Firm focus: Critchleys - Dreaming spires

Regional accountancy practice Critchleys is 100 years old. But it is not resting on its laurels. Managing partner Robert Kirtland tells Lesley Bolton about the Oxford-based firm's vision for the future.

It does not come as a surprise to find among the history and dreaming spires of Oxford, a chartered accountancy practice as steeped in its own tradition as Critchleys. The regional practice, which has some 5,000 clients, is celebrating its own centenary this year.

However, while conscious of its past, the fiercely independent firm, which was ranked joint 58th in Accountancy's Top 60 league table in July (p29), is looking ahead, and has been adapting its own structure to guarantee its future success.

Many of the staff have a long history of employment in the firm, including three who have worked there for over 30 years. Robert Kirtland, appointed managing partner from 1 April this year, has spent his whole working life with the firm, which he joined as a trainee in 1988 in the firm's Thame office.

'We still firmly feel that there's a place for a regional practice of our size,' says Kirtland.

'I think it's interesting to consider how firms of our size - of which there are clearly a large number - have changed and developed, and where their future lies. It's a debate we have internally all the time. Should we remain independent as we have for the past 100 years, or should we become part of something that is bigger? We've obviously been approached by consolidators in the past and we've passed on those opportunities, and probably rightly so,' he adds.

CONSIGNED TO HISTORY

He highlights the changes. And one of these is the role of the general practitioner, which is consigned to history. 'When I started 18 years ago, we were all GPs. We advised our clients on all aspects of their business.

Roll forward 18 years and everyone specialises in something.'

For Kirtland that specialism is charities. But the firm has other sectors which are significant growth areas, including rural enterprise, technology and innovation, and the publishing and literary sector.

The firm's business is divided into service lines, of which accounts and audit, which are separate lines, are still the bread and butter of the firm's work.

The charities sector represents 10% of the firm's income, and about half the firm's audit clients. As the leading charity advisers in Oxfordshire, the firm has some high-profile clients, on which it has been building.

For starters, Critchleys is now the auditor to 14 of the Oxford colleges, including Magdalen, Merton, Jesus, Nuffield and Trinity. Three new colleges have been added in the last year. The firm also acts for leading British charities such as the British Horse Society, Young Enterprise, and the Royal Agricultural Benevolent Institution.

Building on its charities specialism has insulated the firm from the loss of commercial clients as a result of the raising of the audit threshold to £5.6m.

The rising amount of regulation in the sector, including the new charity SORP, is increasing the amount of specialist expertise charities require from their advisers. 'Our charities business has grown because the regulation is pushing charities towards people who are specialists in them,' says Kirtland.

The firm numbers Oxfam among its past clients, before the charity grew beyond its Oxford beginnings. Kirtland points to Critchleys' initial involvement, however, as part of its unique background in working for charities. 'That experience and grounding put us on a footing where we can now bring to smaller but still significant charity clients the expertise we've learnt from Oxfam and others.'

The same applies to the firm's involvement in the publishing and literary sector. Its links with publisher Blackwells go back in Oxford history, again until the company outgrew its regional accountants. However, that backbone of experience in publishing has led to a significant number of referral work in the sector. The firm currently acts for the Tolkien estate and HG Wells estate.

COMMUNITY RELATIONS

The essence, it seems, of a regional practice like Critchleys, is its role at the heart of a business community.

'Like most regional business centres, Oxford is a very small village at a business level and firms like ours tend to be at the heart of that business community,' says Kirtland.

Another thriving sector is technology and innovation. Oxford's universities have made great strides to commercialise ideas. The intellectual property that comes out of the universities has spawned a huge range of new start-up companies, some of which have been extremely successful, such as Powderject.

'We acted for Powderject when it began as two people in a science park.

It has since grown to become a listed company,' says Kirtland.

CHANGING ROLE OF PARTNERSHIP

Critchleys is still run under the traditional partnership model. 'LLP status is not an immediate priority for us because for a firm of our size, the business risks we're taking are different from larger firms,' says Kirtland.

However, the firm recognises the shortcomings of the partnership as a business model. As a result, partners have been freed from managing the business to develop the business. 'Ten years ago, partners would have managed the business in a complete sense. We are now in the position where we have professional marketing people, a HR manager, IT manager, financial controller.'

Service line managers were brought in two years ago. 'That wasn't an easy transition,' says Kirtland. 'But now we've done it, everyone can appreciate the merits of it. We now have clear lines of management responsibility.'

Another innovation, which may spread among other partners, is that of setting up a limited company. Tax partner Gerry Jackson has set up G Jackson Taxation Services Ltd, of which he is director and owner. The company is the partner. It allows him to generate partnership profit but at corporate tax rates.

NOT TOO TAXING

The firm has been taking its centenary celebrations seriously. Apart from getting the staff to regularly dress in period costume this year, the big celebration has come with 50 staff and 13 partners buying a racehorse.

The firm-wide competition to name the horse came up with Not Too Taxing.

The plan is to sell the horse again at the end of the season.

'The racehorse idea was seized upon, following other ideas such as the firm's own beer or wine,' says Kirtland.

Involvement by the staff in the firm, including a staff consultative committee, has been key to the firm's success, says Kirtland. 'Staff retention is a huge issue for any professional practice but I think we fare better than most. It's partly an accident of our location and partly the cultural difference between us and larger firms.'

VITAL STATISTICS

Annual fee income: £7.2m

No of partners: 13

No of female partners: 0

No of UK offices: 2

No of staff: 106

No of trainees: 21

Limited liability: No

Firm's financial year: end of May

FIRM HISTORY

Critchleys is celebrating its centenary this year. The firm was founded by Henry Critchley, who set up shop in Magdalen Street in March 1906.

It still maintains some of its original clients.

The firm expanded during the war years but still had only four partners by the start of the Second World War. Expansion came after the war when the firm merged with a number of sole practitioners. Offices were opened in Abingdon, Wantage and Thame.

By the early 1980s, Critchleys had nine offices around Oxfordshire. These have now been reduced to two - in Oxford and Abingdon - which has enabled them to concentrate their resources.

CRITCHLEYS RESULTS AT A GLANCE
  YEAR TO MAY 2005 YEAR TO MAY 2006 % CHANGE
Accounts £1.25m £1.35m 8
Audit £1.4m £1.6m 15
Tax £1.8m £1.8m 0
Other services £450,000 £500,000 11.1
Outsourced services £600,000 £630,000 5
Investment business £450,000 £500,000 11.1
Insolvency £400,000 £400,000 0
Corporate finance £550,000 £400,000 -27.3
Total turnover £6.9m £7.2m 4.9
Fees per partner £400,000 £550,000 37.5
THE RIVALS
Simmons Gainsford £7.7m
Pridie Brewster £7.6m
Critchleys £7.2m*
Arram Berlyn Gardner £7.1m
Beever and Struthers £6.7m

* Most recently available annual fee income figures

FUTURE PLANS AND STRATEGY

Audit, accounts and tax services are the mainstay of Critchleys' business.

It is also providing other services which are growing faster and provide a large part of the firm's income, such as investment business, corporate finance and outsourced services like payroll. The firm expects those to grow significantly, while also growing the core business as well.

Among the main services, tax is earmarked as the biggest growth area.

Partner numbers have been falling over the past five years - from 20 in 2001 to 18 in 2005, to 13 in 2006. The aim is to increase fees per partner.

'I would like to think that in five to 10 years' time, we will still be the largest regional firm, which we are now, providing those service lines,' comments managing partner Robert Kirtland. 'We are not looking in the medium term to merge or join in with one of the consolidator groups because we don't see the business need for that.'

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