Irwin Mitchell's LLP members were able to split more than £22m after a 2018/19 financial year when profits soared, the firm has revealed.
Accounts filed at Companies House disclose that the profit available for discretionary division among members more than doubled in the year ended 30 April 2019. Operating profit increased 27% year on year to around £60m, while turnover was up 10% to £245m.
The LLP, which forms the legal services division of the Irwin Mitchell group, said revenue growth was led by the personal injury division, with a small number of very high-value cases settling earlier than expected.
But the accounts also show that the LLP has written off more than £6m in personal injury revenue after a contract starting in 2016 performed ‘below expectations’. As a result of a full review of the contract and its prepaid assets, impairment charges of £4.9m in 2018 and £1.2m in 2019 were required.
The LLP also noted that future reform of the small claims sector was likely to have a ‘material impact’ on its volume PI business.
The business legal services division had a ‘more mixed year’, according to the firm’s review, with a ‘difficult decision taken to reshape the partner profile across national teams to facilitate future growth’.
Companies House records show that almost 30 members of the LLP have departed since the start of the current financial year, although around 18 new members have been appointed.
The accounts state that all members are required to contribute capital amounting to a minimum of 30% of notional salary and cash allowances, plus any guaranteed profit share, within two months of becoming a partner. During the year a full review of the capital requirements for full members was carried out, and as a result higher individual target capital requirements were set, depending on the level of basic profit share levels.
Individual members are awarded a base profit share at the start of the year, and in addition a minimum of 28% of the profit is paid into a bonus pool allocated to members after the end of the financial period.
The 2018/19 review also notes that the LLP’s private wealth division had seen ‘flat revenue performance’ against the previous year, but a number of senior lawyers had been recruited to deliver future growth.
The LLP said members intend to grow key areas of the business in 2019/20 through continued investment in the Irwin Mitchell brand, organic growth and further merger and acquisition activity if possible.
The number of fee earners increased slightly in 2019 to 1,405, with a total headcount of 2,281. Staff costs increased in the year by 13% to £94.5m.