Legal services provided a better profit margin than traditional retailing activities at the Co-op last year. The group reported this morning that operating profits from its legal services rose by 15% during 2011, far outperforming the business as a whole.

Co-operative Legal Services (CLS), which was granted a licence to become an alternative business structure yesterday, reported profits of £4.5m last year, up from £3.9m in 2010. Group operating profit was up by just 0.5%, from £582m to £585m.

In the coming year, the Co-op plans to provide legal services through its network of around 300 bank branches. It is preferred bidder for more than 600 branches of Lloyds Banking Group, potentially giving it massive reach across the country.

The group review said: ‘Legal Services strategy, in the wake of the deregulation of the legal services market, is to provide consistent, competitive legal advice to the ordinary person, backed by our scale, reputation, systems, service standards and training.

‘We aim to provide Co-operative members and customers with accessible, high-quality legal advice and services at a competitive price, challenging the legal "postcode lottery".’

Co-op Legal Services has already run a pilot scheme to offer wills, estate planning, probate and bereavement and funeral plans in 30 Co-op branches. It now plans to extend its operation into family law and is recruiting 150 extra staff to add to its current 400-strong workforce.

Justice minister Jonathan Djanogly visited the CLS headquarters in Bristol on the day the ABS was granted and gave a ringing endorsement to the new entrant. 'ABSs introduce more competition in the market place, delivering competitive pricing, higher standards of product and more choice for the consumer.’