The listed law firm reported a $590,000 profit after tax in its 2008/09 financial results announcement, a fall of 62 per cent from the previous year's earnings of $1.54 million. This came despite an increase in operating revenue of 59 per cent to $16.95 million.

The shortfall was attributed by company directors to losses associated with the Law Central business, which the company acquired in August 2007.

However, wages spending was also a large factor in the end of year financial result.

Operating revenue of Law Central, an internet-based legal document publishing and information service targeted towards accountants and financial planners, fell during the last financial year, and the revised growth rates resulted in a write-down of about 18 per cent of the carrying value of the acquisition.

ILH also experienced a significant rise in costs - mainly due to wage negotiations with principals of member firm Talbot Olivier.

The new arrangements will increase the collective earnings of the eight principals of Talbot Olivier to $1.27 million per annum. Prior to the renegotiation the base salary for each principal was limited to $100,000 per annum for the two years of the initial arrangement, in addition to a profit-sharing agreement.

"While these new arrangements provide a significant increase in annual operation costs of the company, the directors consider the finalisation of this matter to be a critical initiative and an extremely positive development for the company which provides increased security of future earnings for shareholders," managing director Graeme Fowler said in the company's report.

Other staff costs included the appointment of a managing director and chief financial officer to the firm, doubling the firm's total wages bill from $5million at the end of 2008 to $10 million this financial year.

In the past 12 months, IMH acquired the business of Argyle Lawyers and mda lawyers, with an annualised revenue of $9 million.

ILH will continue with its aggressive acquisitions strategy. The annual report outlined a future strategy that will see the company target 10 to 15 member firms over the next five to10 years.

"Consistent with its selective and incremental acquisition strategy, the company is aiming to acquire one new member firm and a number of smaller tuck-in acquisitions in each 12-month period, which would contribute approximately $10 million in annualised revenue."

- Laura MacIntyre