Few business growth stories better illustrate the pace of change in the UK’s legal landscape than the meteoric rise of a Newcastle legal firm which specialises in motor accident management services and road traffic accident claims.
Based in a former Newcastle supermarket, Winn Group has grown from zero in 2002 to a £40m-a-year turnover business. A 300 per cent increase in profit since 2008 has made it one of the UK’s star performers in profit per equity partner. Last year it paid Jeff Winn, its founder, around £10m pre-tax, most of which he reinvested.
Winn Group expects to be a beneficiary of the consolidation in the accident management outsourcing market, with the government fixing recoverable costs for low-value claims at £500, reduced from £1,200.
Mr Winn’s confidence about further expansion, based on its low-cost model, is shared by JZ International, a private investment company, and Souter Investments, the private investment office of Sir Brian Souter, founder of Stagecoach, the transport company. Together, they earlier this month bought a 60 per cent stake in Winn Group.
The deal, which values the business at about £80m, was made possible by last year’s easing of legal services regulations, allowing firms to seek external, non-lawyer, funding.
Winn Group comprises Winn Solicitors, specialising in personal injury claims, On Hire, a credit hire and repair facility, and On Medical, a medico-legal agency. The business, which employs 290 staff, owes its origin to Mr Winn’s frustration at the losses he experienced when, in 2002, a motorist ran into the back of his Jaguar.
The group, of which he is managing director, has directors, not partners, a structure which has permitted reinvestment at corporate, rather than personal tax, rates. The traditional system of partners is destructive, he says, disincentivising reinvestment in the business.
Those legal firms which take up the new opportunity of outside investment will expand faster, he believes. “That means others shrinking,” he predicts. “It’s going to be a rapidly changing landscape.”