Why it now pays to work in insolvency north of the border

Insolvency and restructuring practices within accountancy firms north of the border have been steadily building their teams over the last 18 months as ongoing recessionary conditions have sustained a boom in this countercyclical sector.

But with a skills-shortage in Scotland, firms are having to shell out to stop talent jumping ship to competitors.

So, it's (kind of) official - Scotland is still mired in a recession. The latest quarterly Lloyds TSB Business Monitor suggests that a fragile recovery exhibited among Scottish firms at the end of 2009 has essentially been wiped out.

While the majority of businesses won't welcome the news, insolvency practices in Scotland can view it as confirmation that the busy times will continue.

"Scotland wasn't affected any worse than the rest of the UK, the impact was just delayed, which means we're taking longer to recover," says Blair Nimmo, KPMG's head of corporate recovery in Scotland.

"Scottish companies were hit hard by the UK property slump, and we've a heavy reliance on the public sector, which is likely to see more cuts. Insolvency teams will be busy throughout 2010 and into 2011," adds Colin Dempster, partner in Ernst & Young's Scottish insolvency team.

In short, insolvency professionals have been busy, and teams have had to expand. Nimmo says his team has grown by 25% over the last two years and he expects to add another 5-10% in headcount going forward.

RSM Tenon has also signalled its intention to expand its insolvency team after 30% increase in turnover within its Scottish operation last year.

There's just one problem with this potential growth - a relative shortage of experienced people in this sector north of the border. Dempster says 80% of this year's corporate finance graduate intake will work in restructuring, and E&Y is looking to balance this with experienced hires.

"A lot of firms have rebranded people working in transaction services as restructuring professionals without the proper training," says Nimmo. "We've had comments from clients that these people can often be too analytical without actually providing an adequate solution to their problems."

With experienced insolvency professionals a relatively rare commodity north of the border, firms have had to pay to keep hold of them.

"We're hiring, and I know from the number of calls my team get from recruiters that their services are in demand," says Dempster. "Firms are conscious of the need to reward that talent, and the bonuses awarded to insolvency professionals are disproportionately higher than those given to other parts of the business."