Lynch: Injury law is ripe for further consolidation
Leading serious injury law firm Fletchers is set to make another acquisition shortly and offer to other law firms the services of its team who help assess the viability of cases.
The news came as it announced another year of huge growth in turnover since the firm was acquired three years ago by private equity company Sun European Partners – Fletchers said it expected to see more private equity investment in the legal market.
The law firm increased revenue 36% to £58m and operating profit grow 52% to £9.1m in the year to 30 April 2024, while the entire group’s figures were up 39% to £69m, turning an operating loss of £700,000 in 2022/23 into a £1.6m profit.
The other two parts of the group are digital marketing specialist Blume and Medical Law Services, which employs 50 nurses who review medical records to provide a paginated bundle, prepare a chronology and index, as well as give an opinion on the merits of the case.
When Sun invested in October 2021, Fletchers had approximately 450 people and revenue of £34m. With the acquisitions of Blume and law firms Cycle SOS, Minton Morill and Serious Injury Law, the group will hit £100m in revenues by the end of the current financial year and has already now hired its 1,000th member of staff.
The results for Serious Injury Law, which the accounts reveal cost £9.1m to acquire earlier this year, were not included in the latest figures, which will help the current year’s revenue growth.
The medium-term goal is £150m in revenue and 1,500 staff, chief financial officer Alex Lynch said in June when announcing a refinancing deal.
Speaking to Legal Futures yesterday, she said that 90% of the growth to reach £100m turnover would come organically with the rest through acquisition – another one is to be announced imminently, while “we are gearing up to do as many deals as possible”.
She said Fletchers was regularly approach by other firms looking to be acquired, which she put down to succession issues.
Growth would also come from expanding the MLS offering to other firms to exploit the expertise of the team in case evaluation. There will be agreements in place to ensure there is no conflict.
Fletchers has previously talked about how it uses artificial intelligence (AI) to help make decisions on whether to take on cases. Ms Lynch explained that this system helped weed out cases the firm should not take on; cases that passed this stage were then give to MLS to assess.
Sun is also investing £1m a year to build Fletchers’ AI capability. It has a 10-strong data science team working on pilot projects involving processes such as bills of costs and the pagination of medical reports.
Another avenue Fletchers is considering is bringing some rehabilitation services in-house.
Ms Lynch went on: “These results demonstrate the impressive growth and revenue opportunities that are available to firms who can invest in consolidation like Fletchers…
“In recent years the sector has been underweight in respect of private capital, but I believe injury law is ripe for further consolidation, and as our results indicate, there are attractive returns for investors looking to participate in the consolidation in our industry, post reform.”
She said Fletchers would welcome this: “There is so much room to grow alongside our competitors” – adding that it would also happen in the wider legal market.
Recent stories like the successful exit of Stowe Family Law’s private equity investor and the entry of a new private equity player buying Midlands law firm FBC Manby Bowdler would only boost confidence.
Alex Wyndham, managing director at Sun European, agreed that the investment climate in injury law was “as positive as I can remember”.
He said: “The latest results underline our view that consolidation in this field of civil law is a compelling investment strategy and I’m confident there is further headroom for profitable growth.”
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