National insurance and shipping specialist Hill Dickinson has completed the sale of part of its insurance business group to fellow LB100 firm Keoghs.
The sale involves the transfer of 17 partners and 311 staff, giving Keoghs a new presence in Liverpool, where it will sublet premises from Hill Dickinson, as well as adding staff to its offices in London and Manchester. No sale price was disclosed for the deal, which excludes Hill Dickinson’s marine insurance and clinical negligence work.
Both North West-based firms confirmed they had held ‘high-level preliminary discussions’ in August last year, on what was said to be the potential transfer of £23m worth of business. Yesterday’s (12 February) completion of the deal was the third and final phase of the sale process.
In a statement, Hill Dickinson said the sale allowed the firm to focus on strategic areas of growth in its core business areas of health, marine and commercial. Chief operating officer Iain Johnston told Legal Business in August it had become clear the firm needed to find a new home for some of its insurance business as a number of other parts grew very quickly.
The sale follows a challenging few financial years for Hill Dickinson, and the loss of a 24-strong casualty claims team to Kennedys last March. Turnover at the Liverpool-based firm fell 1% to £101.7m in the year to 30 April 2017, continuing a trend which has seen revenue drop 8% since 2011/12.
The firm’s most recent LLP accounts, released to Companies House earlier this month, show the highest-paid member received £367,000, up from £350,000, as member numbers fell from 143 to 138. Key management personnel were paid £3.8m, down from £4.2m.
A business review in the accounts said strong growth in the business services and health business groups was offset by falls in turnover in legal services to the insurance industry and challenging market conditions for legal services in the global shipping markets.
The Parabis Group has confirmed the sale of its defendant personal injury firm Plexus Law to a consortium of private individuals, including the group’s original founders, Andrew McDougall and Tim Roberts.
The announcement comes after recent talks with LB100 firm Keoghs failed to result in a deal.
A spokesperson for Parabis said in a statement the board considered both the founders’ and Keoghs’ bids and, with the support of the group’s key stakeholders, has entered into exclusive talks with the founders.
‘The sale is due to complete in November 2015 and represents a positive outcome for our people and clients alike,’ Parabis said.
Legal Business reported in September that Parabis, which was purchased in 2012 by private equity firm Duke Street Capital, was in talks to sell off parts of its business after legal reforms reduced the value of insurance work in the UK, in particular personal injury. Duke Street Capital, which pumped £13m of extra capital into the firm in December 2014 did not receive the return it expected and sought an exit strategy. Indeed, Parabis’ income fell from £12.1m to £8.9m in the year to 31 March 2014 according to filings on Companies House.
In 2012 Parabis Law became the first private equity-backed ABS to be licensed by the Solicitors Regulation Authority, and was seen as one of the forerunners of the new legal landscape in the UK in which firms were able to welcome outside investment.
Defendant insurance law firms, Plexus Law and Greenwoods claimed their merger in May 2012 would create combined turnover of £90m. Since then, Parabis made a series of cutbacks, making a raft of redundancies in Croydon and closing offices in Bristol and Colchester.
Legal services market reforms are being blamed for job losses at Bolton-based UK top 60 insurance firm Keoghs, which has put 41 people at risk of redundancy including fee earners and support staff.
The redundancies will mainly affect the firm’s Coventry office and particularly its counter-fraud services (CFS) division, as it looks to consolidate its offering for low-value fraud work in the North West.
Last year, the Legal Aid, Sentencing and Punishment of Offenders Act banished referral fees for personal injury claims and a spokesman for Keoghs said: ‘The post-reforms market environment has yet to stabilise but it is clear that insurers’ ongoing counter-fraud requirements are going to be significantly different to what they were 12 to 18 months ago.It is regrettable that we have to lose colleagues from our business. However, the restructure we are undertaking within our CFS division will give us the agility needed to respond cost effectively and continue to thrive in a rapidly changing market.’
The move comes after the 275-lawyer firm recorded an 18% increase in revenue in the last financial year to £55.5m. It converted to an alternative business structure in 2012 and in November received a cash injection from private equity house LDC, part of the Lloyds Banking Group, which took a 22.5% stake in the business.
Keoghs said in a statement that it will remain the ‘largest provider of counter-fraud services to the general insurance market,’ and is currently looking to fill 51 vacancies across the business.
Last year the firm, which recently won a place on the Allianz Insurance legal panel, bolstered its Manchester office with the hire of three Clyde & Co partners, Estelle Machell, Mike Pope and Anthony Mangham.
Leading insurance firms that reported unprecedented revenue and headcount growth in their counter-fraud teams in 2011 expect this trend to continue in 2012.
Many firms have some capability in insurance fraud, however the biggest reported growth in the sector is undoubtedly within motor fraud. This is a practice area dominated by regional and national firms such as Keoghs, Hill Dickinson, DWF, Berrymans Lace Mawer, Weightmans and DAC Beachcroft. All saw sizeable increases within their teams in 2011.
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