CEO cites heavy investment as reason for loss as firm sets out to convert 'multi-million pound sales pipeline'

Fixed-fee legal venture LawVest has posted a loss of £3.2m for its first 16 months of trading, as the DLA Piper-backed business gears up to convert a "multi-million pound sales pipeline".

The accounts, which cover the period from the company's launch in February 2011 to 30 September 2012, show the firm took in revenues of £170,036 against costs of £431,986, with £1.2m spent on sales and marketing and £1.7m on administrative expenses.

LawVest, the holding company of Riverview Law, is headed by CEO Karl Chapman (pictured) and COO Adam Shutkever, while DLA Piper holds a 21% stake in it. 

Riverview focuses on volume fixed-fee work, handled via two arms of the business: Riverview Solicitors and Riverview Chambers.

Chapman told Legal Week the loss had been expected, with the business still in the early stages of development. He pointed to a multi-million pound sales pipeline as evidence that the venture is moving in the right direction.

"As you'd expect, during the set-up phase there's been a heavy investment in creating our infrastructure and building the Riverview brand so that we're positioned correctly in the market," said Chapman. 

"Since the year-end, we've won several new contracts and we expect more this year as we convert our multi-million pound sales pipeline. Expect a dramatic increase in sales in our report next year."

A major recipient of the investment made by LawVest is business advisory company AdviserPlus Business Solutions, which received £1.5m in fees. Chapman is a non-executive director of AdviserPlus, while the business also owns around a 20% shareholding in LawVest.

Chapman commented: "AdviserPlus was the founding shareholder – it set up Riverview Law. At the outset it provided a lot of services – from recruitment to IT – that helped us manage our fixed and variable costs effectively."

The accounts also show that a warrant has been issued allowing an unnamed holder to subscribe for 11,959 shares in the company at £50 per share – totalling almost £600,000 in value. 

The warrant can be exercised at any point until 2 November 2019. Chapman said the warrant had been issued to a set of advisers that helped establish the business.

In March, Riverview revealed plans to double its headcount over the next 12 months, while potentially also moving into emerging markets such as Russia and Asia to take advantage of the growing number of overseas companies looking to gain access to English courts. Riverview already has a base in New York, which launched last June.

Both LawVest and Riverview have attracted much attention since their launch owing to their unconventional structure, with DLA's financial backing also causing controversy. 

DLA global co-chief executive officer Nigel Knowles personally holds a stake in the business, comprising 333 ordinary shares and 2,333 additional shares held by the trustees of his pension fund, amounting to a 0.9% stake. 

London international restructuring head Stephen Halladay and independent director Sean Mahon both have more than 1,000 shares.

Other smaller shareholders include DLA's Leeds corporate head Jonathan Procter, London restructuring head Michael Fiddy and London consultant Bruce Westbrook. 

Also included are Outer Temple Chambers' Richard Lissack QC and Andrew Spink QC – both of whom are members of Riverview's chambers arm – and former DLA senior partner Roger Lane-Smith.