A Manchester firm doubled its losses in a year and took on almost £30m in extra debt, newly published accounts have revealed.
Veritas Solicitors, which specialises in personal injury, housing disrepair and financial mis-selling claims, made an operating loss of £5.2m in the year to 29 November 2023. The accounts were published this week after being due more than a year ago, while accounts for 2024 were due by 29 August this year and are now also late.
Veritas has been open about its plans for expansion, saying in 2023 it was ‘extremely ambitious’ and wanted to recruit 150 more staff.
According to the 2023 accounts, turnover increased from £2.8m to £10m, while headcount more than doubled to 132. At the same time, loans payable within a year went from £5.4m to more than £32m. Interest on a two-year facility taken out with Claim Finance & Administration Co Limited is charged at between 37% and 39%, although payments are contingent on the successful resolution of the underlying legal cases during the term.
The business went from having net current assets of almost £25m in 2022 to £2.2m in 2023. Cash reserves dwindled from £763,269 to £225,711. Net liabilities attributable to members, once further loans due after more than a year were taken into account, came to more than £10m.
The accounts include a note saying the expected settlement of existing cases was ‘far in excess’ of the net liabilities shown on the balance sheet.
Veritas also noted that its 2022 profits had been cut by £9.1m after the partners identified that work in progress on contingent cases had been wrongly recognised as income. A further adjustment was also required because prepaid disbursements had been wrongly recognised and not released where cases matters had been completed or closed. This further reduced the reserves for 2022 by almost £5m.
In a statement, managing partner Faraz Fazal said the firm had pursued ‘targeted strategic spending at a time of solid growth’. He added: ‘As shown in our accounts, between 2022-23, our staff base doubled, with revenue increasing by 257% on the previous year. This would not have been possible without significant investment in resources, including technology and physical infrastructure.
‘Changes to our auditing process during this period have further clarified our financial position, and we are proud to reflect on a period of sustained success for the firm. Veritas Solicitors continues to invest in its clients, providing reliable access to justice for victims of housing disrepair, financial mis-selling, personal injury, clinical negligence as well as other forms of grievance.’
The firm said its next set of accounts are expected to be published in six to eight weeks.
