Shepherd and Wedderburn’s business went from strength to strength in 2006, converting to LLP status, becoming increasingly international, achieving record income, completing high profile deals and attracting new clients while continuing to strengthen relationships with existing clients.

Our review of the year looks at the business from five key areas that contribute to client service delivery and satisfaction:

• People: ensuring we have the right quality and balance of staff
• Physical Evidence: delivering results for clients
• Place: covering our geographic markets
• Processes: developing our approach to working with clients
• Promotion: communicating with the market

Some of the highlights from 2006 include:

• Year-on-year income growth of 14.2% over the last five years, achieved through organic growth and lateral hire.
• Conversion to LLP status, bringing both the English and Scottish business together into one entity, underpinning the firm’s future development.
• 300 new commercial clients across all areas of the business.
• Involvement in over 50 flotations or secondary fund raisings since the beginning of 2004.
• Third firm client research exercise by Acritas involving 135 clients and 51 prospects, with very strong results and excellent feedback.
• Arrival of new partners, Helen Dickson from Ledingham Chalmers (Corporate Finance) and John Schmidt from Shearman and Sterling (Competition, Regulation and Public Law).
• Preparations for our London operation move to new offices in January 2007, a doubling of office space, in line with our continued growth across the UK.

People (our key resources)

We have continued to strengthen our position by adding to our team in a number of areas.

• Helen Dickson has joined our growing Aberdeen office from Ledingham Chalmers as a Corporate Finance partner. Her experience covers a wide range of debt fundings, equity investments and restructuring transactions as well as management buy outs, acquisitions and disposals, particularly in the oil and gas sector.
  
• John Schmidt has joined the firm as a partner in our Competition, Regulation and Public Law team. John returned to work in Edinburgh from US firm, Shearman and Sterling's London office. Dual qualified in Scotland and Germany, John has represented a number of the world's leading corporates before the European Commission, the UK OFT and Competition Commission as well as the German Bundeskartellamt.
• Three internal promotions to partner were made: Ewan MacLeod in Planning and Environment, David Mitchell in Property and Euan McLeod in Construction and Special Projects.
  
• Eleven assistants were promoted to associates in our Edinburgh, Glasgow and London offices, across several key divisions. Claire Donald and Simon Fraser (Projects), Gordon Hay (Banking), Charlotte Johns and Lesley Murphy (Employment), Ben Kemp and Moray Thomson (Planning), Richard Jones (Pensions Tax and Trusts), Aaron Mitchell and Ian Mitchell (Corporate Finance) and Suzanne Wilson (Energy).
  
• Sebastian McMichael joined the firm as a senior associate in our London office from Freshfields, giving the firm's Competition and Regulation Group a presence in each of four offices across the country.
  
• Caroline Cumming joined the firm as a Property associate in the Aberdeen office, while Fiona Paterson joined as a Corporate Finance associate in the Edinburgh office.
• The firm recruited new Finance Director Keith Wilson. Keith was previously with Scottish Equitable/Aegon UK, where he was latterly Director of Finance for Aegon UK.
• We welcomed the arrival of 29 new trainees in September 2006.
• Our legal staff continue to broaden their experience of different aspects of the law through several secondment opportunities with key clients of the firm including Miller Construction, Fidelity Investment, National Australia Group, ProStrakan and the Scottish Executive.

The firm now employs 552 staff, including 57 partners.

The quality of our partners and employees has been demonstrated in the various awards and recognitions the firm has achieved over the year:

• The Law Awards of Scotland 2006.
  • The Corporate Finance team picked up the Corporate Law Firm of the Year award.
  • Wende Wraight picked up the award for Paralegal of the Year.
    
• Four of our PPP team's key projects claimed top prizes at the 2006 Public Private Finance Awards dinner in May.
  • Grand Prix: The MOD Heavy Equipment Transporter project.
  • Best UK Deal to Reach Financial Close: MOD C Vehicle Capability.
  • Judges Award for Innovation: Argyll & Bute Schools NPDO.
  • Best Operational Defence Project: MOD Heavy Equipment Transporter project.
• Shepherd and Wedderburn won the 'Best Marketing Campaign' award in the Managing Partners' Forum 2006 European Practice Management Awards for the "Don't Stand Still Campaign". The firm also won best legal interactive application and best legal microsite/landing page in the US Internet Advertising Competition 2006, for the same campaign.
  
