Legal Business

Brexit and oil price stymie Burness Paull as profit drops 8%

Brexit and oil price stymie Burness Paull as profit drops 8%

Burness Paull has felt the effect of economic and political uncertainty more than most this year, reporting muted growth and an 8% drop in profit as two of its biggest markets struggled.

Revenue at the Scottish independent was up a sluggish 2% to £58.5m for the 2018/19 financial year, while profit fell to £22m from £23.8m. Two of the firm’s biggest markets – oil and gas and commercial property – had a slow first six months, heavily weighing on the result.

Chair Peter Lawson (pictured) told Legal Business Brexit and a stabilising of the oil price meant some investment decisions had taken longer than anticipated, impacting activity. While the first half of the financial year had been quiet, the second half had picked up significantly, he said.

‘We’re talking about small margins here but it’s meant our growth has been less than expected,’ he commented. ‘Our large real estate team was also impacted, and that’s been Brexit-related. That will be across the market. Clients have been up front with us in terms of saying they’re just holding off investment until the whole situation is clarified.’

Conversely, Lawson said the corporate finance team had its busiest year ever working on private equity, capital markets and owner-managed M&A deals. Pensions, food and drink and private capital had also had successful years. The firm’s revenue is up 26% over the last five years.

The firm decided to undertake a client review during the year, from which it has been investing in new technology such as cloud computing, document automation and practice management systems. Its headcount had increased by 9%, driven largely by the employment of legal technologists and paralegals to support its approach to technology. A review of its rewards and remuneration structure was on the agenda for this year, too.

He was optimistic about the next year, anticipating further improvement in investment levels once there was more political and economic clarity.

‘Clients are making it very, very clear to us that they’re weathering their own challenges,’ Lawson told Legal Business. ‘It’s about being more efficient in the way we can be giving them our services, and not just in relation to fees, but crispness of advice and working in a way that works for them.’

‘The client care project has been the biggest project across the firm this last year. It’s been a painstaking process but fantastic, you know what the client wants. Lawyers can sometimes be a bit presumptuous because that’s just always the way we’ve done it.’

Fellow Scottish independent Brodies earlier this year reported a strong set of results, with revenue and profit up by double-digit percentages to £76.9m and £37.4m respectively. Revenue at Shepherd and Wedderburn, meanwhile, rose 4% to £55.7m and profits were up by the same percentage to £22.8m.

hamish.mcnicol@legalease.co.uk

Legal Business

‘Cracking place to do business’: Burness Paull leverages international growth in 7% revenue uptick

‘Cracking place to do business’: Burness Paull leverages international growth in 7% revenue uptick

It has been a choppy year for the Scottish economy but local independent Burness Paull has used a 30% increase in international mandates to drive its ninth consecutive year of revenue growth.

The firm’s revenue for the year to 31 July 2018 rose 7% to £57.6m, while profit lifted 8% to £23.8m. Chairman Peter Lawson (pictured), who took on the role at the start of August alongside new managing partner Tamar Tammes after the firm changed its leadership for the first time in a decade, told Legal Business he was pleased given it had been a tougher year for the Scottish economy.

‘We’ve set a three-year growth plan and one year in we’re absolutely on track.’

Lawson pointed to a recovery in oil prices, which resulted in growth for the Aberdeen market, as well as investment in renewable energy and technology. Major deals included advising on Savannah’s $125m fundraising and reverse takeover of Seven Energy, as well as the Alternative Investment Market (AIM) listings of i3 Energy, Springfield Properties and Beeks Financial Cloud.

‘Last year was a pretty flat year for the sector, this year there has been a bounce back. Oil prices are a big factor in the Scottish economy, and Aberdeen is a significant part of our economy.’

But the past year was the first in which emphasis on international business, a strategy implemented about three years ago, has been borne out in the results. International clients saw Scotland as increasingly attractive for inward investment and the firm had people on the ground in the US, China, Norway, Canada, India, Germany and Israel every week. This year also saw Burness appointed to the Lex Mundi network of independent law firms.

‘When we speak to clients they see Scotland as a cracking place to do business,’ said Lawson. ‘No doubt the weak pound has helped inbound investment across the UK as a whole but that – combined with it being a good, stable, economy, even with Brexit there –  means clients looking to expand their businesses globally are looking at the UK and thinking it’s a safe place to do business.’

