National firm Irwin Mitchell has shed its asset management business one year after a damning ruling on a potential conflict of interest.

Financial adviser Shackleton today announced it had set up its own personal injury and Court of Protection division after acquiring IM Asset Management (IMAM) from the Irwin Mitchell Group. The deal is subject to approval by the Financial Conduct Authority.

The legal group sold the business notwithstanding the outcome of a directions hearing in Irwin Mitchell Trust Corporation v PW & Anor which was held in October. Her Honour Judge Hilder had scheduled the hearing to determine whether the appointment of IMAM to handle client PW’s affairs could be ratified.

PW, a mother of four, developed permanent brain damage after contracting viral encephalitis in hospital and settled a claim with the NHS trust for £1.85m and £151,000 per year in periodical payments. Irwin Mitchell Trust Corporation, a wholly owned subsidiary of Irwin Mitchell LLP, was appointed as property and affairs deputy for PW. The deputy then determined to appoint IMAM as investment manager for a significant part of PW’s damages award.

IMAM was wholly owned by Irwin Mitchell Holdings Ltd, which was also the controlling member of Irwin Mitchell LLP.

IMAM told the Court of Protection at a hearing in January 2024 that the conflict of interest rule did not apply on the facts of the case. IMTC invited the court to have regard to the fact that it was a highly experienced deputy used to taking decisions about the investment of assets and appointment of advisers.

Deputies from other firms gave evidence to the court about how financial advisers were appointed, but the judge said it was striking how none of them supported instructing a related investment manager. She concluded the appointment by IMTC of IMAM to manage PW’s assets ‘clearly conflicts’ with rules against self-dealing, and there was an actual conflict of interest in that the Irwin Mitchell group gained financially. This amounted to a ‘beauty parade in which a family member of a protected person participates’, and none of the processed adopted by IMTC could extinguish that conflict.

Irwin Mitchell today said the sale of IMAM was not related to the case, where a ratification judgment is awaited, and was instead part of its strategy to focus and invest on its existing services.

Craig Marshall, group chief executive at Irwin Mitchell, said: ‘This deal aligns with our strategy to simplify our structure and allows us to invest further to grow our core offer as a full-service law firm. We’re the leading complex personal injury firm, we have one of the largest national private client practices in the UK, and we provide comprehensive legal advice for mid-market corporate businesses.’

Irwin Mitchell said the asset management sale was a continuation of a strategy showcased in 2021 when it sold its low-value volume PI business to focus on more complex cases. The firm, which exceeded £300m in annual revenue for the first time in 2024, has expanded in the past four years with office openings in Brighton, Cardiff, Liverpool and Nottingham.

IM Asset Management Limited has performed well, according to accounts for the year ended 30 April 2024, with revenue just below £10m and pre-tax profits rising slightly to £3.48m.