• The firm received a commendation for the Arts and Brand Identity award at this year's Arts & Business Scottish Awards. We were commended for our sponsorship of Citizens' Theatre's 'An Audience with..... ' series.
  

Physical Evidence (our track record)

The range, depth and quality of work undertaken by Shepherd and Wedderburn reflects the stature and expertise of the firm.  The following section gives just a flavour of the headline achievements of our legal teams throughout 2006.

Corporate Finance

• Advising on the merger of the Alliance Trust Plc and The Second Alliance Trust plc by way of a scheme arrangement worth £2.5 billion.
• Acting as legal advisers to ScottishPower plc in the approximately £11.6 billion recommended offer by Iberdrola S.A., the Spanish utility company.
• Acted on the £57.7 million stock market flotation of London investment bank Bridgewell Group plc, advising its nominated adviser Bell Lawrie.
• Acted for Dunfermline Building Society in connection with the issue of £250 million Floating Rate Notes due in 2009 to be listed on the Channel Islands Stock Exchange and which completed on 28 March 2006.
• Acted for Numis Securities Limited in the hostile bid made by First Quantum Minerals in a deal worth £100 million.
• Acted for Scottish & Newcastle in the creation of a joint venture with Kuehne + Nagel Logistics Limited to undertake distribution for the drinks industry in the UK and using specialist practice areas from every division from Corporate Finance through Employment to Property.
• Acted for the international engineering consultancy Scott Wilson Group, in its main market flotation involving a £72 million placing, in which Shepherd and Wedderburn acted for the sponsor as solicitors to the issue.
• Acting as lead legal advisers to FTSE 100 client Cairn Energy PLC in the approximately US$6.3 billion* (implied market cap.) Indian IPO of its subsidiary, Cairn India Limited, which was priced on 16 December 2006. 
• Acted in the approximate £5 billion Standard Life demutualisation as court reporter.

Property

• Acted for Arlington Securities in relation to the acquisition of Akeler Developments interest in Scotland by providing property advice in relation to the new BP North Sea Operations Centre in Aberdeen and Central Quay Development Glasgow in the context of a £640 million acquisition.
• Acting for BAE in relation to sale and lease back of facilities at Crewe Toll, Edinburgh to the BAE Pension Fund at a price in excess of £70 million. 
• Acting for Rock Capital in the acquisition of City Park, Glasgow at a price of £64 million.
• Completed the acquisition of retail investment in Glasgow on behalf of Redevco UK Limited for £41 million.  This transaction was the largest High Street retail acquisition for the year to March 2006.
• Completed the acquisition of St Andrews Bay Development Limited on behalf of Apollo Real Estate Advisers Limited from the Chateau Elan chain of hotels and resorts in a deal worth $100 million USD. 
• Sale of headquarters of The Scotsman newspaper on behalf of The Scotsman Properties (1998) Limited to a private Irish investor. 
• Acted for Miller Developments in the £29 million disposal of units in an SPV JPUT to Exchange Property Developments Limited.
• Acted on the Development Agreement between NHS Forth Valley and Cala Management Ltd/Persimmon Homes Limited on the transfer of school site to Falkirk Council.
• Acted for the vendor in the Trump/Menie deal, in which US entrepreneur Donald Trump’s company, Trump International, purchased a large tract of land in Aberdeenshire to create a world-class resort with two championship-standard golf courses.
• Acted for Royal Bank of Scotland in a significant deal to provide funding to Babcock & Brown, who are partnering the Welsh Development Agency in a one million sq ft property development.

