Interview with Stephen Goldie: the next chapter for Brodies LLP

Transcript

00:00:05 David Lee, Host

Hello and welcome to Podcasts by Brodies. My name is David Lee and in this episode, I'm delighted to be joined by Brodies managing partner, Stephen Goldie.

Stephen took up the managing partner role in May 2024, succeeding Nick Scott. He was previously head of the disputes practice at the firm and is a recognised expert in dispute resolution.

Last year, Brodies achieved a major milestone, becoming the first Scottish legal firm to break through 100 million in annual revenue, as well as launching its first international arm, Brodies Middle East LLP, and opening an office in the United Arab Emirates.

Welcome, Stephen. Just tell us a little bit about what the role of managing partner involves and especially what are your priorities in your first year in the job?

00:00:59 Stephen Goldie, Managing Partner

Thank you, David. The managing partner at Brodies is an elected position. When you're elected to the role, the outgoing managing partner can work with the incoming managing partner to ensure continuity across many of the projects the firm is undertaking. But fundamentally, the rule is about implementation of the firm's strategy. Last year, in October 2023, the firm went through its strategic review process and during that process, all the practice areas, all the areas of the firm including the business services teams, produce a review and a plan that we're looking to implement over the following three years, which commences on the 1st of May. So, implementation of the strategy is a big part of the role alongside monitoring the financial progress and success of the business. My priorities, as managing partner, flow from that strategic review. First, I want to ensure that all colleagues have the best platform to encourage the implementation of those plans and there are three main areas that I think we must really concentrate on in the coming three-year period.

The first one is looking after what I call the anchor in Scotland. The majority of our colleagues are in Scotland and we have the offices in Aberdeen, Inverness, Glasgow and Edinburgh and of course having that anchor in Scotland has been a great feature of our success and our growth over the past 14 years. So, we've got to make sure that we're looking after the existing clients and of course the markets that are available in Scotland.

The second thing that is a real priority for the business is how we go about helping existing clients and indeed winning new clients in the rest of the UK. Scotland, of course, is a country of 6 million people. It is part of the United Kingdom, which has an awful lot more people in it. So, we recognise that we are on the doorstep of a £40 billion legal market, so we're going to be making sure that we're making inroads into the rest of the UK with their existing clients and indeed winning new work because we do have capability within our firm to do English law work as well.

So, we have this opportunity to work with clients in their international projects and indeed to work with clients that are involved in Middle East projects, whether that be traditional energy projects or indeed transition projects.

So, we've got quite a busy agenda across those three areas and my job is to ensure that everyone has got the best opportunity to implement the plans across those three strands.

00:04:19 David Lee, Host

Excellent. Thanks, Stephen. We'll come to some of those areas later on in a bit more detail, but we're recording this podcast in the summer and the financial results have just come out and they're strong, they're up 7.5% from the landmark breakthrough past 100 million last year. What's the main reason, over the last year, for those strong brodies results and which areas of the business are doing particularly well?

00:04:54 Stephen Goldie, Managing Partner

So, I'm really pleased to say that all the main practice areas at Brodies made progress in terms of income, so it was record income for all the five practice areas Corporate, Real Estate, Banking and Finance, Personal and Family of course Disputes from where I spent seven years as the practice area leader. The main thing I would say about the continued success of Brodies is the commitment of our colleagues to service excellence. Of course, we also need to have a strong client base and of course we've got that and those clients really do continue to trust us with the work that they're doing. There's been any number of challenges across the economy. We've been operating in an economy where there's higher interest rates than people are used to, there's been political change throughout, and of course, we're helping clients navigate that landscape constantly which is evolving and changing. Our people in that process have been fantastic. That's the real reason why we've managed to deliver growth. It's hard work that people put in to making sure that the clients are getting what they want and what they need.

00:06:14 David Lee, Host

Thanks very much, Stephen. As we said, turnover was up by 7.5% year on year, but profitability is actually only up just about 1%. Can you explain why that is?

00:06:27 Stephen Goldie, Managing Partner

I mean that is planned investment in the firm. So, there was significant investment in the year in recruitment, so more colleagues arriving at Brodies. Salary reviews, of course. Inflation has been running much higher than in previous years, innovation and technology and of course the infrastructure of the firm.

