Law firm issues profit warning as economic headwinds bite

Law firm Knights, which has offices across the Midlands, has issued a profit warning blaming the impact of Omicron and “recent macro conditions” – including greater illness rates among it staff and a softening of business confidence.

Knights says that despite it having a strong second half of the financial year to April 30, a slower-than-expected return to the office because of illness has hampered its “team-based culture”. Furthermore, lower business confidence due to concerns around the strength of the economy has meant a slowdown in corporate work.

The upshot of these conditions has meant that while Knights says it has seen increasing activity rates, these are lower than management expectations. The firm is now expected to deliver revenue of around £126m and underlying profit before tax of approximately £18m for the year ending 30 April 2022. Knights stresses it has not seen any significant losses of clients or fee earners.

David Beech, CEO of Knights, said: “Following a good first half, it is frustrating that recent events have held the business back from delivering a stronger performance in the second half.

“Beyond this near-term uncertainty, the opportunity to cement our leading position in key legal services markets outside London remains substantial and we are as well placed as ever to deliver on that opportunity.”

Knights will provide a further update on trading for the full year ending 30 April in May.