Co-op: Jackson reforms hit legal business
Co-operative Legal Services (CLS) made a loss of £22m in 2013 when the impact of a slower rate of growth than previously planned for is taken into account, the group announced today.
However, there was no suggestion that the poster child for alternative business structures will be sold off, as other parts of the Co-operative Group, such as its pharmacy business, are to be.
CLS’s revenues were flat at £33m, with an underlying operating loss of £9.1m. But its operating loss after “goodwill impairment” was put at £22m, compared to £2m in 2012.
This adjustment followed a reassessment of CLS’s business plan, “which has assumed a slower growth rate than previously applied”.
The business review published with the results said the legal services business remains in the early stages of its development, “and this is reflected in the performance for 2013”.
It attributed the losses to “regulatory change, uncertainty about the future of our general insurance business, and decisions to invest in future growth”.
It continued: “We are now looking to consolidate and optimise the portfolio, with further restructuring planned, to work more closely with Funeralcare and General Insurance as part of the newly formed consumer services division.
“Regulatory change, including the Jackson reforms, had the most significant impact upon our personal injury business. The restructuring of the PI business announced at the end of 2013 has been completed in line with our plans.
“However, following the decision not to sell the General Insurance business we are now able to explore opportunities to work more closely with our insurance business.”
The review highlighted the investment made into CLS’s fixed-fee family law businesses in 2013. This brought in £1.2m revenue in its first full year of trading; “however, we remain focused on ensuring we have an efficient operating model to take the business forward”.
Probate and wills remain key areas for growth, it added, and CLS will continue to work more closely with the Funeralcare division during 2014.
CLS employs 560 people across three sites, although Legal Futures revealed last week that one of the most senior, director of policy Christina Blacklaws, left last month.
Overall the troubled group lost £2.5bn in 2013, reflecting the impact of its bank recapitalisation.
