National firm Simpson Millar has reported that losses more than doubled in a year as turnover fell sharply.

Annual accounts for the year to December 2023 show that the firm’s pre-tax losses were up to £14.4m from £6.3m the year before. Meanwhile, income dropped by 39% to £19m as parts of the business were shut down to cut costs.

The decision to exit private client markets in the past two years has cost around £1.8m, with staff numbers slashed by 27% in 2023 to just under 392 across seven offices.

By the end of last year, the business was running with net liabilities of almost £28m – a figure which had more than doubled in a year. Assets fell to £40.5m as unbilled income dropped by 23% to £14.5m – only marginally more than the total losses during the year.

Meanwhile, amounts owed by the end of this year had jumped from £56.5m to £68.3m.

In spite of the losses, the accounts reveal that in March this year, Simpson Millar owner Doorway 4 Law Limited acquired the trade and assets of Southampton firm Novum out of administration for £266,000 cash and a deferred £1.2m to be paid based on future performance.

In 2018, Simpson Millar had entered into a five-year loan agreement with Doorway 4 Law Limited worth £25m. This was subsequently extended during 2023 to £30m with a deferral on the maturation of the loan. The Simpson Millar accounts reveal that Doorway 4 Law has provided a ‘letter of comfort’ stating that financial performance covenants have been waived and there is no need to impose financial performance metrics which the firm would not be reasonably expected to meet.

Accounts for the 2023 financial year relating to Doorway 4 Law were published on the same day as Simpson Millar's. These give more details about the strategic business plan for the law firm, which generates 97% of the group’s revenue.

The report states that falling turnover was a result of continued delays to cases resulting from the pandemic and ‘challenging’ market conditions.

Doorway said it would adjust focus to consumer legal services by ensuring that ‘appropriate investment’ is made in marketing and creating a ‘high performing, engaged work-force’.

Processes would also be developed to improve productivity and customer service, while the business would maintain a ‘strong focus on reducing costs and improve margins across the group’.

The report adds: ‘The board believes that achieving these objectives will provide the foundations for strong organic growth in revenues, earnings and much improved margins over medium term and will ensure that the group is well place to benefit from any future consolidation in the legal services market.’

 

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