Burness Paull’s performance mirrors growth at fellow Scottish independents Brodies and Shepherd and Wedderburn, which saw revenue increases of 3% and 6% respectively. All three firms have seen revenue rise 49% over the past five years.

Burness Paull is paying a 5% bonus to its employees as a result of the performance. The firm has 317 lawyers and 67 partners, promoting five partners the past financial year and hiring former Pinsent Masons restructuring partner Michael Thomson.

Lawson said the changing geopolitical environment and technology would continue to put pressure on prices and the way law firms operated. But he is confident there would be future growth.

‘We think that there will be strong activity, we’ve seen a real increase in capital markets work in the energy sector and private equity will continue to be active. We’re confident that the Scottish market will continue to get strong inward investment.’

Hamish.mcnicol@legalbusiness.co.uk

For the latest on the Scottish legal market, read ‘Scotland: All our yesterdays’ (£)

 

Legal Business

Scotland: All our yesterdays

Scotland: All our yesterdays

Change always creates opportunities,’ says Nick Scott, the new managing partner at Brodies, when asked about this year’s departure of predecessor Bill Drummond. But he then quickly adopts a more cautious tone: ‘There will be no radical change to the way we will run our business.’

Scott’s reticence to herald a new era with a major pivot reflects the predicament of a leader inheriting a 20-year legacy of success. Drummond presided over a striking 122% revenue growth between 2007 and 2017, ending with a slow (by Brodies’ standards) 2% increase for the financial year 2016/17, with turnover up to £66.7m, while profit per equity partner (PEP) dropped 2% from £597,000 to £585,000.

Legal Business

The future in the instant: Burness completes leadership overhaul of Scottish independents

The future in the instant: Burness completes leadership overhaul of Scottish independents

With Brodies having completed a generational overhaul of its leadership recently, a changing of the guard at rival Scottish independent Burness Paull  will take place this summer for the first time in over a decade.

Burness Paull corporate head Peter Lawson and property and infrastructure head Tamar Tammes will become the firm’s chairman and managing partner respectively from August this year. They replace longstanding figurehead and chairman Philip Rodney and managing partner Ian Wattie, who have held their positions for more than 12 years.

Rodney (pictured) is leaving the firm to pursue personal projects, while Wattie will provide strategic consultancy over the next year on the final stages of key projects. The leadership change follows a year-long shadowing process.

Chairman-elect Lawson said he and Tammes will look to a ‘new generation’ of leaders for the firm’s next chapter, adding: ‘Philip and Ian have led the firm through a transformational process and will leave their roles with the firm in great shape. It is an exciting time for the firm, which has a very clear growth strategy.’

Tammes commented: ‘Over 40% of our work is now international, and we have recently become the sole UK-headquartered member of Lex Mundi – the world’s leading network of independent law firms. That puts us in a unique position to ensure our clients get the best possible advice and support for their businesses, both in the UK and internationally.’

The firm advised on 296 transactions with a total value of £42.8bn in the year to March 2018, and alongside Brodies has been the most successful independent Scottish player over the last five years. However, the past year or so has seen some turbulence following a steady climb: its financials for 2016/17 were flat, with turnover up 1% to £53.8m from £53.3m, while profit per equity partner (PEP) stands at £453,000 compared to £451,000 the previous year. Additionally, overall profit was down 2% from £22.5m to £22m. The firm also drew a line under a £160m dispute relating to its legacy business Paull & Williamsons earlier this year.

Succession at Burness after a long spell of consistent leadership comes following the announcement in January that Brodies managing partner Bill Drummond is stepping down after 20 years as managing partner . Drummond makes way for current real estate head Nick Scott, representing a handover to a younger generation of leadership after a hugely successful run. Drummond steps down this month after driving phenomenal financial growth as managing partner.

hamish.mcnicol@legalease.co.uk

Legal Business

Burness Paull draws line under legacy conflict saga as it settles £160m dispute

Burness Paull draws line under legacy conflict saga as it settles £160m dispute

Scottish independent Burness Paull has reached a confidential settlement in a £160m dispute relating to its legacy business Paull & Williamsons, which came to light in late 2016.

The former chairman and principal shareholder of oil service firm International Tubular Services (ITS), Robert Kidd, filed the claim against Paull & Williamsons alleging it acted for both sides in a private equity investment by Lime Rock into ITS.

