The head of the standard bearer for alternative business structures has admitted the company grew too fast in its early years.
Matt Howells (pictured), managing director of Co-operative Legal Services, spoke as the business - the first big non-lawyer consumer brand to enter the new legal market in 2012 - posted losses of £5.1m for the first half of 2014.
That figure was 70% up on the same period in 2013, bringing total losses in the last 18 months to more than £14m. Revenues for the first half of 2014 were down by 28%, from £18m to £13m.
The losses were blamed on the costs associated with a year of job cuts and rebuilding the business.
Howells, who joined CLS in April 2014, revealed that staff numbers are now down to around 400, from a peak of more than 500 in January 2013. And he lifted the lid on the Co-op's struggle to cope with the rapid expansion that followed the high-profile grant of an ABS licence.
'We grew very quickly and those costs had nowhere to go when the revenue was not coming in,' he said. 'The problem was the pace we executed our strategy. We grew far too quickly. There is always a balance between how much noise you make and the attention you want to draw. What you can now expect is a business that is very clear on what it's trying to achieve.
'We have started to look at what is the right size and shape of the organisation.'
Howells said the firm has '100% backing' from the Co-op group, which has absorbed the losses of the past two years, but admitted it has to start turning a profit in 2015. CLS is earmarked to break even in the second half of this year.
The former Barclays managing director said probate, wills and family divisions had all brought in revenue in line with expectations, with personal injury income suffering following reforms to the sector.
Howells insisted CLS can prosper despite its early setbacks and said he still believes the company has something different to offer compared with traditional firms.
'The reason we're here is to offer customers an alternative solution,' he added.
'We've tried exceptionally hard to give customers transparent, fixed-fee pricing.
'There is always going to be a need for the high-street [firm] and customers who want that. The key thing is to be an alternative. We need to be more realistic.