Energy and Utilities

• Acted for Cairn Energy during the US$822 million initial public offering of its India business.
• Advising Electricity Regulators in Republic of Ireland (CER) and Northern Ireland (NIAER) on the drafting of a financial "hedge" contract to cover electricity trades in the combined electricity market. 
• Advised Bowleven on its £30.1 million recommended takeover of FirstAfrica Oil involving advising on the corporate aspects of the and on the application of the oil and gas legal framework in Gabon using our West African expertise.
• Advised Renewable Energy Services (RES) on the termination of one of its SRO contracts for a windfarm site at Ark Hill.
• Represented Airtricity at the Clyde Windfarm Inquiry, which was conjoined with Harestanes over a nine week period. If consented, this will be the largest windfarm in the UK comprising 161 turbines with a potential capacity in excess of 570 megawatts.
• Acted for Edinburgh Oil & Gas plc in connection with a public offer for the entire issued share capital of the company by Dyon UK Limited effected by way of a Scheme of Arrangement under Section 425 of the Companies Act 1985.
• Acted for DeepOcean ASA in the acquisition of the entire share capital of CTC Marine Projects Limited.
• Advising ScottishPower in relation to Whitelee Windfarm, Europe's largest onshore windfarm, which received planning consent in April 2006.

PPP

• We are currently advising Western Isles Council in respect of its "hybrid" Education PPP project.  This project is structured to address some of the unique concerns of the Western Isles as regards market interest and supply chain capability. 
• Acted on behalf of the Sir Robert McAlpine sponsored consortium to complete the Gateshead Schools PFI scheme, which has a capital value of £55 million.
• Closed Phase 1 of the Acute Services Review (ASR) for NHS Glasgow and Clyde.  This project, with a capital value of £198 million, is the first stage of a much larger project and procures two ambulatory care hospitals in Glasgow.  Work on Phase 2 of the ASR has begun.
• Concluded the Scottish Prison Service's £356 million PFI project, which will see a new 700-place prison being provided at Addiewell in West Lothian. 
• Acted for Amec Group Limited in its capacity as design and build contractor and facilities management contractor in South Lanarkshire Council's £352.2 million schools PFI project.
• Acted for Argyll & Bute Council in the extension of its NPDO schools project to include a further secondary school in Helensburgh which will be re-provided on a greenfield site in the town. This involved the NPDO vehicle raising an additional £29 million of capital from the existing funders of the project, the Royal Bank of Scotland and the European Investment Bank.
• Advising North Ayrshire Council in connection with its £100 million capital project for the development of new school premises in the area.
• Advising Midlothian Council in its second schools PFI project with a capital value of £60 million.

Pensions Tax and Trusts

• Advising AWG Pension Schemes on aspects of a £2.2 billion bid for the company by Osprey Acquisitions and advising Stagecoach on the pensions implications of the sale of all its London Bus operations to Macquarie Bank of Australia.
• Advising on and negotiating the merger of three ScottishPower group schemes into the ScottishPower Pension Scheme.
• Advising Vivendi Universal trustees on US and Canadian corporate reorganisation proposals and impact on pension scheme.

Litigation

• Acted for Monarch Energy in their case against PowerGen Retail, part of the E.ON Group for approximately £7 million in the Commercial Court of the Court of Session. The claim involves complex issues of commercial agents law and EU law.  The case settled following the first week of a five-week preliminary proof.
• The firm has received a number of director disqualification instructions from the Insolvency Service since we were appointed as their sole legal agents in Scotland following competitive tender in 2006.
• Advised on numerous Fatal Accident Inquiries around Scotland for Medical and Dental Defence Union of Scotland/Medical Protection Society in 2006. 

Life Sciences and Biotechnology

• Acted for Sigma and Scottish Coinvestment Fund (backed by Scottish Enterprise) in a £1.3 million investment into B1 Medical Limited.
• Acted as lead legal adviser to ProStrakan Group in its £11.3 million placing of public new issues.
• Acted in the £83m deal to create TMRI Limited, the company set up by Scottish Enterprise to act as a link between universities, drug companies and the NHS in a £50m funding package for groundbreaking medical research in Scotland.

The firm continues to attract new clients across the country. In Aberdeen, new clients this year include Deep Ocean, Total, Genesis Oil & Gas, Iceni Oil & Gas and PSL Energy Services. Our London office continues to enhance its reputation through such new client wins as Fidelity Investment Management and Pernod Ricard UK.

