Disputes specialist Stewarts has experienced a reality check after a consistent period of striking financial growth, with revenue tumbling by more than 20% for the 2017/18 financial year.
Turnover has dropped from £77.9m to £62.4m, while profit per equity partner (PEP) fell by an even wider 28% margin to £1.4m.
Despite the stark decreases, managing partner John Cahill (pictured) described it as ‘a solid set of financial results’ and insisted the firm is targeting revenues of £100m by 2022.He added: ‘During the year we have made significant investment in a number of new contingent cases. I indicated last year when announcing a set of record results that our revenue patterns will be “non-linear” and that remains the case.’
Last year Cahill did state that contingent fee arrangements would result in ‘non-linear’ patterns of income and fluctuations in profit. In 2016/17, the firm recorded a 25% increase in turnover and PEP climbing 19%, both of which have been more than wiped out by the latest results.
Certainly Stewarts benefitted from the conclusion of major cases in the previous financial year, not least the financial settlement of the £4bn shareholder group action against the Royal Bank of Scotland. Shareholders represented by the firm accepted a last-gasp offer of 82p per share.
Another major mandate, Stewarts’ representation of 125 institutional funds who claim they lost money as a result of a 2014 Tesco profit overstatement, is ongoing.
The latest results bring three consecutive periods of double-digit growth to an end. However, when put into perspective Stewarts is still on a strong upwards trajectory. The firm’s revenues have jumped 38% over a five-year basis, while PEP has increased 22% over the same period.
Stewarts also still offers attractive levels of remuneration in comparison to its competitors, for the 2017/18 financial year the top of equity took home £1.6m.
Despite the financial regression, the firm announced in July that it would be setting up a financial crime unit, significantly expanding Stewarts’ practice.
Richard Kovalevsky QC, formerly of 2 Bedford Row, was appointed to head up the new department.