Local authority-owned law firm Pathfinder sees revenues rise to £10.3m, profits fall but to “more expected and sustainable level”

Pathfinder Legal Services, the law firm owned by four local authorities, saw revenues rise by 6% from £9.68m to £10.3m for the year ended 30 March 2022, but profit after tax fell to £304,996 from £868,092.

In its latest set of accounts Pathfinder, an alternative business structure, said: “The firm expects to build on the changes that it has made and see further growth in 2022/23. After the exceptional and turbulent 2020/21 financial year dominated by the Covid pandemic, 2021/22 has been equally challenging in different circumstances and has seen the company revert to a more expected and sustainable level of profitability. It has also achieved a position of cumulative retained profit.”

Debbie Carter-Hughes, the firm's Executive Director, said: “Pathfinder Legal Services is proud of the 2021/22 accounts. Whilst the last two financial years have been challenging with the global pandemic, the firm now faces the uncertainty of the current employment challenges and inflationary costs. We continue to work hard to provide excellent legal services to the public sector.” 

The strategic report section of the 2021/22 accounts said Pathfinder “continues to deal with work connected to the pandemic (either delayed due to the lockdown and changes in working practices or directly resulting from the pandemic) and has found cases becoming more complex in nature”.

It added that this had seen the firm increase the number of staff it employs, review its working practices and, as a result, invest in its staff in relation to training and development. “With the reintroduction of in-person court hearings, the firm is developing its in-house advocacy offering and, with the geographical spread of employees, has continued to take on files for external clients elsewhere in the country with the ability to provide advocates.”

The report said Pathfinder had seen instructions from new external clients “but also, for the first time, had had to decline instructions from external organisations due to working at full capacity”.

It added that the firm continues to recruit to enable it to take on this external work and hopes to continue to develop its client base through 2022/23. The average monthly number of persons employed (including directors) in 2022 was 161, up from 145 the previous year.

During the 2021/22 year the firm changed its name from LGSS Law to Pathfinder Legal Services. This rebrand followed the disaggregation of LGSS, the previous shared service owned by Cambridgeshire County Council and Northamptonshire County Council, and the local government reorganisation of Northamptonshire County Council and the seven district and borough councils in the area. This led to the creation of two new unitary authorities, West Northamptonshire and North Northamptonshire, which are now shareholders in Pathfinder alongside Cambridgeshire County Council and Central Bedfordshire Council.

The 2021/22 report meanwhile highlighted that local authority budgets “continue to be strained, with the pandemic and the current cost of living crisis adding to the pressure on local authorities and public sector bodies to make savings”.

It said that in addition “the employment market has been difficult to navigate over recent years, especially in the local government and legal sectors, meaning that local authorities are competing for a limited pool of talent at a higher cost than ever before”.

Pathfinder suggested that “as a result authorities are seeking to derive better value for money from their legal spend, better legal services for the same or lower cost, and to consider new ways of working”.

It added: “The model developed by Pathfinder Legal Services Ltd draws on elements of a commercial model in its performance management and business-like culture/processes, but retains key elements of an in-house legal team, such as the client ownership and control. The ability to call on Pathfinder Legal Services Ltd’s services on an as-needed basis provides comfort to public sector organisations who may sometimes need additional legal capacity but cannot justify further permanent or locum staff.”