Place (geographic markets)

Our locations in Edinburgh, Glasgow, Aberdeen and London allow us to continually and efficiently meet the needs of our clients across the UK and beyond.

Shepherd and Wedderburn has strengthened its ability to serve clients in England with the continued expansion of our London operation.  January 2007 will the see our London operation move to new offices in the City, a doubling of office space. This is in line with our continued growth across the UK.

We continue to support existing clients and develop business in the North East of Scotland with our Aberdeen office. The Aberdeen office has quadrupled in size since its conception in 2004.

The firm has been involved in numerous international deals this year.  We have been involved in transactions around the world including South America, Africa, Asia, North America and Europe.  Our success in the international arena has been facilitated by our membership in the World Services Group (WSG).  World Services Group is a global membership association whose members are among the top providers of professional business services.

WSG acts as a springboard for larger introductions and referrals, however our  experience shows how WSG can also be hugely helpful in the more practical day-to-day matters which often arise in transactions.

Processes (our approach)

Our Client Relationship Management programme continues with training and coaching to provide the skills and structures within which our legal staff can increase the benefits of the relationship for the client and the firm.

This year has seen the rollout of a client relationship programme to 30 of our key clients.

Promotion (our communication)

Shepherd and Wedderburn has continued its commitment to helping clients deal with the law proactively, rather than reactively.  We have achieved this through engaging in many channels of communication to ensure clients are informed about the law and how it impacts upon them.  Our aim to remain high profile in the market has been achieved in the following ways:

• Release of regular updates to subscribers of our e-bulletin list service.  Registrations for this service have increased by 118% in 2006.
  • This year we have broadened the scope of our e-bulletins to include; Commercial Dispute Resolution; Corporate Finance and Professional Discipline and Regulation.
    
• Distribution of our unique publication, Open magazine, to our clients and contacts featuring insight to how Shepherd and Wedderburn assisted in client cases.  Open reaches over 8,000 clients and contacts.
• Delivery of over 30 seminars throughout the year covering a wide variety of legal issues.
• Growth of the firm's Alumni Network has continued with membership more than doubling since its launch in 2005. The network continues to provide a range of benefits including bringing together former Shepherd and Wedderburn employees for networking.
• The firm continued to support the Prince's Scottish Youth Business Trust as our Annual Charity Partner.  As well as a financial donation, we are able to provide, through some of our junior legal staff, some of the basic direction on the law that a new business might require.
• The firm continues to employ e-marketing techniques to raise our profile and grow our database of contacts. Following the success of the 2005 Oil and Gas Challenge we are running an online Planning and Environment Challenge in January 2007 targeting specifically those from within the planning and environment sectors and businesses in the UK.
• The re-launch of the firm's website has created a class leading site.  The website has allowed the firm to increase interaction with users and enhance content availability while complementing wider marketing activities.
• In 2005, our direct mail campaign, and subsequent online competition, "Don't Stand Still", was designed to cross-market the services of the firm as well as alerting clients and contacts to the implications of some of the major pieces of upcoming UK and Scottish legislation in an innovative way. The online competition attracted over 1,200 registrations from across the business community.  This year we are once again interacting with our clients and contacts in a creative way through our online Christmas competition, which has been hugely successful in introducing people to the firm.
• Shepherd and Wedderburn continues to be active in sponsoring events around the country.  This year we have sponsored some high profile events such as Fizzers Art Exhibition at the Scottish National Portrait Gallery, the CBI Annual Dinner, the Scottish Hockey League and the Citizen's Theatre to name but a few. These sponsorships have allowed the firm increased exposure to existing and potential clients while at the same time reinforcing our brand values.
  
• To celebrate the University of Edinburgh's tercentenary of its first chair in law established in 1707, the firm has set up a scholarship which will support present and future generations of students studying for a law degree.  Georgina McBride is the first recipient of the scholarship. The firm is delighted to be involved in this very practical way of investing in the next generation of lawyers.