Burness Paull ditches firmwide bonus as profits drop post-Brexit

Scotland’s Burness Paull has abandoned its traditional firmwide bonus payout following a slow financial year in 2015/16.

The firm saw turnover grow 3.9 per cent to £53.3m last year, but profit to full-equity partners dropped 2.3 per cent to £21.1m.

The firm cited “post-Brexit uncertainty” as leading to a “significant pause in activity and client instructions” in the second half of its financial year, which ended on 31 July.

The results follow a stronger year previously when turnover grew by 11 per cent to £51.3m and profit was up 13 per cent to £21.6m. The firm doled out bonuses on the back of the results, handing employees a bonus equal to 7.5 per cent of their individual salaries.

Burness Paull has long incentivised staff with bonuses, awarding a 10 per cent payment after profits rose by 42 per cent in 2006/07. More recently, the firm paid a bonus of 5 per cent at the end of 2012/13 and 10 per cent following the 2013/14 year.

But this year staff will not receive a flat bonus rate, with individual bonuses instead to be reviewed on a case-by-case basis, according to the firm.

Chairman Philip Rodney said Burness Paull was one of the few firms to reflect “the post-Brexit shock” in its 2015/16 financial results. “Were it not for Brexit the figures would have looked better, but we get the sense business has accepted what’s happened and is moving on,” he added.

Rodney said the firm’s corporate finance and capital markets teams performed well with a “notable increase” in domestic work. Its property team also saw an uptick in activity.

In the last financial year the firm advised on the acquisition of the Eastgate Shopping Centre in Inverness, Scotland’s largest retail investment deal of 2015; the acquisition of distillery BenRiach by US drinks giant Brown-Forman; and Standard Life Investments’ sponsorship of the British and Irish Lions rugby team.

It also boosted its funds and banking business, in part due to an increase in borrower work and a trend towards alternative lenders in the sector.

Rodney added the firm was heavily investing in its technology practice, which has seen significant growth in the last year. Burness Paull brought in Callum Sinclair from DLA Piper last year to head up the technology sector group.

“There is an exciting and increasing requirement for top-tier support in this sector from our growing international client portfolio,” Rodney said.

The firm made one other lateral hire in 2015/16, bringing in Ronnie Brown as head of tax from DWF. It also made up two lawyers to its partnership: Paula Kennedy in banking and funds, and Steven Guild in disputes. The hires and promotions were across Burness Paull’s offices in Glasgow, Edinburgh and Aberdeen.

Brown brought in a key new client to Burness Paull, with Scottish Leather Group following him from his previous firm. Burness Paull also won panel places with Ecotricity and Weir Group last year.

“Our strategy now is to remain independent,” Rodney added. “When we look to Europe we see the leading firms are the independents like Garrigues and Noerr – that’s a model that works best in Scotland.

“It’s not just about technical ability, it’s about having a real connection and intimacy with our own markets here,” he said. “Whatever the outcome of Brexit, Scotland will always be a separate legal jurisdiction to England so it’s right for us to compare ourselves with these strong European markets.”

Burness Paull has spent three years consolidating the merger of Burness with Aberdeen’s Paull & Williamsons. Rodney said the firm was now keen to grow and has been investing heavily in its internal processes and IT systems.

He added: “Going forward, while it is important for us to retain our Scottish market intimacy and focus, international work – which now accounts for nearly 40 per cent of annual turnover – is creating a number of real opportunities in the US, Canada, China and Norway.”