How I turned a legal dispute into a business

Peter Done set up Peninsula, his employment law group, following a protracted legal dispute with a disgruntled employee. He tells GrowthBusiness how it happened.

Unlike the majority of entrepreneurs, Peter Done welcomes employment and health and safety regulations. His company, Peninsula Business Services, founded in 1983, claims to be the UK’s largest employment law firm, with a turnover of just under £36 million and pre-tax profits of £8.5 million.

Today, the business has 14,000 retained clients (mostly small and medium-sized businesses, although a small number are blue chip) and 540 employees across two sites in Manchester and Dublin. Client contracts last, on average, for three years and services include a comprehensive range of HR support, covering basics such as helping to draw up contracts through to handling and advising on tribunals. The company also provides a 24-hour advice line, 365 days a year.

Done originally set up Peninsula after being faced with an employment tribunal claim. In the early 1970s, Done and his brother Fred started off working as managers in a small betting office, but decided they could do just as well, if not better, on their own. They left and bought a betting shop with £1,000 each of their savings.

‘We believed that other bookmakers were not running their business as a service, but as a cash cow. Within 12 months, we had three shops and the business was growing,’ recalls Done. Today, there are more than 300 Done Bookmakers across the UK (the business is now run by Fred Done).

It was when he was looking to expand the bookmaking business that Done was faced with an employment tribunal.

‘By 1983 we had 67 branches and the business was very mature. We bought a group of ten betting shops to expand, and came up against an awkward employee. She had been with the business we had taken on for twenty-odd years, was a few years from retirement and wanted redundancy and a pay-off,’ recalls Done.

Done was adamant that the employee should either accept the existing terms and conditions, or leave, and when this did not happen, the employee was dismissed.

‘We thought we had done it fairly and we had taken advice from lawyers but then it went to tribunal. We ended up settling out of court which left a really bad taste in our mouths. We had to pay £4,500, which may not sound like a lot, but on top of that we got a bill for £7,000 from the lawyer which really annoyed us,’ glowers Done.

Spurred on by defeat

Done was then approached by someone who asked if he was interested in running a service offering advice on how to deal with employment tribunals.

‘I decided to turn that episode into a business opportunity – but instead of running the service, we decided to back it [with £800,000], with the aim of making it profitable within the year,’ explains Done.

However, those running the business, although experts in HR and employment law, fell far short of the skills needed to run a company. Over the course of the next three years the Done brothers invested a further £400,000 but never saw a return on that money.

‘We lost money for the first four years. We made a mistake by backing the wrong management team. Our accountant advised us to get rid of the business, but I decided to take a bigger involvement to try and turn the company round,’ explains Done.

Getting rid of the existing management team was his first priority, followed by a rebranding exercise and overhaul of sales and marketing strategy (the company changed its name from PPMS to Peninsula). Within 12 months, the business had paid its debts back, started to generate more clients, and had a turnover of £250,000.

Done attributes the turnaround in fortunes to being involved hands-on and going back to basics.

‘The first four years had been a waste of time. It was a small company so I knew I needed to know everything. I sat in on sales presentations and for about eight months went out on the road. This gave me insight into what clients wanted and how to get the presentations right. I decided that if I could do it, someone else would be able to do it even better than me. I then took a back seat and decided to concentrate on financing the business development,’ acknowledges Done.

Done also puts the growth of the business down to its ‘simple business model’.

‘Most of the calls we take end up going to employment tribunal and we guarantee [through indemnity insurance] to pick up the bill for our clients, assuming they have followed our advice,’ he claims.

‘You have to realise that when employees leave, it is only the cost of a stamp that stands between them and putting an appeal in. Even if they have not got a case, there is nothing to stop them,’ stresses Done.

He faced a serious situation when he found out that a key member of his management team (who was also a shareholder) was in the process of setting up a business deemed to be identical to Peninsula’s, whilst still in Done’s employment. The result was litigation that dragged on for some time, with the case eventually settled out of court.

‘It was a big problem as it involved one of my key management members – and the person I’d least expect. I was forced to appoint two new directors. As it turned out, this became a major milestone for the business – I ended up getting top quality staff at director level who are still with me today and who have helped drive the business to where it is now,’ acknowledges Done. But the experience has taught him one or two lessons.

‘You need to go in strong and protect your business – at whatever cost. And ensure you have restrictive terms of covenant for your top management – it’s very important to get contractual information in place from the start,’ he stresses.

Leslie Copeland

Gordon Yost

Leslie was made Editor for Growth Company Investor magazine in 2000, then headed up the launch of Business XL magazine, and then became Editorial Director in 2007 for the online and print publication portfolio...

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