Savill: Write-down will be recovered in coming years
Lyons Davidson has had a good-looking year spoiled by the collapse of its joint venture [1] with NAHL plc, meaning that it has posted a £2.8m loss for the last financial year.
The Bristol-based law firm took full control of National Law Partners on 2 January 2020 and as part of the agreement it is paying the owner of National Accident Helpline £5m over three years in payment for historic panel enquiries.
Its accounts, for the year to 30 November 2019, include a write down of the contract costs – rather than account for them in future years – resulting in a 38% reduction in accrued income.
The timing of the transfer meant the firm could not recognise the balancing value from the assets of the joint venture.
Managing director Mark Savill said: “We are however forecasting that the write-down will be recovered through fees on the claims referred to us through our relationship and which will bill out in future years.”
The pair launched the personal injury alternative business structure [2] in October 2017 and initially created 35 new jobs in Kettering, the home of NAHL, and Lyons Davidson’s Cardiff office.
But the volume of cases going through it were said to be disappointing, and the agreement to terminate avoided the prospect of a protracted dispute between the pair.
Lyons Davidson’s turnover for the year increased 3% at £36.1m, with gross profit of £18.3m – the gross profit margin of 51% was up from 44% the previous year. EBITDA doubled to 12%.
Mr Savill said the results reflected the full impact of cost savings from its 2017 restructuring; in 2017 it had 831 staff, which fell to 760 in 2018 and 689 last year.
He said the firm has been building market share in the household legal expenses market, helping the diversification of the business and strengthening its insurer relationships.
Personal injury claims levels were on the rise again after lockdown, Mr Savill said, while areas such as employment, family, property disputes and Lyons Davidson’s legal helpline were experiencing activity above pre-Covid levels.
The firm is also getting ready for next April’s whiplash reforms: “We are advanced in our integration with the Official Injury Claim portal, and are working closely with our business partners to deliver effective solutions for their customers which will deliver a strong service solution within the new environment.
“This includes our customer portal that has been further enhanced with a new interface design and the introduction of artificial intelligence functionality.”
Mr Savill said the firm responded well during the Covid-19 pandemic – it introduced a four-day working week for a four-month period to help control costs – while the various claims protocols introduced to encourage greater co-operation during lockdown have also helped.
Meanwhile, NAHL announced this morning that long-standing chief executive Russell Atkinson has resigned as a director with immediate effect and will leave the company at the end of the month.
Group chair Caroline Brown said: “We would like to take this opportunity to thank Russell for his considerable contribution to the group over the past eight years, including the IPO, three acquisitions, the transformation of the personal injury business into a law firm and navigating the Covid-19 lockdown this year. We wish him well for the future.”
A trading update in July [3] said NAHL’s revenues had dropped by 21% in the first six months of the year as a result of Covid-19.