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Northampton firm Tollers is contemplating a possible ABS launch for its consumer-focused arm as the firm reports a 69 per cent increase in its net profit for 2012/13.
Tollers reported a 1 per cent turnover increase for 2012/13 from £8.4m to £8.5m. The firm’s net profit, however, saw a 69 per cent jump to £1.55m from £917,000 in the previous year, boosting its profit margin from 11 per cent to 18 per cent.
With the number of equity partners remained at 11, its average profit per equity partner (PEP) also surged up by 69 per cent to £141,000 from the previous year’s £83,000.
Managing partner Duncan Nicholson attributed the significant increase in profitability to the firm’s shifting focus from personal injury (PI) claims to commercial and corporate matters. At the beginning of the 2012/13 financial year, the firm made a small number of redundancies to reduce overheads, affecting mostly administration staff in its PI department. It came after previous rounds of fee-earner redundancies during 2011/12.
However, PI claims remained the largest fee-generating practice area in the firm, contributing £3.65m or 43 per cent of the total revenue. The firm said it would look at the possibility of spinning out its consumer-focused arm into an alternative business structure (ABS) in the near future.
“There are a growing number of ABSs in the market. They haven’t had any real impact on our business yet, but it will put more pressure on our private clients and personal injury services,” said Nicholson. “We may consider converting the firm into two separate businesses with the consumer-based services possibly spinning out to form an ABS. We’ll start reviewing our strategy in the next three to six months.”
In the meantime, the firm has been growing its commercial and corporate capabilities with lateral hires. Last September, the firm appointed former Eversheds senior associate David Wells to be a partner in its commercial property team based in Milton Keynes. It is also in the process of hiring a number of lawyers from other larger rivals such as Pinsent Masons.
The firm’s commercial and corporate department brought in 26 per cent of total revenue, or £2.2m, a 5 per cent increase year-on-year.
“The past few years have been a period of consolidation within the firm following a reshape. We are working on our three-year growth strategy, which will start implementation next year. We have achieved strong financial performance and it has given us the opportunity to invest and grow,” Nicholson said.