So, we have just completed the Glasgow and Aberdeen office upgrades in the previous year. That has meant that we've got even better facilities for clients and colleagues to come and work together in and that has been a significant investment over the year in particular. So the work that we've done in our offices has been done at a significant expense, but of course that was planned expense. So we did expect our cash balances to come down in the year where we're making that sort of level of investment.

00:07:22 David Lee, Host

Thanks very much. Just to explain a little bit more, Stephen, why is it so important to Brodies to invest in those office upgrades and to invest in new offices and what is it that matters most to your colleagues about their working environment?

00:07:38 Stephen Goldie, Managing Partner

I think it's very important nowadays that in the modern office you provide an optimal place for people to come together and collaborate. So, our Edinburgh office has of course received a Platinum Well accreditation, health and well-being, of course is very important in terms of looking after our colleagues and hat does that mean for the way that we go about running our offices? Well, it makes sure that we've got light, air, space, comfort in mind, when we're putting in place the environment for people to come together.

00:08:14 David Lee, Host

You touched on recruitment Stephen already, but the headcount at the firm continues to rise. I think in terms of full-time equivalents just under 800, is that going to continue rising? Are we going to see Brodies recruiting even more? What impact does that have in terms of your fee-earners and as in terms of that financial pressure cause what we've seen in the legal market is salaries continuing to rise all the way from new recruits at trainee level upwards and that's working its way up through the legal chain. Is the salaries putting a bit of pressure on the profitability and the way the firm works?

00:08:53 Stephen Goldie, Managing Partner

Well, taking the first point about headcount, I can exclusively reveal that we have indeed recruited 24 newly qualified lawyers who will start with us in August in the first year of our strategic review plan. So, we're absolutely delighted to do that, at any given time we have in the region of 40 to 45 trainees in the firm and we're retaining 24 of the trainees that are going into these newly qualified positions. So yes, the headcount of the lawyer group will increase, but it's also important that you recognise that it's a team effort in any law firm. So, on the business services side of the business, we're also making sure that we recruit into those areas and indeed, there are important areas for example, you'll be alive to the changes that are coming in terms of AI and how you deal with data. So, we've been recruiting data analysts and making sure that we've got the right IT skills in the firm, including how to go about training the legal side of the business about how they work with those with those tools that are becoming available on the market, so that's all really important. So, you're seeing an increase in the headcount in the lawyers and you'll see an increase in the headcount in the business services teams and that's essential in terms of how you go about servicing in the modern law firm.

Like any business nowadays, we're not immune to the pressures that are out with our control. So yes, we do have to take account of inflation and I'm pleased to say that over previous years we've certainly done our bit in Brodies to make sure that we’re doing our utmost to stay ahead of the curve when it comes to inflation. We have paid out bonuses to colleagues, and indeed the bonus that we're just about to pay for the year gone past is 3% and of course we have a performance bonus scheme as well which assists the colleagues with recognition for the hard work they've put in over the past year.

00:11:03 David Lee, Host

Thanks very much, Stephen. You've talked a little bit about your strategy looking ahead in terms of maintaining that service excellence, in terms of constantly looking over the horizon and seeing what's coming next. But beyond that strategic approach, what about you personally? What personal characteristics do you think you bring to the role of managing partner that will help you to really deliver for Brodies?

00:11:35 Stephen Goldie, Managing Partner

So, I think I've got a body of experience built up over a long career at Brodies, over 20 years, I became a partner in 2007, having joined the firm in 2002. So, I was a partner in the litigation team and with disputes, I think it's very much a solution driven approach that we have there. So I think that I can take the experience of that and apply it for the solutions that our business needs and will have going forward. I think I've got great experience of our business and I also think that I've got several fantastic relationships with people throughout the business that I have cultivated and grown over my 20 years at Brodies. So I think that's important to note that you know, I've got a track record with a lot of the people in the business already. I think I've got a track record of growth on the dispute side of the business, which was recognised by the partnership when they were taking their decisions about the managing partner role. I think resilience is incredibly important nowadays and I think that the final thing I would add into that in terms of the qualities that are needed for the role and that I can bring to it is that it does take hard work, you have to be committed to the business as a job which demands a huge amount of time and respect and of course I view that as a privilege in terms of how we go about looking after the business going forward.

00:13:04 David Lee, Host

Thanks very much, Stephen. You talked there about the relationships that you've built up with different colleagues across the firm. What about one specific relationship between the managing partner and the chair? So in Brodies case, obviously Christine O'Neill KC, how does that dynamic work between yourself and Christine and in its early stages, would you say it's working well?

