The year ending 30 September 2019, our second full year of trading, saw us continue to build on our successes and further demonstrate the growth capacity of our business model. With high demand from UK SMEs recognising they no longer have to write off commercial disputes and bad debt, Escalate has been appointed to recover over £80 million on behalf of SMEs. Our thanks goes to the Escalate Partner firms all across the UK for their support and help in giving SMEs the access to justice they deserve.
Rapid growth and a healthy pipeline
We have seen revenue increase by 750% and, importantly, operating profit growth of 1,000% during 2018-19 – yet this still doesn’t give the full context of our financial achievements. Alongside this year’s revenue and profit growth, we have an engaged portfolio of work in progress prudently valued at £4.22million and a further pipeline of £2.5million in case assessment for engagement. This has been carried over into 2019-20 for crystallisation, ensuring that we start the next financial year with growth already in place and the potential to continue to expand at a significant rate. As a result, we expect to see our original 2019-20 revenue forecast to be revised upwards for the next trading period.
A growing volume of cases
Our origination model, driven by our Escalate partners, is demonstrating its potential. As the year progressed, we saw a growing volume of enquiries and a greater willingness from SMEs to start discussing matters that they previously would have ignored and/or buried within their businesses. We received more than 500 enquiries, of which 236 progressed into formal valuation and 108 were engaged. In the past 12 months alone, we have been engaged to recover in excess of £80 million on behalf of our SME clients.
The goodwill that we gain on case rejection has been one of the most surprising and pleasing elements of the past financial year. When we reject a case for the Escalate solution, we offer a full explanation along with any guidance on alternative next steps. We therefore, in effect, provide a free ‘legal review’ that helps many businesses understand their position quickly, saving them the hassle and expense of pursuing the exploratory phase of a more traditional route. We have seen some strong advocacy and referrals from these rejected clients.
Our partner network continues to strengthen
We have continued to build our business through our licenced partners and, in particular, our accountancy partners, who help underpin and differentiate the Escalate solution. Their commitment to ensuring their clients benefit from the Escalate solution and their support in building our brand underpins our success. These financial results reflect the value of this collaborative approach.
We have also seen an increase in the number of law firms, membership bodies and lenders during the year. Notable highlights from this have been the adoption of Escalate as a member benefit by several British Chambers of Commerce, and the support and regional promotion of Escalate by Barclays Bank to its customers as part of its value-add commitment to SMEs.
Four awards and counting
We have won four major national awards from the legal and accountancy sectors over the past two years: ‘Innovation of the Year’ at the British Accountancy Awards, ‘Best Collaboration Initiative’ at the Lawyer Awards, ‘Excellence in Business Development’ at the Law Society Excellence Awards, and ‘Legal Services Innovation Award’ at The British Legal Awards.
In addition, we have recently been recognised as one of the ten best new businesses in the UK and shortlisted for ‘New Business of the Year’ at the National Business Awards. Whilst we will not know the outcome of this award until November 2019, the fact we have been recognised for our achievements against rivals from across all sectors of the economy is something of which we are proud.
The year ahead
We enter our third year of trading with an engaged WIP that will ensure continued significant financial growth. This will be supported by considerable additional investment into infrastructure (as we move our caseload on to a new IT platform to support our national delivery partners) and in people (as we start to build our regional Escalate hubs to ensure SMEs gain greater access to justice via the Escalate solution).
Two significant new developments are expected in 2019-20. Firstly, the creation of our sub-brand ‘Escalate Debt Recovery’, as we start a greater push to help SMEs recover low value debts and help influence the end to the ‘late payment culture’. And, secondly, the launch of a new £10 million dispute resolution fund in partnership with the lending platform Archover. This will provide additional capacity for not just the Escalate partners but also for those law firms that need to unlock cases via the use of commercially viable disbursement funding.
Our financial and operational performance over the past year demonstrates that we are successfully delivering on our mission of providing access to justice for SMEs. By drawing on our culture of collaboration and innovation, we believe that we are well-placed to continue to make a real difference for all of our stakeholders in the next 12 months.
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Exchange Station, Tithebarn Street, Liverpool,
Escalate Law Limited
Company No: 10381993