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Categories:East Midlands

Freeth Cartwright remains optimistic about debt levels

11 October 2010 | By Andrew Pugh

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Top 100 firm Freeth Cartwright has a “reasonable expectation” that it will continue as a going concern despite being heavily reliant on overdraft facilities to meet its working capital needs.

The firm’s annual LLP accounts reveal the amount of loans and overdrafts with LloydsTSB rose from £7.1m in 2008-09 to £7.5m in the 2009-10 financial year. The total amount due to creditors in the next year stands at £11.2m.

The amount owed to the firm by trade debtors has risen from £8.9m to £10.1m. A number of those debtors are in the construction and property industries, which account for 38 per cent of overall turnover.

The accounts also reveal the extent of staff cuts over the past financial year, down from 422 to 339, and staff costs slashed from £12.5m to £9.9m. Total fee income was down by 2.8 per cent to £31.6m but operating profit rose 26 per cent to £11.5m, and overall operating costs were reduced from £23.4m to £20.1m.

A statement included in the accounts said: “The LLP meets its day-to-day working capital requirements through overdraft and practice management facilities which have been renewed until 31 July 2011. The forecasts and projections of the business, taking account of reasonably foreseeable changes in trading performance, indicate that we should be able to operate comfortably within the level of our facilities.”

Freeth Cartwright chief executive Peter Smith said: “We’re not concerned at all about our position. These are a static set of figures and aren’t reflective of the overall position - a number of businesses use overdraft facilities, and we have more than sufficient headroom. We do a lot of billing at our year-end, so our borrowings come down dramatically.”

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Readers' comments (17)

  • Anonymous | 11-Oct-2010 12:46 pm

    Is it
    A to push the figures up with premature billing or
    B poor billing practice
    If it is A, they will almost inevitably accelerate the payment of tax , and dependant on their average payment days, increase their VAT liability
    If it is B, no wonder they need the level of over draft facilities referred to in the Article
    Either way it does not speak well of the quality of management of the firm as cannot see any other sensible explanation

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  • Anonymous | 12-Oct-2010 6:26 pm

    Eek! The next Halliwells?

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  • Anon | 12-Oct-2010 7:33 pm

    Didn't Halliwells also go through the stage of being "not concerned at all about [their] position"?

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  • Anonymous | 13-Oct-2010 11:24 am

    They can continue to trade until July 2011 because their Bank allows them to ! The Partners drawings are presumably funded by the overdraft . They should turn their attention to debt collection of their unpaid bills.

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  • Former Trainee | 13-Oct-2010 12:27 pm

    It does not surprise me that Freeths is on the verge of crisis. For way too long the firm has ignored business rationale when making key decisions.

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  • Anonymous | 13-Oct-2010 3:58 pm

    It is no surprise that Freeth Cartwright are unsure about their future...too many people making few good decisions...

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  • Anonymous | 14-Oct-2010 8:43 am

    Jam tomorrow springs to mind.....................

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  • Anonymous | 14-Oct-2010 11:51 am

    They must be very unsure about the Company's future, it's one redundancy after another, when will it stop!?!

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  • Anonymous | 14-Oct-2010 11:25 pm

    I think many many more law firms must close.

    There are too many.

    I dont understand why they keep training more and more when there is no demand

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  • Alexander | 19-Oct-2010 10:23 am

    Freeths are a highly ambitious firm who embarked on a strategy of growth a few years ago.
    I greatly enjoyed my time working there and believe the management are more than capable of making the firm into a major regional player. During a period of great change there will always be challenges but I believe in the long term plans of the firm.

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  • Anonymous | 19-Oct-2010 4:37 pm

    they don't seem 2 have heard of KPI's, unless they think they are nuts they have with their cocktails

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  • Anonymous | 19-Oct-2010 8:03 pm

    To the above comment by Alexander.
    It does matter how good the firm is, if the work has dried up then the debt is no longer servicable.
    It's a matter of economic not the quality of the firm.
    Now that cuts are going to be made, money is going to be withdrawn from the economy so the chance of gaining work is diminished.

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  • Anonymous | 20-Oct-2010 10:44 pm

    I knew things were looking bad last year when I saw the partners in the corporate dept wearing polyester suits.

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  • Albino | 24-Oct-2010 8:34 pm

    The all singing all dancing Freeths Corporate partner has been decked out in polyester suits for years.

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  • Anonymous | 22-Nov-2010 5:55 am

    Contrary to most of the views expressed on here, Freeths has been run, both on the day to day level and strategically, by accountants, not partners for a very long time, and they do it very well. As a former long-term employee I know from experience that the firm is highly focused on interim billing and cashflow, although as Peter suggests in the article it's impossible to eradicate lawyers' tendency to save a lot of their fees up for the year end.

    I have no doubt that Freeths' management is well up to the task of seeing it through the difficult period that almost all firms are currently experiencing. The worrying thing is that if the Lawyer is writing this sort of thing about Freeths, it is clearly missing a large number of less well-managed firms which are probably in far worse situations.

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  • Anonymous | 10-Jan-2011 5:48 pm

    The above comment is written by the PR team of Freeth Cartwright...

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  • Anonymous | 23-Aug-2011 1:09 pm

    I wonder if FC's accounts include the same warning this year?

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