A pioneering law firm owned and backed by three local authorities has turned a seven-figure annual loss into a profit, accounts have revealed.
Financial results at LGSS Law Limited, covering the 2019/20 year ending 31 March, show pre-tax profits were almost £300,000 – a marked turnaround on last year’s £1.2m loss. Turnover also increased by 8% to £8.5m.
The accounts show that the firm, which trumpets its ability to charge lower fees than private sector competitors, drew down its full loan facility of £1.05m from its parent authorities: Northamptonshire County Council, Cambridgeshire County Council and Central Bedfordshire Council. Interest on this loan is set at 3.75% pa.
Total headcount at the firm increased marginally to 137, while the remuneration of the highest-paid director rose from £105,526 to £127,258.
The alternative business structure, set up in 2015, advises the public and not-for-profit sectors, aiming to provide a cost-effective alternative to private firms through increased specialisation and economies of scale. The model developed by LGSS seeks to implement a commercial side through performance management and business-like culture, whilst retaining elements of an in-house team.
Writing in the financial results document, director Debbie Carter-Hughes said the business took a ‘step back’ in 2019/20 to review practices and processes.
‘Any growth in the 2019/20 financial year was achieved organically, through "regular" clients or word of mouth,’ she said. ‘There was no active marketing of the firm to achieve growth. This time has allowed the firm to develop its Strategy 2020/21 as well as a new vision, mission and set of values.’
The firm’s balance sheet shows that LGSS now reflects net assets of almost £500,000, having reported liabilities last year of £1.3m.
While the Covid-19 pandemic has introduced uncertainty since March, the firm said it has continued to trade throughout this year and has actually increased its caseload, with staff working remotely.