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Financials 2021/22: Strong year for Scottish independents while Stewarts’ profits balloon 93%

As financial results season enters the home straight, Scottish leaders Burness Paull and Brodies, as well as London-based disputes firm Stewarts, have announced strong increases to their top and bottom lines.

Burness Paull has unveiled a bullish set of financial results, with a 9% rise in turnover to £78.6m and a 7% hike in profit to £35.7m. Employees in particular will welcome the news, as the numbers are sufficient to trigger an all-staff bonus worth either 5% of their annual salary, or £2,500, whichever is higher.

Two years into a three-year strategy to attract and develop top talent, much of the growth is thanks to strong years for the firm’s staple practice areas of finance, real estate, dispute resolution and employment, though restructuring, technology, tax and public law also fared well. Standout transactions included Incremental Group’s £175m takeover by Telefónica Tech, and repeat instructions from tech giants such as Amazon and Comcast.

While positive, these results could not match the growth in 2020/21, when the revenue jumped 19% and profit 39% across the Edinburgh, Glasgow and Aberdeen offices.

Speaking to Legal Business, chair Peter Lawson (pictured) said: ‘We did experience a slight softening in the market following global inflation and the war in Ukraine. So we were delighted to come in pretty much what we budgeted. It’s just a slight softening, work continues to come in and we are still very busy.’

While profit and revenue were up, profit per equity partner (PEP) only saw a negligible increase from £725,000 to £729,000. Lawson said: ‘We took a strategic decision to allocate some equity points to the non-equity partners this year. We felt it was the right thing to do, to incentivise and reward all of the partners across the firm and we were pleased that we triggered our all-staff bonus’.

Over the last 12 months, the firm has brought in eight lateral partner hires, including immigration lawyer Grace McGill. The firm has also looked to move into family law, having hired former Brodies lawyers Richard Smith and Jennifer Wilkie earlier this year.

For its part, rival firm Brodies last month announced a twelfth consecutive year of growth which saw revenue reach £98.5m, up 20% on the previous year, as well as a boost in profit of 18% to £46.1m. The latest numbers will be particularly welcome given a static 2020/21, which saw both profit and revenue rise by just £0.5m.

Managing partner Nick Scott said: ‘Throughout the year, investments continued to be made in people, with the recruitment of colleagues in legal and business services teams, the payment of bonuses, and the introduction of new reward structures more closely aligning individual performance with reward. These measures represent the single largest investment in colleagues and colleague reward the firm has, to date, made.’

The last 12 months have seen the firm focus heavily on its office premises. A new Edinburgh office in January 2022 followed the opening of a London branch last summer, with a new Inverness outpost set to open its doors later this year.

Elsewhere, litigation specialist Stewarts has continued its striking financial run, today revealing a 43% jump in turnover and an eye-watering 93% uplift in profits. Total revenue grew from £79.7m to just over £114m, while net profit rocketed from £30m to £58m. Profit per equity partner (PEP) has shot up 86% from £1.4m to £2.7m.

On a four year track, revenues are up by 83%, however this includes a couple of shaky years where revenue  and PEP  plummeted as a result of Stewarts’ volatile contingency-fee reliant model.

The firm also announced its equity spread – Stewarts’ top earner took home £3.4m last year, while its lowest equity payout still easily broke seven figures at close to £1.2m.

Managing partner Stuart Dench, who replaced the long-serving John Cahill on 1 August, said: ‘During the year, we litigated ground-breaking cases, resolved disputes and achieved excellent outcomes for our clients. In previous years, we have indicated that our revenue and profit patterns will be “non-linear”. That remains the case, as these results demonstrate.’

Dench added that Stewarts plans to invest in new areas of work, announcing the launch of a policyholder disputes practice in September. A significant financial boon would have come Stewarts way this year, after Tesco settled a long-running shareholder dispute, paying out £193m. The dispute related to an accounting discrepancy in 2014 that saw the retailer post incorrect profits by a margin of £263m, with Stewarts partner Sean Upson leading a team representing a group of 112 claimants.