Burness Paull, Scotland’s second biggest independent law firm, has said Brexit uncertainty has contributed to a fall in profits as clients reacted to the EU referendum vote.
The firm has reported a “significant pause in activity and client instructions” in June and July prior to the end of a financial year which saw profits down 3.4per cent to £22.6million on a modest 3.9per cent rise in turnover to £53.3m.
Chairman Philip Rodney said: “The anticipation of, and the changed circumstances brought about by, the outcome of the EU referendum inevitably impacted adversely on the last couple of months’ trading and are reflected in our results.
“The anxiety and the shock had a big impact. But the world goes on, and I think there is an acceptance from clients that it is a new order, we have got to work within that, there will be lots of opportunities for clients and they are starting to explore them – there is no point in wallowing in Brexit grief.”
He added: “While there will continue to be uncertainties, we are beginning to experience nearer normal market conditions as we work with our clients to support them in these changed circumstances.”
Burness Paull has racked up aggregate growth of almost 40 per cent since the 2012 deal which saw Burness merge with Aberdeen market leader Paull & Williamson, but its profit margin remains high at over 40 per cent.
“It’s a margin which most of our competitors would be very happy to achieve,” Mr Rodney commented. “Last year was a successful one and we did some fantastic work.”
The firm advised on the first private rented sector deal in Scotland, the acquisition of the Eastgate shopping centre in Inverness - Scotland’s largest retail investment transaction of 2015, the acquisition of BenRiach by US drinks giant Brown-Forman, and Standard Life Investments on its sponsorship of the British and Irish Lions rugby team as well as the spate of acquisitions made by Standard Life’s new advisory business 1825.
The firm, with 500 staff and 59 partners, said its funds and banking business also grew last year and it invested more than £1m in its people, systems and property.
Mr Rodney said the firm had no regrets over the timing of its Aberdeen merger.
“Strategically it was the right thing to do, we always knew the oil and gas industry is cyclical and Aberdeen isn’t just oil and gas, it has the ability to reinvent itself. We have technology clients looking at internationalisation, lots of infrastructure projects happening...we went into Aberdeen with our eyes open.”
Last year saw a “slight downturn but nothing like what you might have imagined”.
On the Scottish market Mr Rodney said: “I think we will see more UK firms and international firms taking over Scottish firms, and some mergers within the Scottish market, but it’s a continuing trend, I don’t think it’s specifically triggered by Brexit.
“We have set out our stall in terms of wanting to remain independent, and if you look at Europe, the leading firms in Italy, Germany, Spain and most European jurisdictions are the large independent firms, not the multinationals.”
Key lateral appointments had included Ronnie Brown to lead the firm’s specialist tax division and Callum Sinclair to head up the technology group, both in Glasgow.
“We believe that the technology sector in Scotland will see significant growth over the next five years,” Mr Rodney said.
“There is also an exciting and increasing requirement for top-tier support in this sector from our growing international client portfolio."
He said new client wins over the last year included Scottish Leather and Ecotricity.
"We were also appointed to the European Panel of Weir Group. Going forward, while it is important for us to retain our Scottish market intimacy and focus, international work – which now accounts for nearly 40per cent of annual turnover – is creating a number of real opportunities particularly in the US, Canada, China and Norway.”
Mr Rodney added: “There’s no doubt that continued uncertainty will remain as we enter this new financial year. But with our Scottish market intimacy, combined with the dynamic approach and our absolute commitment to our clients, we believe that 2016/17 will certainly be one of great opportunity.”
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