A national firm has said it is ready for a sustained period of growth after reducing annual losses during the latter part of the pandemic.
Lyons Davidson, which has offices in Bristol, Cardiff and Leeds, posted operating losses of almost £3.5m in 2020 but this week reported that losses were cut to £960,000 for the year ended 30 November 2021.
The firm’s financial statement also revealed that employee numbers in 2021 were cut by 14% to 550, with lawyer numbers reduced by 17% to 448.
Turnover fell by 10% to £27.8m as the pandemic – which was still prominent throughout the reporting period – affected areas such as personal injury.
Managing director Mark Savill said the business had responded well to the challenges of Covid and the associated lockdowns, making business efficiencies and savings throughout the year and maintaining its gross profit of 47%.
Salary costs were reduced by 10% through what the statement described as ‘natural attrition’, the continued use of furlough during the period and some small team restructures. During the year, the firm also closed its Solihull office, moving all employees to permanent remote working, as well as consolidating two Bristol offices into one.
During the financial year the firm successfully completed a refinance of the business, replacing an annual arrangement with Lloyds Bank with a five-year agreement with OakNorth Bank plc. This reduced bank debt by £5m and increased net assets from £5.2m to £37m to provide the business with capacity for development.
Savill said the key to the business’ strength in future will be diversifying its services and not being reliant on one particular sector. By next year, the firm expects revenue for its civil and injury divisions to be around a third each of the total business, and the annual report notes there will be a ‘much more balanced business base’ in future with a wide range of services.
He said: 'Our reputation in the household and commercial legal expense sector has continued to show positive development and that growth will match the size of our motor business for the first time in 2023. Outside our insurance business our consumer and business divisions are also expanding with our family department in particular receiving national acclaim for the work that it does.’
Savill said that the impact of the pandemic is still being felt as the court backlog affects the lifecycle of claims across the litigation areas of the business, but this is being mitigated by increased use of alternative dispute resolution. Referrals for the motor injury sector remain 20% below pre-pandemic levels.
He added: ‘While the economic pressures we face today together with court backlogs make 2022 challenging, we have a strong set of forecasts as we move away from the impact of the pandemic and as our new contract wins build. We have a solid diverse business that we are confident will achieve good growth over the next few years.’
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