Co-operative Legal Services posted an underlying operating loss of £9.1m on a flat turnover of £33m in 2013, the Co-operative Group’s results reveal today.
The legal subsidiary also said it had taken a £13m ‘goodwill impairment’ following a reassessment of its business plan which ‘assumed a slower growth rate than previously applied’. The operating loss including the impairment of £22m compares with a deficit of £2m in the previous year.
Revenue remained at £33m for last year – the same as posted in 2012 – placing Co-operative Legal Services (CLS) just outside the UK’s top 75 law firms based on turnover. Underlying operating profit was zero in 2012.
The financial statement said CLS is looking to ‘consolidate and optimise the portfolio’, with further restructuring planned, and to work more closely with the funeral and insurance businesses as part of the newly formed Consumer Services division.
In November, CLS confirmed up to 60 redundancies in its personal injury department in Bristol, and the financial statement makes clear that regulatory change, including the Jackson reforms, ‘had the most significant impact’ upon the PI sector.
Following completion of staff cuts, CLS will now ‘explore opportunities’ to work more closely with the insurance business.
The statement said: ‘The legal services business remains in the early stages of its development, and this is reflected in the performance for 2013. Sales were broadly flat with losses arising from regulatory change, uncertainty about the future of our General Insurance business, and decisions to invest in future growth.’
The CLS family law business achieved £1.2m revenue in its first full year of trading, and the company said it will focus ‘ensuring we have an efficient operating model to take the business forward’. The family sector suffered a blow last month when director Christina Blacklaws quit to run her own consultancy business.
The statement also confirmed that CLS now has 560 staff members working from three sites.
CLS was one of the first three alternative business structures licensed by the SRA and was seen to be the pioneer for the new wave of non-legal entrants attracted to the sector following the Legal Services Act and subsequent liberalisation of the market.
The Co-operative Group announced overall losses of £2.5bn for 2013, marking the worst year in the group’s 150-year history.