A nosedive in personal injury claims during the pandemic resulted in a south west firm posting significant losses for the year.
Lyons Davidson reported this week that operating losses for the year ending 30 November 2020 were almost £3.5m. This followed a year in which the business posted a £2m loss.
The firm said the increased losses were a direct result of the lockdown and that when exceptional costs and related items were taken into account, profits before tax were around £1m.
Trading was substantially affected by Covid-19, with injury instructions falling to 28% of normal referrals in the first lockdown and a complete amnesty on motor recovery work and landlord and tenant actions. Managing director Mark Savill said the business had to control costs in the face of falling revenue (down by 15% to £30.8m), using the furlough scheme and implementing a four-day working week while volumes recovered.
He said: ‘The pandemic has been a real challenge for us but our people have been fantastic, working effectively from home and helping us with our response to limiting costs during this period.
‘We were also able to rely on our family team and household legal expenses business, particularly in areas like employment, contract, property disputes and our legal advice helpline, which were very busy during this period.’
Accounts show the firm secured £5m in borrowing including a full refinance with OakNorth Bank which had replaced an annually-reviewed loan to a long-term five-year agreement. This money has enabled the firm to invest in a new agile working environment and collaborative working space in all its offices, as well as complete a technology upgrade.
Staffing levels fell during the year, with the average number of people employed coming down from 689 to 642. This saved around £500,000 a year in staff costs.
The firm faces a number of challenges in the coming year – not just adapting to the post-pandemic landscape but also trying to make a profit from whiplash claims that are now handled in the RTA portal which went live in May.
Savill added: ‘We have some strong forecasts as our recent contract wins build volume and as we move away from the impact of the pandemic. Our customer digital solutions are creating a lot of interest in the household and commercial sector, and we have successfully integrated with the Official Injury Claims Portal as part of the injury reforms.
‘With our new banking arrangement and long-term insurer relationships we have a solid diverse business that we are confident will see good growth over the next few years.’