Kidd, who left ITS in 2013 citing disagreements with the board, claimed Paull & Williamsons had used another firm – Ledingham Chalmers – as a front for the activity. Burness Paull inherited the potential £160m liability when it acquired the Aberdeen firm in 2012.

Early last year, Edinburgh’s Court of Session found the legacy firm had acted in breach of conflict of interest rules, meaning the case was headed for a full hearing, but this week that court was told the case had been settled.

A Burness Paull spokesperson said: ‘The dispute between Robert Kidd and Paull & Williamsons LLP arising out of historical events which occurred before its merger to form Burness Paull has been resolved between the parties. The terms of the agreement are confidential. No further comment will be made concerning this matter.’

In a judgment delivered in August 2016, Kidd was described as a ‘very successful businessman who grew his enterprises from humble beginnings to a turnover exceeding many millions of pounds. The decision said ‘Kidd is what is commonly referred to as a “wheeler dealer”. He focused on the wider picture leaving the detail and paperwork to others.’

Burness Paull will be relieved to draw a line under an issue that has dogged it for over a year. The firm, which has in recent years been a success story among independent Scottish players, posted flat financials for 2016/17 with turnover up 1% from £53.3m to £53.8m, while profit per equity partner stands at £453,000 compared to £451,000 last year.

Additionally, overall profit was down 2% from £22.5m to £22m in what the firm’s chairman Philip Rodney described a ‘bumpy year for the Scottish economy’.

hamish.mcnicol@legalease.co.uk

Legal Business

‘Bumpy year’: Burness Paull posts flat revenue and profit as muted Scots performance continues

‘Bumpy year’: Burness Paull posts flat revenue and profit as muted Scots performance continues

Scottish independent Burness Paull has posted flat financials for 2016/17 with turnover up 1% from £53.3m to £53.8m, while profit per equity partner stands at £453,000 compared to £451,000 last year.

Additionally, overall profit was down 2% from £22.5m to £22m in what the firm’s chairman Philip Rodney described a ‘bumpy year for the Scottish economy’. In 2015/16, the firm saw stronger revenue growth of 4% but PEP was down by 6%.

Speaking to Legal Business, Rodney (pictured) said: ‘We have seen marginal growth, which is symbolically nice to see rather than it going the other way. Given the market that we are operating in in Scotland over the last year, I am satisfied with the result.’

According to Rodney the areas of tax and technology performed well, as did energy and renewables. Oil and gas performed ‘better than expected’ and although deals were ‘more stop-start than usual’, corporate and transactional activity was good.

Highlights for the firm in the past year include advising Scottish-based Renegade Spirits on the development of Waterford Distillery in Ireland and acting on the $163m sale of Sterling Resources (UK) to Dutch company Oranje-Nassau Energie.

The firm has also brought in eight partners, including property partner Nicky Clemence from Brodies and dispute resolution partner Jody Crockett from Freshfields Bruckhaus Deringer as well as appointing its first general counsel.

This muted performance from a Scottish firm that has enjoyed a strong run over recent years is in keeping with the other Scottish independents to announce figures so far. In a market that has suffered from political and economic turmoil over Brexit and a potential second referendum on Scottish independence, Burness’ rival Brodies posted a slower rate of growth than usual, while Shepherd and Wedderburn saw revenue fall 5% from £53m to £50.5m, as PEP fell 7% to £349,000.

kathryn.mccann@legalease.co.uk

For more on a tougher Scottish legal market, read ‘The Scottish play – amid uncertain times English law firms keep crossing the border’

Legal Business

Burness Paull faces full trial after legacy firm conflict breach

Burness Paull faces full trial after legacy firm conflict breach

Lawyers involved to face professional complaint

A $210m claim against Burness Paull will go to a full Scottish civil trial after Edinburgh’s Court of Session found last month that legacy firm Paull & Williamsons had acted in breach of conflict of interest rules. While the court found that the firm did not act fraudulently, the case is now likely to move to a full hearing in early 2018.

Legal Business

Burness Paull defends multimillion-dollar claim relating to legacy business

Burness Paull defends multimillion-dollar claim relating to legacy business

Long-running dispute reaches Court of Session

One of Scotland’s leading independent firms, Burness Paull, is defending a $210m claim relating to legacy business Paull & Williamsons, Legal Business has learned, with a procedural hearing understood to have taken place in the Court of Session – Scotland’s supreme civil court – in November.

