Making the most of ill headwinds

Looking first at where lawyers and their clients have been doing well, energy, real estate, infrastructure, technology, and life sciences are singled out by Andrew Blain, managing partner at Shepherd and Wedderburn. He says: “The biggest opportunities in the Scottish legal sector have been in the sectors driving the future economy. These sectors are our areas of focus and growth, and we are highly active in them.”

He adds: “Over the last year, our firm’s activity has been dominated by our strategic commitment to invest in key sectors and practice areas.”

Shepherd and Wedderburn appointed five new partners across clean energy, real estate and infrastructure, plus banking and finance.

Claire Armstrong, Scotland managing partner at Dentons, highlights similar sectors to Blain as being ones that have been keeping her firm busy.

“Opportunities for Scotland’s legal sector this year have largely been driven at a national level by investment in real estate and energy transition and infrastructure, from both UK and international players,” she says. “Our international client base continues to be active in Scotland. Financial services remains a key industry for Scotland as does technology and digital, particularly across life sciences and consumer products.”

Broader advisory activity has been led by busy and growing client demand for support with regulatory compliance, employment law matters, brand protection, data protection and cybersecurity, according to Armstrong.

“As cost inflation continues to put pressure on businesses, Scotland’s position as a competitive jurisdiction for first-class advisory work and advice on complex transactions has been reinforced, particularly in the renewable energy space where the country’s ambitious net-zero targets are creating a pipeline of infrastructure projects requiring legal expertise.” she comments.

Dentons’ energy practice continues to ride the energy transition wave, having advised Turkish company Gülermak Renewables on its acquisition of the 49.9MW Corshellach Energy Storage Project in Moray from UK renewables energy business RES, among other deals.

“The current optics across the energy sector remain on the US shift away from net-zero technologies and whether other governments will follow suit or adjust climate change targets while re-investing in more conventional energy sources,” says Armstong.

“However, this is set against the backdrop of the administration of a previous significant oil and gas player in Petrofac. Net-zero has become a balancing act against energy security in uncertain geopolitical times and it remains to be seen what the global direction of travel will be, but there have been green shoots with some of the world’s major emitters setting greener targets than ever before.”

Partners at law firm Burges Salmon agree that growth sectors of the Scottish economy include renewables, infrastructure, and real estate, particularly projects related to the energy transition.

Stuart McMillan, partner and head of Infrastructure Burges Salmon, says: “Despite some headwinds, many projects across the country are coming to fruition and successfully meeting the ambitions of the Scottish Government’s Infrastructure Investment Plan.”

He explains that opportunities have been driven by the energy transition, with significant progress in heat networks, EV charging infrastructure, and hydrogen initiatives.

Legislative measures such as the New Build Heat Standard and the Circular Economy (Scotland) Act 2024 are also accelerating innovation in sustainable construction and retrofit projects, according to McMillan.

Dixcee Fast, partner in the real estate team at law Burges Salmon, adds: “Scotland’s leadership in renewables –with record generation figures – is reshaping property strategies, as developers and investors increasingly seek assets that integrate clean energy solutions.“

However, these opportunities come with challenges. Planning delays, rising compliance costs, supply chain challenges and funding have added complexity for our clients.”

She adds that the single pressure point for every developer in the industry over recent months has been the Grid Connection Reforms under Gate 2. National Energy System Operator (NESO), responsible for managing the Gate 2 process, set a deadline that was shifted multiple times, but the Gate 2 portal was officially closed in late August.

“This was an industry-wide critical milestone date, by which developers needed to ensure that their land rights were in place in order to secure an essential grid connection for their development project, with each project representing significant value once developed. These reforms are essential for the UK’s drive to net-zero,” says Fast.

“This evolving landscape has kept our firm busy advising on major energy and real estate transactions, from battery storage, wind, hydrogen and solar portfolios to multi-landowner deals and nationally significant projects. Grid connection reform has driven demand for strategic advice.”

Peter Lawson, chair at Burness Paull, says that in addition to advising on corporate M&A, real estate transactions and disputes, his firm has been kept busy supporting our clients on a whole raft of issues arising from changes to laws and regulations. These include the Employment Rights Bill currently making its way through parliament and the Moveable Transactions (Scotland) Act taking effect, and the fundamental changes it has made to commercial transactions in Scotland.

Technological developments and artificial intelligence (AI) have been welcomed. Brodies managing partner Stephen Goldie says: “The rise of generative AI remains one of the big opportunities for the legal sector, and having tech that will help free up our colleagues to focus even more on our clients is something that we welcome with open arms.

“Our firm has already assessed and adopted new ways of working that involve the latest technology, including use cases established through immersive AI labs that our innovation and technology team, together with teams of lawyers, worked on last year.

“When appropriate, AI tools can be used in tandem with lawyers to review and summarise information quickly. Our evaluation will continue as new and improved products come to market but we also see people as being key to unlocking more use cases. The challenge lies in identifying and using AI in a way that creates efficiencies, freeing up lawyers to do the parts where clients require and benefit from human judgment, insight and interaction.”

Murray McCall, managing partner at Anderson Strathern, says: “This has been a year of reckoning with technology. AI has moved from abstract conversation to practical reality. Many younger lawyers are already using it instinctively, while others are still finding their footing. The key has been to approach these tools with curiosity rather than fear. Just as email once transformed how we worked, AI is doing the same and demanding we understand it well enough to use it wisely.”

Martin Darroch, chief executive at Harper Macleod, comments: “Innovation has always been part of our culture and, undoubtedly, technology and AI will continue to play a significant role in the way we do business. It’s a constant loop as technological advancements are made and professionals become more accepting of how it can make them better advisors.

“Aligned to technology, the legal sector is not immune to cyber security risks, and we’re seeing significant levels of investment to make any organisation as secure as it can be against an ever increasing and sophisticated threat.”

Turning to challenges, the need to develop and retain skilled people is cited by many firms.

Blain says: “The continued success of our firm, our continued commitment to invest in our key sectors and practice areas, and our focus on career development and training, evidenced by our Platinum Investors in People accreditations, have been key factors for us in addressing this.”

According to Armstrong, law firms need to continue to invest in their people, to be constantly evolving to attract and retain talent. “This goes beyond compensation packages [where upward pressure remains]. To stand out from the crowd, it is essential to invest in training, personal and professional development and to create opportunities for career development at all stages, including mentorship and sponsorship. Agile and flexible working remains topical in Scotland,” she adds.

McCall comments: “Talent retention and the career paths of lawyers are changing. I think career paths and our sector generally will be less linear than in previous years, due to the increase in so many firms adopting generative AI and AI tools.”

Darroch describes it as a “big responsibility” to provide growth opportunities for people, whether for modern apprentices or graduate trainees.

According to Goldie, making progress against a backdrop of continuing domestic and global headwinds continues to ask questions of all businesses –and the legal sector is no different.

“We remain focused on listening to our clients and ensuring that we have the best skills, services and technologies that will help them to achieve their ambitions,” he says.

Summing up the year, McCall says: “The past12 months have tested the resilience and adaptability of Scotland’s legal sector like never before.”

He concludes: “It has been a turbulent time, but we – as lawyers – need to rise to the occasion and rediscover our creativity and humanity when we tacklethe many and varied challenges ahead.”