National law firm DAC Beachcroft took a £4.39m hit on a failed IT project as it tried to change its case management system internally, accounts reveal.
The firm’s LLP accounts for 2014/15 show it wrote off £1.5m as an exceptional expense after giving up on the IT project. The year before it had written off £2.89m associated with the project, for a total of £4.39m.
The accounts say after a board review the project was considered ‘no longer viable.’
DAC finance director David Gillard said the firm had hired external consultants which worked with staff to develop a case management system, but in October 2014 it was decided it was no longer of value.
Gillard said since then the firm had not yet implemented a new system but it was ‘back to the drawing board.’
He added: ‘We will look to all sorts of alternatives – it may be more sensible for a large software firm to take over the project for us.’
Despite the expense, the firm posted a 20% jump in profits for the financial year 2014/15. Its profit for division among members rose to £30.5m from £25.5m.
The firm, which posted flat turnover at £198.5m from £197.2m said in the report it considered the results a ‘solid financial performance in challenging circumstances.’
‘This growth was principally due to a reduction in expenses, in large part associated with lower staff costs, including those occasioned by restructuring in DAC Beachcroft Claims Operations,’ the accounts stated.
DAC’s average number of employees fell to 2,129 from 2,027 and staff costs were reduced from £109.2m to £104.8m. The firm’s highest paid member took home 6.7% more, as the payout rose to £438,506 from £468,063.
The firm reduced its lock up days from 164 to 149, and said total net debt at the year-end reduced from £29.7m in 2014 to £24.6 in 2015, a reduction of 17.2%.
In July last year, the firm elected real estate partner Virginia Clegg as senior partner, while insurance head David Pollitt became managing partner, bringing both the insurance and non-insurance parts of the business together.