LAW firm Burness Paull has highlighted the impact of political and economic uncertainty on key markets after recording a fall in profits in the latest financial year.
The Edinburgh-based firm made £22 million before partner distributions in the year to July 31, down eight per cent from £23.8m in the preceding period.
Revenues increased by 2% annually to £58.5m from £57.6m.
“Economic and political uncertainty had a tangible impact on two of our biggest markets, namely oil and gas and commercial property,” noted Burness Paull’s chair Peter Lawson.
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Burness Paull’s experience highlights the challenges faced by firms in Scotland’s key professional services sector as uncertainty about Brexit weighs on investor sentiment.
This has resulted in a drop in the kind of transaction-related activity that is a key income source for commercial law specialists.
The resulting problems have been compounded for some advisers by the sharp fall in the crude price since 2014, which triggered a slump in the North Sea oil and gas industry.
While there has been a partial recovery in the crude price since late 2016 activity levels remain below those seen during the boom years earlier in the decade.
Mr Lawson noted: “The first six months of our financial year were relatively flat, with Brexit and oil price recovery delaying some investment decisions and taking a while to convert into activity.”
Burness Paull has a significant presence in Aberdeen. It also has an office in Glasgow.
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With the UK facing the prospect of leaving the European Union on October 31 without agreeing an exit deal, business leaders have expressed fears about the possibility of a serious slowdown in the economy.
However, Burness Paull’s experience suggests many businesses have decided they have to get on with things.
“The second six-month period was materially better as clients adjusted to uncertainty being the new norm and the gradual uptick in activity in the North Sea flowed into investment and transactional work,” noted Mr Lawson.
“The fact that our corporate team had a record year, particularly in tech and international markets … is evidence that clients were bullishly responding to changes in their markets by investing.”
Describing current activity levels as encouraging, Mr Lawson said Burness Paull is confident of achieving stronger growth in the year ahead.
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He said the firm has made contingency plans on the range of possible Brexit outcomes, adding: “While some markets may see a decline in activity we believe there could be new opportunities in other areas.
“We are seeing strong inward investment into Scotland and our international clients tell us they are happy to do business here. We hope that continues.”
Mr Lawson said Burness Paull had invested heavily in staff and technology to shape its service in response to client feedback.
“Technology is becoming an increasingly powerful enabler in legal services with benefits in terms of speed, accuracy and cost,” observed Mr Lawson.
The firm has increased staff numbers by 9% in the past year, to 543.
Partner numbers have increased to 73 from 67.
Burness Paull did not disclose details of how profits were shared between members of the LLP in the latest year.
Accounts lodged at Companies House show the firm’s highest-earning partner received a profit share of £634,000 in the year to July 2018 while the average partner got £366,000.
Two prominent law firms based in Scotland reported growth in profits last month.
Brodies said it grew profits before partner distributions by 14% in the year to April 30, to £37.4m from £32.9m. Turnover rose 12%, to £76.9m from £68.6m,
Shepherd and Wedderburn grew profits before partner distributions 3.6% in the year to April 30 to £22.8m, from £22m. Revenues increased by 4% to £55.7m, from £53.5m.
Burness Paull was created via the December 2012 merger of Edinburgh-based Burness with Aberdeen firm Paull & Williamsons.
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