Dundas and Wilson are integrated into the financial structure more than any other Scottish solicitors. Managing Partner Alan Campbell gave The Firm a unique insight into how they faced the economic storm.

In the year since the collapse of Lehman brothers and the unprecedented nationalisation of the banks, news of job losses, redundancies, pay freezes and firm closures have abounded throughout the legal sector. Figures bandied around in the name of quantitative easing, interest rates, spending cuts and unemployment levels overlook the emotional horror of living though those changes, not only on the receiving end, but also for those implementing. As Dundas and Wilson joined Shepherd and Wedderburn, McGrigors and many others introducing salary cuts and unpaid leave on top of necessary redundancies, managing partner Alan Campbell agreed to talk to us about what is involved in coming to those decisions, and the difficulties in juggling economic expediency, business morale and client expectation in the midst of a perfect economic storm.

“People had been talking about a credit crunch for about 12 to 18 months, so liquidity was on people’s minds, but wasn’t to the extent that the financial fabric would seize up,” he said.

“Nobody that I was hearing said that the markets were going to dry up wholesale, and institutions were not going to have a supply chain. A bank that can’t get money is like a supermarket that can’t fill its shelves. It was so across the board.”

Dundas and Wilson, perhaps more than any other legal firm, have always watched the financial markets very closely, yet despite their abundant intelligence and contact with its ebb and flow, neither they nor their clients anticipated the fact of the financial collapse, or its extent, perhaps indicating how faith based and insubstantial the entire first world social model really is.

“If you go back to a single point it was obviously the collapse of Lehman brothers, and the fact that it wasn’t supported. Of course you had Northern Rock beforehand, but that became part of the context, rather than a one off. Then you had the situation where people were questioning the capability of major institutions in the US to survive.

“For the likes of AIG to be insolvent -these were the asset backers, so instruments were guaranteed by a guarantor who now has less credit worthiness than the instrument itself- was a complete sea change, and something certainly I had never experienced.  We had systemic failure. It is like a conveyor belt suddenly stopping, and there was no information about when it was going to start moving again. I don’t think anybody let themselves believe that this wasn’t potentially very serious. We had a situation where HBOS and RBS were potentially going down. To suggest that it wasn’t alarming would be kidding ourselves. For a Scottish firm that is embedded in the financial sector as we are, seeing that level of shake up was very concerning.”

No business of the scale of Dundas and Wilson is predicated on an ability to respond instantly to fundamental changes in the world order. Without any precedent to provide guidance about how the situation might resolve itself, there was little to do other than be ready to react, whilst keeping staff as informed as possible.

“Rather than have formalised board meetings once a month, the executive board moved on to two-weekly sessions, and at one point weekly sessions, primarily based upon who had what intelligence. Not quite crisis management, but much shorter term. You have your hand on the tiller the whole time,” he says.

“There is a real danger from a leadership point of view if you throw out the long term ambition entirely.  Even if you can’t see the horizon, you still have to be heading in a certain direction. You move from a situation of having a fairly good eye on the market from a leadership point of view - looking ahead 6 to 18 months and your strategic decision making is much further out - to a situation where you are almost unable to find that fix on the horizon because there is so much uncertainty, and you don’t know what your longer term game is. So you begin to go short term and keep all the options open. That is management philosophy in a time of crisis, and is what every other well led organisation was doing.”

In any kind of crisis there is a basic human need to hang on to certainties. The greater the degree of upheaval, the more certainties are lost and there is less to cling on to. With major, worldwide banks going down and the entire first world machinery grinding to a halt, it is unsurprising that the firm’s staff, as well as other firms in Scotland, looked to the management of Dundas and Wilson for guidance. But what do you say when there are no answers that can be given?

“Very quickly people understood there was no clarity, no certainty. We were honest, and that was genuinely warmed to,” Campbell says.

“We had staff sessions in early December. We knew transactions were coming to an end. We were trying to find, in this new environment, what our baseline was. At least if we could find something we could rely upon as a revenue stream, we could test the sustainability against it. And even that was difficult. There was still such uncertainty and it was so seized up.  We told staff we hoped to avoid redundancies, but nothing could be certain. We were trying our best to find out where the new markets were, how to diversify into new streams. But if you can do that in 6 months you are really accelerating. It’s a longer term game than that. What we found, internally and externally, was that a degree of empathy was really well received. Never in my professional time do I remember getting such a response to “How are you?” across the board.

“Against the backdrop, people are wanting reassurance, but knowing fine well that at a factual or intellectual level that it can’t be given. You have to say, ‘I don’t know’. But you have to say what you are doing, and give reassurance that you are all in this together.”

Even then, there comes a point where a firm must balance empathy and consideration with short term and long term survival, and in the economic boom years across the professional sector, organic growth came easily. Careers developed and firms flourished, based on revenue growth, which was suddenly and unexpectedly choked, leading to the painful yet unavoidable redundancies.

“To maintain that model without growing, you have to take people out, almost at every level, as it is growing.  In a frothy market where there are alternative career prospects, people come to their ceilings and move somewhere else, but in a recessionary market that somewhere else is very difficult to find, if not impossible,” Campbell says.

“If you are not seeing the revenues increasing in the normal incremental way, you are not seeing natural spillage, so you really have to deal with this in a more systematic, or possibly compulsory way.  Your business becomes uncompetitive, and you are also not developing your staff properly because they don’t have enough to do. You just have to stop that. Primarily, lawyers have a fixed cost base. We pretty much know how much we are going to spend every month. On the revenue side, we pretty much have no long term contracts for supplying services to clients. We are on panels, have relationships and can look at past trading, but there is no guarantee. All the data you have is historic. What you need to know is the cost/revenue ratio for the next 12 to 18 months. Even with all your client relationship management tools, pipelines and so on, it is still a stab in the dark. In a more stable market, you can work out how busy you are going to be. In this environment, you can’t.

 “We knew we had to bring our costs down very quickly, and hoped it would only be a temporary measure.”

All eyes are on the financial road ahead, and with his unique perspective on the financial landscape, Campbell does believe there are perhaps not green shoots, but certainly now visible light at the end of the tunnel.

“I am now in the more bullish, optimistic camp than some. If you have a job like mine, you are probably meant to be thinking more months ahead than others. I think we’ll get busy again in the Spring. To people on the floor, Spring might sound like ages away, but it’s near enough for me.”