Legal Business

Burness Paull defends multi-million dollar claim relating to legacy business

Burness Paull defends multi-million dollar claim relating to legacy business

Burness Paull is defending a $210m claim relating to legacy business Paull & Williamsons, Legal Business has learned.

The claim, filed by Robert Kidd, former chairman and principal shareholder of oil service firm International Tubular Services (ITS) relates to a private equity investment by US firm Lime Rock Partners into ITS. Kidd, who left ITS in 2013 citing disagreements with the board, is claiming Paull & Williamsons acted for both sides in the investment and used another firm, Ledingham Chalmers as a front for the activity.

The original value of the claim was $210m, but Kidd is also claiming interest at 8% over about five years. The original claim value is roughly four times Burness Paull’s turnover in 2015/16 which stood at £53.3m last year.

Burness Paull, which inherited the liability when it acquired Paull and Williamsons in 2012, has instructed BTO Solicitors’ professional negligence lawyer Alan Eadie. Levy & McRae’s head of commercial litigation, Graham Craik is acting for Kidd.

It is understood that the case will appear imminently in a Court of Session, Scotland’s supreme civil court, for a procedural hearing. The case has been live in front of the court for 18 months, but the claim was first filed three years ago.

ITS was involved in another court dispute earlier this year against Downhole Solutions, a technology and technical solutions company.

Downhole Solutions claimed it owned equipment manufactured and delivered by Steel Service Oilfield Tubular Steel Services. However ITS denied that it had the property or that the pursuer was the owner of the property, arguing that it was owned by a separate company, namely the group holding company ITS which went into administration in May 2013.

In a judgment delivered in August, Kidd is described as a ‘very successful businessman who grew his enterprises from humble beginnings to a turnover exceeding many millions of pounds. The decision says ‘Kidd is what is commonly referred to as a “wheeler dealer”. He focused on the wider picture leaving the detail and paperwork to others.’

A spokesperson for Burness Paull said: ‘We can confirm that a claim has been made against the firm that arises out of events concerning Paull & Williamsons. Adhering to the highest ethical and professional standards is a guiding principle of the firm. The action is being defended and it would be inappropriate to comment further on the matter at this stage.’

Representatives for Kidd, and Ledingham Chalmers also said it was inappropriate to comment.

kathryn.mccann@legalease.co.uk

Legal Business

Brexit blamed: Burness Paull posts 7% drop in PEP and modest turnover growth

Brexit blamed: Burness Paull posts 7% drop in PEP and modest turnover growth

Scottish stalwart Burness Paull has blamed Brexit for mixed financial results, announcing a 7% drop in profits per equity partner (PEP) from £480,000 to £449,000, while turnover is up a moderate 4% to £53.3m from £51.3m. Net profit was £22.6m, down 3% from £23.4m.

According to Philip Rodney, chairman of Burness Paull, a year of consolidation and investment also contributed to this year’s financial performance. The firm’s reporting year runs until 31 July.

Speaking to Legal Business Rodney (pictured) added: ‘We always thought that this year would be a year of consolidation that we wouldn’t see quite the growth that we had seen in previous years. The results are not what we would have anticipated but for Brexit and over the last couple of months of the year we saw a definite downturn – at first there was the anticipation and then the shock of the result.

‘Our figures aren’t really comparing like for like with anybody else. Everybody else is 30 April or earlier so nobody has reported on their figures for the two pre-Brexit months.’

Despite Brexit woes, property, corporate finance, banking and funds were all sectors that performed well for the firm over the last financial year.

Standout mandates include advising Brown-Forman Beverages on its acquisition of Benriach Distillery Company and Savannah Petroleum’s $40m capital markets fundraising.

‘It was a great year for funds, banking – positive again. Growth in fee income, an increase in borrower work, I suppose a trend moving towards alternative lenders, we saw that,’ said Rodney.

This financial year has generally been good to the Scottish independents, with Brodies continuing its strong form, announcing revenue growth of 12% from £57.9m to £65.1m, while profits per equity partner (PEP) is up 13% from £532,000 to £602,000.

Likewise, Shepherd and Wedderburn enjoyed a third year of consecutive growth with revenues up 10% to £53m and profits increasing 20% to £21.5m, however rival independent Maclay Murray & Spens had another disappointing year financially with a 12% drop in PEP from £283,000 to £248,000, while turnover is up 3% to £44.8m.

kathryn.mcann@legalease.co.uk