Legal Business Blogs

‘A great year for growth and consolidation’: Keystone’s revenue up in the face of market-wide recruitment difficulties

Keystone Law has released its financial results for 22/23, reporting a positive 8% revenue increase since last year with a turnover of £75.3m in comparison to last year’s £69.6m. A breakdown of revenue earnings per principal also shows a promising 4% rise to £190k since January 2022.

Although revenue grew, cash generated from the business decreased by 7% from £10m to £9.3m. The figure given for profit before tax (PBT) is £8.4m, the same as 12 months ago, while adjusted PBT is up by 6% to £9.2m.

Based on this year’s results, Keystone has proposed to pay shareholders a final dividend of 10p, which is down from 11.2p this time last year.

Speaking to Legal Business, CEO James Knight (pictured) said: ‘We are marginally ahead of market expectations. We were predicted to do something that was reasonably good, and we did a little more, so we are very happy. Revenues are up 8.1%, the profit is up 6.3% and we are able to pay a nice dividend to our shareholders. The firm is growing in all respects.

‘It has been a little challenging on the recruitment side because there is so much demand from clients across the whole legal market. However, we have benefited from that as well because everyone has found recruitment to be a challenge as everyone is looking for new lawyers.’

Knight explained in further detail the reasons for the firm’s financial success. ‘We are starting to see the broader market slow down and we feel very confidently that this will play to our strengths as we have already taken on some excellent lawyers with 32 new senior lawyers alongside a number of junior member recruits.

‘Our principal driver of growth is excellent hires. New recruits bring their own clients with them, which bolsters the work that we do and helps to grow our revenues. We have also really worked hard on the infrastructure of the firm and the technology we use to improve our systems and take on more sophisticated work. It has been a great year for growth and consolidation.’

CFO Ashley Miller explained how being a limited company is a contributing factor to Keystone’s overall financial growth: ‘We offer lawyers something really special in terms of potential earnings, lifestyle, flexibility, autonomy and remote working. We offer that whole package, which means we attract the best lawyers. It has been a challenging recruitment market for law firms that are getting lots of clients and don’t want to turn away the work. We can deal with our existing client demands as we bring in the client and the lawyer at the same time.’

When asked about Keystone’s goals for next year, Knight emphasised the value of improving the existing product: ‘We will continue to provide a first-class service and support in infrastructure. We are completely focused on that and delivering the clients’ demands.  We are not an acquisitive law firm – we have no plans to acquire other organisations or move into areas other than the law. This is a good market for us, worth about £10bn, so we have a very significant opportunity to grow within the field we currently operate.’