DAC Beachcroft (DACB) has cleared nearly £40m of debt in about four years, providing the icing on a financial cake which has sweetened for a fifth successive year.
Revenue at the firm grew 6% to £243m in the year to 30 April 2019, building on an 11% uptick the previous year, and coupled with a 10% increase in profit to £52m. Profit per equity partner (PEP) similarly increased 7% to about £570,000.
DACB managing partner David Pollitt (pictured) told Legal Business the result was ahead of budget following three strong years previously: ‘For us, revenue growth isn’t the key indicator. What’s key for us, in a market that people are beginning to find a bit more difficult, is that we’ve improved our profit by 10% and we’ve improved our profitability.’
He added: ‘The icing on the cake is that we turned our net debt position into a net cash position, having started last year with £14m net debt and ending up with £1.5m in cash. That swing is the final piece of the jigsaw in our financial resilience, we’re in control of our business.’
Pollitt, who was appointed as the firm’s leader alongside senior partner Virginia Clegg four years ago, said the firm had improved its cash position by being disciplined in collecting money and controlling costs, having previously ‘drifted close to the rocks’.
The firm had still managed to invest, however. It opened new offices in London, Paris and Belfast, and made lateral hires Pollitt admits the firm would unlikely have made a few years ago: for example, former Norton Rose Fulbright head of insurance Liam O’Connell and Chris Wall, who joined as head of banking from Kirkland & Ellis.
Pollitt said it was continuing to invest and was hoping to announce some big team hires in the next few weeks, as well as having further laterals in the pipeline.
Insurance – which accounts for about 60% of the business – had a strong year, with the firm acting for all of the UK’s top ten insurers, while real estate went backwards in revenue terms.
Looking ahead, Pollitt cautioned the market was ‘not as easy as it was a couple of years ago’. The firm was growing and on-budget so far this year but he believed firms which wanted to grow substantially would do so inorganically.
‘Clients, understandably, are saying, “Why should I do that now? Why should I undertake this brand new IT project now? Why should I refinance?” Off the back of all those decisions hangs a lot of legal work, so everyone’s getting thoroughly bored. It seems like we’re in a holding pattern at the moment, I don’t think there will be many firms knocking it out of the park.’