00:13:29 Stephen Goldie, Managing Partner

It's working very well with Christine. I've got a fantastic relationship with our chair and of course, we worked together for a number of years quite closely in the disputes team. Christine is a fantastic lawyer, she's got this ability to see in 3D and of course, the experience that she's got in the chair role is of huge advantage and benefit to me. She's a fantastic sounding board. I think it's somebody that I will be working with very closely as we go through this year and it's an absolute pleasure to work with Christine. Don’t get me wrong, she has the ability to see things that I don't, again, that's a benefit from her experience but that just brings forward the team effort that goes on there. Christine chairs the strategic board that I report to, so again, it's very important that I've got a good working relationship with her. Day in, day out I am liaising with Christine about all the sorts of issues that come up in a business of this size, as I said earlier, so it's a real pleasure to work with Christine.

00:14:34 David Lee, Host

Let's come back to some of the things you talked about earlier, Stephen, you talked about the new office in Abu Dhabi. How is that going? It's in its relatively early stages. What are the plans for Brodies in the Middle East in the short and medium term?

00:14:56 Stephen Goldie, Managing Partner

The office in the Middle East, we opened just over a year ago, so it's just come to the end of its it’s first year. The accounts for the LP and the separate LP Brodies Middle East and have been consolidated for the first time. As you'll see from the accounts, David. It’s a very new enterprise for us. We have got a business plan there, it's a three-year business plan. So we are at the end of the first year of that. I'm pleased to say that the people that we have in the Middle East office, including Josh McFadzen and Brian Wilson have done exceptionally well in their first year to settle in, make sure that we've got new recruits coming and of course, they've been putting in a great shift to win new business and new clients. So, we're very pleased with the progress of the office in the first year. As we go into the second year of our business plan in the Middle East, we are already seeing that we'll have new recruits joining Brian and Josh based in the Middle East. So that was important to make sure that we could attract new talent to the business because Brian and Josh need that because we're generating more work there. So, we're foreseeing that we're going to make progress in the second year and it's a good news story for the firm.

00:16:14 David Lee, Host

Another thing that you touched on earlier, Stephen, was looking at that work outside Scotland, that Scotland has a population of 6million, limited amount of work, there is a ceiling there and only so much capacity for growth. So, what are the plans? What is Brodies doing in terms of looking for that additional work from that very large UK legal market?

00:16:43 Stephen Goldie, Managing Partner

So, I think that we do have the ability to continue growing in Scotland, David. I wouldn't say that there's some kind of ceiling there that we're concerned about. So, I think that there's a number of areas where we can grow in Scotland. So for example, natural capital and also the transition periods is going to generate a huge amount work for legal teams that are based in the UK, in particular in Scotland. So, we do see that there should be growth in Scotland, but when it comes to the work that we are doing further afield, what we're seeing is the ability to work with clients in other jurisdictions in a way where we are involved in the project management because of the skills and experience that we've already gained with those clients in Scotland. To give an example of that, if there is a renewables project in Europe with one of our existing clients, we're well placed to help those clients with that project and indeed because of the strong relationships we've got them, they want us to do that.

00:17:51 David Lee, Host

Something else you talked about earlier on Stephen, was Artificial Intelligence. I think it's widely recognised that it's one of the biggest challenges, one of the biggest opportunities and maybe one of the biggest unknowns in both the legal sector and the business world more generally. How is Brodies grappling with those real challenges of Artificial Intelligence, both in what the firms do in and how it serves its clients?

00:18:18 Stephen Goldie, Managing Partner

We see a huge opportunity for the firm with AI products, David. There are several products which are coming to market. They're coming out quite quickly, they're coming thick and fast and the first thing that we did when we saw the direction of travel here was to make sure that we had an AI task force that was working with the new products that were coming to market. Now, that doesn't mean that you just jump in with two feet, I think that we're being quite considered in our approach, we're already adopting some of those tools that we think will be the best tools to help us with clients and with efficiency in the workplace, it's undoubtedly the case that there will be tools that are quite effective at reducing them at a time that some tasks take, that we see an opportunity again because that frees up time for lawyers and their business services teams to do other things. So, it's a massive opportunity for us and one that we're going to be working on quite hard as we go through this current year.

