Co-op's legal arm - once a standard-bearer for the liberalised legal services market - saw profits fall by a third last year despite a higher case load, the company’s annual report for 2020 has revealed. It cites the adverse impact of the pandemic and external factors as affecting its performance.

In the year to 2 January, revenue in the legal services business fell by £2m year-on-year to £37m, while profits slid from £6m to £4m. However Co-op said case volumes grew by 9% in 2020, following an increase in will writing at the start of the pandemic and a 250% increase in divorce-related enquiries after the first lockdown was lifted.

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Co-op's legal arm saw profits fall by a third last year

Meanwhile, cancelled house viewings, delayed house sales, reduced interest rates and delays in processing paperwork impacted revenue.

‘When the pandemic arrived, our legal services business was ready thanks to the ongoing investment in digital technology we’ve been making over the last few years to make services more convenient,’ Co-op said. ‘The transition to remote working was fast and effective. Having developed digital legal advice technologies for estate planning, which makes sorting out wills easier and more effective, we developed a suite of digital legal advice services in 2020 that covers probate, personal injury, employment and family law. These tools put us in a good position to build new partnerships and reach more customers.’

Last year Co-op brought together legal services, funeral care and insurance into one ‘life services’ function. The company said it is now accelerating its digital transformation and capabilities in these areas.

Co-op Group as a whole – which spans food, funerals, insurance, legal services and health – reported revenue of £11.5bn, up from £10.9bn in 2019. Meanwhile, reported profit before tax leapt from £24m to £127m. 

Co-op’s performance as a legal services provider has been closely monitored since it emerged in 2012 as one of the first three applicants to be authorised as an alternative business structure under the Legal Services Act. The venture was rationalised after losses in its first few years. However, in April 2019 it reported significant increases in profit and revenue.