Top Scots firm Dundas & Wilson is bucking the trend of its increasingly equity-shy English and US rivals by taking a stake in a client for the first time ever.
Dundas joins the select band of Scottish firms, who have also started to take equity in place of fees. Masons’ Glasgow office took its first equity stake in a client, Dundee-based Internet company Mindwarp Pavilion, in April. And both MacRoberts and McGrigor Donald are also believed to have taken shares in return for fees in recent months.
Under the deal, Dundas, Andersen Legal’s Scottish firm, is taking a 2% share in start-up Intense Photonics, Glasgow university’s opto-electrics spin-off. Andersen, which is doing the corporate finance work has taken a 2.7% stake, while Glasgow university has taken a 10% stake.
Dundas head of technology Laurence Ward said that although it was the Dundas partnership that holds the shares, Intense Photonics would have access to the Andersen Legal network. “People will be mindful that for Dundas & Wilson this is an important client. We are not going to do this for every technology company that we act for,” he said.
Ward added that part of the motivation for the deal was to secure work on the exit of the investment, which investment banks tend to push to the magic circle.
US and UK law firms such as Linklaters, which trail-blazed the practice of taking equity instead of fees as the hi-tech sector boomed in the late 90s, have become more cautious with reports of some getting burnt when their internet clients have gone bust.
John Salmon, Masons’ technology head, said: “I’m quite surprised that Dundas & Wilson have done it because a year ago they said they weren’t going to do it.”
However, Ward said: “I’ve never ruled it out completely. I have never said we’d never do it and we’ve not changed our view.”
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