The new owners of personal injury specialist Fletchers Solicitors oversaw a profits wipe-out as they rebuilt the business for the future, new documents reveal. Accounts published this month show that in the year ended 30 April 2022 the firm went from posting a £5.1m pre-tax profit to a £209,000 loss.

Private equity business Sun European Partners bought the north west firm in October 2021 and promised to grow the business through a number of acquisitions. The accounts report that 2021/22 was a ‘transformational year’ for the group with a new external chief executive appointed, new leadership team installed and a move away from low-value personal injury work.

Revenues dropped by 21% to £34m as the business was hit by a key insurer and supplier of work entering administration during the year. But the leadership team said new work sources will drive personal injury revenue up to pre-pandemic levels from this year.

Fletchers said the outlook for medical negligence revenue, which decreased last year, is also positive, with new cases in this areas up 30% and a ‘noticeable shift’ to higher value work. Overall the firm took on 5,744 new cases – an increase of 17%.

Alexandra Lynch, chief financial officer, said the firm has reinvested back into the business during the year to facilitate future growth plans, mainly through staff remuneration and extra marketing. That, coupled with one-off transaction costs of £3.5m relating to the sale of the business, had caused a temporary hit on the profits figure for the year.

‘With access to funding and a strong balance sheet, we are well positioned to take advantage of the many opportunities to grow in a highly fragmented market,’ said Lynch. ‘This year has been one of transition for the group. Despite the loss of a key contact and leads, the business has set itself up for success in future years with a shift to take on higher value work in medical negligence and resetting our sources of work in PI.’

All members of the previous board resigned at various points during the 2021/22 year. The accounts show that directors’ total remuneration rose from £1.1m to £2.8m. The Gazette understands that the new board members who joined the board midway through the year do not account for the increase.

The firm increased its cash reserves from £1.7m to £2.4m and net assets fell marginally to £11.27m.

 

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