One of the biggest claims suppliers in the UK suffered another fall in profits and turnover last year as PI firms re-evaluated their business models in the face of looming reforms. Accounts published by First 4 Lawyers this week reveal a 19% drop in operating profits for the year ending 31 March 2017, on turnover down 15%.
Posted revenues of £9.5m are around 30% down on those in 2012/13, demonstrating the long term impact of the 2013 personal injury reforms.
However the drop in profits, to £1.2m, was less than the 32% reported in 2016.
In his business review accompanying this year’s results, director Qamar Anwar said performance was in line with expectations considering the uncertainty arising from further legislative reform. ‘There was a natural rationalisation of the solicitor panel in the first part of the year as law firms concentrated on future-proofing their own business models,’ he said.
‘As confidence returned to the personal injury sector, and law firms identified us as a robust partner with a sustainable model capable of thriving in any new legislative regime, the final part of the year saw us once again add to our personal injury panel, adding both new law firms and welcoming back others.’
Anwar said the company is in the PI market ‘for the long term’ and added that indications for the current financial year show an increase in turnover, buoyed by a record period of claims generated in the past two months. The workforce has increased by 30% in the past year, the accounts show. Directors took out £415,646 in total – an increase of 11.6%. The highest paid director enjoyed a 12% rise to £210,690.
However further challenges are likely to hit the sector through the Civil Liability Bill and an increase in the limit of the small claims track. First 4 Lawyers says it is impossible to know the implications of any changes, but predicts that they could be postponed to as late as October 2019.