National firm Irwin Mitchell has attributed a fall in profits to its investment and growth strategy.
The group, which includes a number of associated companies, reported a 1.2% rise in income to £202.7m for the financial year 2013/14. But pre-tax profits fell 8.5%, to £17.1m.
The firm stressed that the profit figure was arrived at after paying the partners, including equity partner drawings and bonuses.
Irwin Mitchell invested significantly over the year, including opening two regional offices – one in Southampton and a second in Cambridge - after the end of the reporting period.
The firm embarked on a recruitment campaign, hiring 26 partners, taking the overall head count to around 2,250 – 200 of whom are partners - and carried out a ‘seven figure’ multi-media marketing campaign for its personal injury services.
Group chief executive Andrew Tucker told the Gazette: ‘Profits have gone backwards slightly due to continuing significant investment as part of our growth strategy to increase scale and reach.’
Tucker said the firm made a ‘conscious choice’ to invest to grow the business and had not expected to see returns within the year.
Income growth was seen in a number of areas, including the Business Legal Services division, multi-track Personal Injury (PI) and in group companies including Irwin Mitchell Asset Management and debt legal services firm Ascent. This helped offset the impact of funding reform in its motor team and some personal injury areas.
Profit per equity partner fell 13.7% to £571,000 from £611,000 in the previous year. But chief financial officer Andrew Merrick said: ‘PEP does not drive our behaviour – it is not the right measure for us. If you cared about PEP, you’d behave differently.’
He added: ‘We do care deeply about investing in the medium- and long-term health and growth of the business.’
Merrick said the firm has a three-year forecast to grow the business ‘significantly’. Growth is expected to revolve around M&A activity and further recruitment of individuals, as well as moving into new market sectors and practice areas, and increasing ‘strength in depth’ in its current sectors.
‘We don’t have a narrowly based view of the right way to go,’ Merrick added, and if other opportunities come along the firm will seize them.
In March Irwin Mitchell secured £60m in a four-year package from three major banks – HSBC, Lloyds and RBS - to fund its growth plans.
The firm has been the most active creator of alternative business structures since they were permitted. They include Ascent; Coris UK Ltd, which offers international assistance and insurance claims handling services; Irwin Mitchell Trustees Ltd, which accepts appointments as trustee, executor and estate administrators; and Irwin Mitchell Trust Corporation Ltd, which accepts appointments to act as deputy in the Court of Protection cases.
Earlier this month the firm announced a joint venture with stock exchange-listed motor insurer esure. IMe Law Limited was licensed as an alternative business structure by the Solicitors Regulation Authority. Based in Sheffield, it provides legal representation for esure customers who have been injured in accidents where another party was at fault.