It is an area where it feels like there's a lot of change potentially happening quite quickly and again, I think that's an opportunity to modernise businesses and just again, make sure that you're adopting the right things throughout the operation. We also think that there's a huge bit in here with training of people. I think that you must really spend the time making sure that people understand the tools that are available and making sure that you use them in the right way. There's no point just introducing things and thinking it's going to be a magic wand to make things better, there's a huge amount of work that goes into it. So, we're making sure that we're well abreast of the latest developments and we're moving on to train colleagues in the tools that are available.

00:20:04 David Lee, Host

When we talk about AI, Stephen, we always come across this tension between what AI can do, what tasks it can displace, and that human element of talent. How do you think Brodies can best respond to get that balance right between the concerns that AI is taking on a lot of the task of your colleagues and that human element and keeping that human element in the loop?

00:20:29 Stephen Goldie, Managing Partner

There's a very good reason why the products often use the words like it's a co-pilot. It is about people and technology working. I've heard a few sound bites about the way that the business world is approaching this. You'll hear people say things like ‘AI will not take your job, but somebody using AI might’ well, we want to make sure that our people are in that latter category where we're giving them the tools to make sure they're working with AI to do the job better.

00:21:07 David Lee, Host

Thank you. Just thinking, Stephen, you’re talking there about AI, you touched earlier on as well about the energy transition. You've also mentioned the big challenges that all businesses have faced in recent years with the pandemic, the cost-of-living crisis, geopolitical events and so on. Now we've got new government at UK level, constant change. How do you keep that real focus of that strategic plan and screen out all that noise? Therefore, what would success look like for that first strategic plan during your time in office?

00:21:45 Stephen Goldie, Managing Partner

What you must do is make sure that you're staying close to the clients and listening to what the clients want and what they need. The clients always must adapt to the change in landscape round about them, they're very good at that, they are very good at pivoting and doing different things when policies change depending on the type of business that they're involved in. It's our job to make sure that we are relevant to those clients. So, making sure that we're relevant through listening, making sure that we are going forward with the clients and helping them achieve their business objectives that's one of the most important things for us as we go forward in the strategic review, David.

00:22:24 David Lee, Host

Finally, Stephen, what is it about Brodies? What is it that allowed Brodies to be that first firm that went through the 100 million revenue barrier in Scotland? Is there something culturally different about Brodies? What is it that makes Brodies stand out from the crowd as someone who's worked there for more than two decades?

00:22:51 Stephen Goldie, Managing Partner

I've worked here for over 20 years and I can say that the people that we have here are fantastic. It's a real pleasure to come into the office and work with the group of people that have assembled here at Brodies. I think they make a real difference in terms of the skills they have, the hard work and commitment that they put into the business. I think there is a genuine sense of collaboration at Brodies. I think there always has been. I think that the way that we go about planning our business really assists us, we really do focus on what the clients want. I think there's also been a period of time when the landscape in Scotland in particular has changed. The firms that were the larger firms, the independent firms 10 years ago, some of those firms have moved into other organisations. So, you see more national and international firms in the Scottish landscape during that time. We've just been quite resilient and we've stuck to our plans. You mentioned earlier about noise, I think you have just got to filter that noise out and concentrate on your plan. It does come down to the delivery by the people and of course the clients trusting us with their work as we've gone through the past 20 years.

00:24:16 David Lee, Host

Are you enjoying it, Stephen? Are you enjoying your early days as managing partner?

00:24:22 Stephen Goldie, Managing Partner

It has been a great experience so far, David. I'm learning so much every day. Of course, it is a learning experience because it's different from the previous role, but again, the support that I've enjoyed around the, you know, the boards, the partners, colleagues generally has been fantastic. Yes, I am enjoying it. I won't say it's not been hard because of course there's going to be hard times when you're working hard to achieve strategic objectives and whatnot. But yes, I am enjoying it, David.

00:24:53 David Lee, Host

Great stuff. Thanks very much indeed to Stephen Goldie for his great insights today and looking forward to his first period as managing partner at Brodies as he says, a lot of external factors affecting the way that the firms operate, but the need for Brodies and the ability of Brodies to keep that real focus on staying close to clients, understanding what they want, delivering excellent service through the brilliant staff that they've got and always looking ahead and always understanding what is coming over that horizon.

So this episode is part of Podcasts by Brodies, where some of the country's leading lawyers and special guests share their Enlightened Thinking about the issues and developments having an impact on the legal sector and what that means more widely for organisations, businesses and individuals across the various sectors of our economy and wider society.

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