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Profits slump at lawyers Maclay Murray & Spens

LAW firm Maclay Murray & Spens has seen a near 23% fall in profits underscoring the tough trading conditions for even the largest players in the sector.

VOTE OF CONFIDENCE: Chief executive Chris Smylie believes high-profile transactions are a positive sign.
VOTE OF CONFIDENCE: Chief executive Chris Smylie believes high-profile transactions are a positive sign.

Annual accounts filed at Companies House for the firm, traditionally one of the largest in Scotland although it also has a London office, show turnover fell 13% from £46.9 million to £40.8m.

That led to pre-tax profits in the 12 months to May 31 last year dropping from £14.3m to £11.05m.

Writing in the accounts MMS said: "The board considers these results satisfactory in light of the challenging economic environment in the UK."

The 2013 profit was actually boosted by a £252,000 gain on the sale of fixed fee employment law subsidiary Law at Work to its management team which included former MMS chief executive Magnus Swanson.

The lower annual profit at MMS meant average profit per partner was down from £233,000 to £190,000. In the accounts the firm, led by real estate partner and chief executive Chris Smylie, said the amount of profit attributable to the partner with the largest entitlement slid by more than 26% from £397,000 to £292,000.

Average full-time equivalent staff numbers went down from 387 to 354 in the year with fee earners dropping from 233 to 210.

Overall employee costs declined from more than £18m to £16.7m while other operating expenses dipped from £13.4m to £12.2m.

The depreciation and amortisation charge was at £1m, down slightly on the £1.1m for 2012.

Net funds fell from £1.5m at the start of the year to £406,000.

Mr Smylie said: "These results, relating to our previous financial year ending May 2013, reflect the restructuring of the firm in line with our strategic review and a planned reduction in revenues resulting from the sale of a non-core subsidiary."

However he suggested there had been an improvement since the end of the financial year and said: "With deals worth more than £2 billion concluded in the last three months of 2013, including Aberdeen Asset Management's £650m acquisition of SWIP and the £700m joint venture between Gatehouse and Sigma, we are confident that our focus on quality will pay dividends.

"Such high-profile transactions are a clear vote of confidence in our current strategy and commitment to further invest in our UK-wide and international capabilities."

Other deals included Helical Bar's purchase of a £50m property portfolio and Dart Energy's farm-out of a 25% stake in onshore petroleum exploration and development licences to GDF Suez for £24.5m,

The Scottish legal sector has seen several mergers in the past two years with firms facing headwinds including difficult economic conditions, increasing competition from English firms and clients being more demanding on fee levels.

Among the largest Scottish firms the McGrigors name disappeared, following its merger with Pinsent Masons, with Dundas & Wilson likely to go the same way when its merger with CMS Cameron McKenna is formally approved in May.

MMS had talks about a merger with Bond Pearce in early 2012 but the English firm later agreed a tie-up with Dickinson Dees.

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