of banking finance rather than CR (corporate recovery)."
The work done by the company's banking and finance arm, which spun out from its corporate recovery department, is "80% bank-led", with HBJ Gateley on the panels of all the major banks.
Its client list also includes challenger banks such as Shawbrook and Metro Bank, and emerging alternative lenders such as Urica, which is focused on supply chain finance and has been allocated £10 million by the government under the business finance partnership.
It also acts for other corporate borrowers, and advises clients on acquisition finance, asset-based lending and real estate finance.
Mr Henry said: "The marketplace has become much broader in terms of [the] financing offering. At some points I do not think the traditional banks were falling over themselves to lend, but that position has changed: 80% of our work will be banks/lenders, and 20% from borrowers."
Mr Henry said banking and finance was a more competitive field than corporate recovery because of its specialist nature, and highlighted Dickson Minto, Dundas & Wilson, Brodies and Pinsent Masons as its main competitors.
It has a worked on a number of major deals recently, including the Clydesdale Bank's restructure of the facilities of Superglass, and has several more currently on the slate. It has four healthcare deals underway with Santander and RBS, and is acting for Arran Brewery on its forthcoming crowdfunding initiative.
Mr Henry revealed it was working with a bank in the sale of two loan books with a gross value of more than £1 billion, and for a £700m fund aimed at regenerating inner cities south of the border.
It is also involved in the refinancing of a major Scottish plc, and working with RBS on the refinancing of a major Scottish hotel and leisure company that is acquiring another hotel as part of the deal.
In spite of the optimism at HBJ Gateley, Mr Henry said the positive outlook was not universal across the legal profession in Scotland, noting that a recent review of the sector by Deloitte illustrated the challenges it faces.
He said: "The profession is polarising. Broadly, Scotland has too many law firms and too many lawyers. I do not think many people would argue with that.
"Scotland is 'over-lawyered' and you have got the worries with banks [that] some decision making is potentially moving south to London. You can take a doom and gloom view of it, which I do not, but I think the market is generally polarising.
"We have seen some failures of legal firms, Semple Fraser being the most notable, and then I think there has been a whole range of mergers/consolidation. Time will tell whether those were down for valid strategic reasons or out of necessity, I guess."