Things have gone from bad to worse at insurance and shipping specialist Hill Dickinson, as the firm recorded a second consecutive drop in turnover.
Hill Dickinson would have hoped to improve on 2016/17’s less-than-stellar 1% fall in revenue, but this was off the cards when a 5% drop to £96.8m was announced. The impact was softened by a more robust showing in profitability with profit per equity partner rising 22% from £274,000 to £334,000. However, this is largely attributable to the firm cutting its equity partner count from 57 to 47.
As a result of the dipping turnover, Hill Dickinson has slipped down the Legal Business 100 (LB100) table and is in danger of falling out of the top 50 in future editions. It has been a worrying slide for the firm, which has one of the worst five-year revenue performances in the entire LB100 with a 14% drop between 2012/13 and 2017/18. The firm’s most recent LLP accounts, released to Companies House in February, showed that key management personnel were paid £3.8m, down from £4.2m.
However, chief executive Peter Jackson (pictured) places the result in the context of the firm’s sale of its insurance business to Keoghs in February. A total of 17 partners and 311 staff made the switch, giving Keoghs a new presence in Liverpool where it will sublet premises from Hill Dickinson.
Shifting what constituted 20% of the firm’s business, worth £22m, obviously took a toll, so in a relative sense a 5% fall in turnover can be viewed as grinding out a result. But how much the sale will affect next year’s financials remains to be seen. Jackson, for his part, asserts that the effects of the sale were felt ‘immediately’, while adding: ‘The only business we lost was the business that we chose to lose.’
He also insists that the sale has been offset by substantial growth in other areas, particularly in the firm’s corporate and commercial offerings where more high-profile clients are coming on board. Jackson notes that Hill Dickinson exceeded budget by roughly 10% for the first quarter of 2018.
In perhaps a positive sign for the future, Hill Dickinson scored a key mandate for Lloyds Banking Group in August, acting on a £30m refinancing deal with IT company Elite Group. That same month, the firm advised Blackburn Rovers Football Club on its shirt sponsorship deal with 10Bet, an online sports betting firm.
‘We took the brave decision to transfer over 20% of our business – insurance – because we felt we simply couldn’t support our partners any longer.’
Peter Jackson, Hill Dickinson
How do you reflect on the year?
Peter Jackson: Momentous. We took the brave decision to transfer over 20% of our business – insurance – because we felt that we simply couldn’t support our partners any longer. The firm was not the right platform for them. We were fortunate to find a business that we knew, that was on the acquisition trail, was focusing solely on the insurance sector and could accommodate all of our people.
We wanted our people to be looked after. Having said that, we were saying goodbye to 350 or so people, some of whom had been at the firm for the best part of 20 years, so it was an emotionally-charged transaction to contemplate. We managed to do it on the basis that everybody genuinely believed it was in the best interests of everyone involved.
What’s the strategy of the business that’s left behind?
Jackson: To grow in areas where we believe we have a platform and a strength. We were struggling in insurance – we were undersized, we weren’t on sufficient panels, we were at the commoditised end of the marketplace and none of that sat with what we had in the remainder of the business.
The remainder is still diverse with a broad commercial offering, built around two historic sectors: marine transport and health. We have a growing brand in other areas, such as education and retail. It hangs together well – it’s not commoditised; it’s not a volume business. It’s acting for key players in companies; it’s at the trusted adviser level. We couldn’t do that in insurance anymore. It’s not a criticism of our people, it’s just that the market was different.
How long do you think it will take for the firm to start growing revenue again?
Jackson: Where we’ve retained business we’ve seen growth already, even in the eight or nine months since the transaction has taken place. How quickly we can get back to a turnover of, say, £100m is a moot point. It depends on our appetite to acquire individuals, teams, small businesses and how quickly we can expand our client base. We will be hopeful of doing it within two to three years. There is a momentum at the moment. The insurance side had been a cause of concern for a number of years. To satisfactorily exit that business has really given us a boost.