Simpson Millar made a pre-tax loss of £6.3m on a significantly reduced turnover last year – but its owner says the figures do not reflect the national law firm’s turnaround since.
Its annual accounts for 2018, newly filed at Companies House, showed that the loss increased 31%, from £4.8m in 2017, while turnover shrank 20% from £24.9m to £19.8m.
Simpson Millar was owned by Fairpoint Group PLC, but it went into administration in August 2017, and in January 2018 the law firm was bought by Doorway Capital, which had previously provided it with a £5m invoice discounting facility.
The accounts record that Doorway agreed to waive £29.6m of the debt it acquired from Fairpoint, including £17.7m in respect of Simpson Millar.
It has also provided the firm with a £25m loan facility on a drawdown basis, secured by a charge over the assets of Simpson Millar, with a capital repayment date of December 2023.
The first half of 2018 saw a restructuring that cost 100 staff their job, but since then Simpson Millar has expanded again – in line with what it said was a five-year £50m growth strategy to become a leading consumer brand – with the acquisition of Liverpool firm EAD Solicitors in September 2018 and Lancaster-based JWK Legal Group two months later.
The accounts said that EAD – which had a turnover of more than £6m – cost £100,000 up front with up to £2.1m in contingent payments subject to performance criteria being met. JWK cost £283,000.
It meant that staff numbers by the end of 2018 were nearly the same as a year before.
Steve Din, who runs Doorway and is speaking at our PI Futures conference on 25 September, said: “The 2018 accounts of Simpson Millar certainly do not reflect the results of the investment of Doorway Capital and, more importantly, the hard work of all the staff at Simpson Millar.
“Very simply, the 2018 accounts reflect the effects of prolonged under-investment by its previous owners, Fairpoint.
“Equally, the accounts highlight the terms of £25m committed facility Doorway provided Simpson Millar to fund an exciting turnaround plan. We are now beginning to see the fruits of that plan and are delighted with the results.
“Statutory accounts are, by their very nature, historic should be considered as such.”
A statement from Simpson Millar echoed the point that the 2018 accounts “look back to a particular period in time when Simpson Millar was going through a significant transformation”.
“The period since 2018 has seen the firm commit to significant investment in marketing, technology and developing its people, while also attracting the very best new talent; rebuilding the firm from the bottom up and putting in place strong foundations for growth…
“The focus is now on further growth which will be delivered through strengthening the firm’s own ‘direct to market’ channels and further acquisitions as it capitalises on the opportunities in the consumer legal market driven through continued regulatory reform, cost pressures, changing client demands and unmet legal needs.”
Chief executive Greg Cox added: “The 2018 accounts look back at the recovery period. We are looking forward. Simpson Millar is at an exciting point in its journey. We are starting to see the benefits from the investment in marketing and technology and talent.
“It is thanks to the hard work of my colleagues that we face 2020 with confidence, and are ideally placed to respond to a changing market and to deliver on our promise to open up the law to consumers.”