What could the mutual’s troubles mean for the poster child of alternative business structures?

Has today seen the vestigial remnants of the Co-operative Group’s once envied brand finally cast to the four winds? And what could that mean for the poster child of alternative business structures, the Co-operative Legal Services?

It has been another dismal week for the mutual colossus – and not a crystal methodist in sight. Following last weekend’s revelations of vast pay hikes in the boardroom, group chief executive Euan Sutherland has taken to the mutual’s Facebook page to complain that ‘disaffected elements’ within the business are out to undermine the Co-op.

How Not to Use Social Media – Lesson One. City bellwether the Financial Times is predictably unimpressed: ‘What better way to appear paranoid than to rage against traitors in the ranks?’ it observes today. ‘The only “poke” Mr Sutherland currently merits is the kind delivered with a pointy stick.’

Ouch. Sutherland has even offered to resign, according to the BBC’s Robert Peston [resignation since accepted - Ed.].

Such ‘slings and arrows’ presumably account at least in part for the £67,000 a week Mr Sutherland will bank (at the Co-op Bank, one hopes) during his first year in office. 

Some context here. The boss will earn the average full-time annual salary between now and lunchtime on Thursday. Nice. One could put up with a little internal backstabbing for that kind of money…

But forgive my reverie – I digress! Let me recall how, two years ago this month, the Co-operative trumpeted its achievement of becoming the first major consumer brand to be granted ABS status.

‘The presence of The Co-operative’s “trusted brand and values”… will provide customers with greater accessibility to expert legal advice and value for money…. this move is a “natural extension” of the range of professional services we provide, including banking, pharmacy and funeralcare… we are committed to playing a leading role in this new era, backed by an “ethos of social responsibility”.’

The double quotes are mine. How much of this glowing self-appraisal still obtains? Aside from the brand contagion occasioned by the bank’s travails (it’s now run by US hedge funds), the diversified conglomerate model is effectively defunct. The pharmacy chain and the farms are to be spun off; other parts of the business are likely to follow.

And plans to buy 632 Lloyds bank branches - through which legal services could have been cross-sold - fell through.

The Co-op insists it wants to retain the legal business. But Sutherland himself describes the group as ‘ungovernable’ and warns that annual results to be filed later this month will be ‘very ugly’.

Things are already pretty ugly at Co-op Legal, which posted a £3.4m loss in its last interims and has since announced job losses.

Since the second half of last year, Co-op Legal has been run as a ‘standalone’ business, while the Co-op maintains the subsidiary’s losses ‘reflect the start-up nature’ of the enterprise.

Even so, I would not be surprised if Co-op Legal finds itself even more ‘standalone’ before too long.

Paul Rogerson is Gazette editor-in-chief