Refinanced and refocused Donns boss allays job fears

LAW firm Donns is expecting to return to profit this year after refinancing its debts and moving away from personal injury work towards mis-sold financial services products.

The Manchester practice made an operating loss of £1.4m in the 12 months to the end of April last year, and has refinanced its £3.8m loan and overdraft into a five year term loan with the Co-operative Bank.

As part of its refocus Donns has surrendered a five year contract with insurer Hastings – a move which has impacted on a small number of employees.

Senior partner and owner Raymond Donn says its has been a challenging time, but believes the firm’s prospects are good.

“As a result of surrendering the Hastings work because we felt the terms were too onerous – we are in consultation with 10 people.There are not mass lay-offs, but people are clearly a bit nervous because we are in a period of change.

“The personal injury claims market has been under dual attack from the Government and the insurers for the last few years to reduce the costs of litigation.

“Profitability has been reducing and reducing. Before we spoke to Hastings to cease the contract we contacted a number of leading personal injury lawyers with a view to transferring that contract, but there was no interest because of the terms,  which vindicated our view of its value in today’s market.”

He said the firm is looking to become a major player in claims against mis-sold Payment Protection Insurance policies.

“I see a big opportunity in this market place. It’s less competitive and more profitable so we have refocused our resources towards this area.”

Separately Mr Donn has also ceased to trade Destiny Legal Services – an outsourced legal services business – located in the same building as the law firm.

He said many of Destiny’s 150 staff had transferred back to the law firm since last year. Mr Donn had hoped to sell a stake in Destiny to an external investor such as a private equity firm, but interested parties withdrew, he said.

In addition. last year a call centre serving the business was closed, with 50 posts affected. Operations have now been consolidated on two floors at the Observatory on Chapel Walks, rather than four.

In the last four years Donns’ workforce has reduced from 280 to 120. Mr Donn said: “We have reduced costs and responded to changes in the market place as any business has to do.” 

He said the firm’s finances had been boosted by a £2m payout from Equity Claims and Equity Insurance after a case referral contract was terminated.