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Great Scot

Martin Darroch was awarded the title of Young Finance Director of the Year at the Financial Director of the Year Awards 2007. Heidi Early finds out more about him

Stop thinking like an accountant is the best piece of advice that Martin Darroch offers newly qualifieds. The Young Finance Director of the Year - who is also the first person from a professional services firm to be awarded the accolade - is a man worth listening to.

At just 32, he is chief executive of Harper Macleod LLP, a leading Scottish law firm that was formed out of the restructuring of the original firm Ross Harper and Murphy, which had suffered from serious financial difficulties in 1999. He was a key part of the restructuring and the subsequent multi-million-pound-turnover success story. He qualified as a Scottish CA just nine years ago.

"I'm not a person who's afraid to say what I think," Darroch explains. Which could have been why he was the NQ at RMD Chartered Accountants (Deloitte) who was picked to go into Ross Harper & Murphy Solicitors in 1999 and work out why the business was failing.

After five days, working 20 hours a day, he figured it out. "No one had looked at the basics. There were poor controls in place, mis-accounting and bad management information." Despite the failings Darroch believed the firm could be turned around. He was seconded to them and put a restructuring plan in place. "In those five days I saw and heard it all. I had to present to the partnership what was wrong and what could be done about it. This meant telling the partners the severity of the financial position. I saw how people reacted to stress and the effect it had on them whether positive or negative, which has proved useful experience to this day."

Means to an end

One of the main problems in business, says Darroch, is that "people overcomplicate things. You can have all the spreadsheets and strategies in the world but you can become distracted by it all, you must step back and look from a business perspective at what it is you're really trying to achieve."

Which is what he means when he says: "Stop thinking like an accountant." Darroch believes you've got to think if not bigger, then wider. "Accountancy is a means to an end, accountancy doesn't run a business, it is just the provision of the information that helps you run a business," he says.

Obviously, personality and confidence are great contributors to success, but Darroch's CA training at BDO was invaluable (although he didn't realise quite how good the experience was at the time, he admits). The Scottish BDO practice is smaller than its London counterpart, so it tends to work with smaller clients. This meant Darroch's training was business-orientated and he got to speak with the business owners.

It took two attempts by Ross Harper & Murphy to secure Darroch as their finance director. He knocked back their first offer "because I wanted to see what the reaction of those around me would be" and he wanted to be sure that the firm was going to follow his turnaround advice and not just slip back into their old ways. As he had hoped, the firm did follow his advice so when they came back with a second offer he accepted, making him finance director of the law firm in March 2000 at the age of 25.

As part of his restructuring plan, the firm split one year later to create Harper Macleod LLP of which Darroch became FD. To date and with his direction the firm has grown from 85 people to 226 and turnover has increased from £3.4 million to £13.5 million, excluding competitors acquisitions, it is the fastest-growing law firm in Scotland. Which is pretty unbelieveable, especially considering the age-old problem between accountants and lawyers. "I did tell my partner and mentor at Deloitte that I didn't want to work for a law firm". And look what happened! The thing is, says Darroch, "I wouldn't be here if it was just about finance in a law firm, that's not very interesting in itself, it's about implementing change and leading a business."

As FD he was looking at prospective clients, talking to them about the business and how they interacted with them, and he looked at the services they provided and how effective they could be. "In industry too many people look at competitors and worry about what they're doing. Instead, you should concentrate on your clients and their industry sectors and network with them. From this you should look for lessons that can be learned from them, whether in IT or HR. Concentrate on the customer."

Darroch uses the example of the firm's debt recovery department. It had taken a slide and was turning over just £100k in 2002. Today it has a contribution of £1.6 million and is rated as a leader in its field. So how did he do it? "I looked at what we had been asked to do, and simplified that."

It was a case of understanding our clients; getting the right instructions from the client, speaking to their customer as quickly as possible, getting to court as quickly as possible if that was what was needed and getting info as quickly as possible from the client. Key to this service provision was looking at the best way to use IT tools. "It was a time and motion study and we then fixed the pricing on the back of that. It was about providing a quality service which, provides results that are value for money. And really that has been a building block for our other practices - being able to deliver quality and results."

So it's not hard to see why in August 2006 Darroch was appointed as chief executive, even though he was only 31.

Value of loyalty

"People tend to forget about my age," he reflects, but rather it makes him appreciate his opportunities even more. "I was sitting and chatting with the chief executive of Lloyds TSB recently watching the cricket. My relationships would have been on a different plane if I had stayed at Deloitte," he muses.

Relationships and loyalty appear to be high on his list of priorities. Darroch is married with three young sons ("I couldn't do the job I do without my wife's full support," he comments), and the loyalty he showed to the firm was acknowledged when they sent him off on a leadership course at the highly regarded Harvard business school. "I was 26, the youngest person ever to be accepted on the course," he explains. "It was fun sitting beside senior partners of Big 4 Firms, and other delegates from as far afield as Australia and the Far East. A lot of them wanted to talk to me and find out how I got there."