Co-operative Legal Services, which last week reported a loss for the first half of this year, has dismissed speculation that it is being groomed for divestment by its embattled parent.

The speculation arose after Niall Booker, deputy group chief executive, revealed that the legal services arm would be run as a standalone business from the second half of this year.

A spokesman for the Co-operative Group said that ‘we will continue with our plans to develop this growing business’. This will include setting up a ‘learning academy’ later this year to give legal training to individuals who cannot afford to go to university.

Co-operative Legal Services’ results for the 26 weeks to 6 July showed a loss of £3.4m, compared with a profit of £700,000 for the same period last year. Turnover grew 5.8% to £18.1m.

The firm said the losses ‘reflect the start-up nature of the [legal] business’. Co-op Legal Services, formed in 2006, was one of the first firms to be awarded an alternative business structure licence by the Solicitors Regulation Authority, in March 2012.

According to the results statement, the award of legal aid contracts in family law has provided the business with more than 1,500 legal aid clients since April. Probate revenue has ‘outperformed expectations’, it said.

In June, Co-op Legal invested in a multi-million-pound TV and radio advertising campaign.

Losses in the legal arm were dwarfed by the group’s overall pre-tax deficit of £559m, incurred mainly by the banking arm writing down £496m in bad debt arising from its takeover of Britannia Building Society. City regulator the Prudential Regulation Authority has demanded that the Co-op Bank make good a capital shortfall of £1.5bn.

  • Christina Blacklaws, director of family law and policy at Co-operative Legal Services, is one of four new appointments to the Family Justice Council, established in 2004 to promote an interdisciplinary approach to family justice.