Personal injury firm Minster Law dipped into the red before a high-profile sale to an insurance company, accounts have revealed.
Financial statements published with Companies House today show the firm made a pre-tax loss of £663,000 in the 14 months to 30 June 2013.
That compared with an annual profit of £3.8m in 2011/12.
The reporting period was extended to include Minster’s May 2013 acquisition by BGL Group, owner of the Compare the Market price comparison site, for a sum reported to be the biggest ever paid for a law firm.
Turnover dropped slightly year on year, from £104m in 2012 to £102m.
The directors’ report said the business had experienced ‘significant change’ over the space of 14 months and the board considered the fall in profits to be ‘satisfactory’ given investments made during the period.
It added: ‘The personal injury market continues to be highly competitive and the company has made further investment during the period in people and technology to differentiate its service offering and to ensure compliance with the changes brought in by LASPO.
‘The company has also continued to diversify its legal service offering by further developing its capability to handle a greater number of serious injury cases as well as to support employers’ liability and public liability work.’
The report continued that lower legal fees will require the company to ensure its cost base ‘remains competitive’ and it has since installed new claims management software to bring costs down.
Staff numbers increased from 751 in 2012 to 783 last year and payroll costs rose from £23.8m to £29.1m.
Minster Law, which is based in York and Wakefield, said its ‘core financing requirements’ are now met through an intercompany loan with the BGL Group. Accounts show long-term debt of £68m owed to BGL.