AA closes ABS to new PI clients as National Accident Helpline announces strong growth

Nothing much left under the bonnet at AA Law

Nothing much left under the bonnet at AA Law

The AA has shut its alternative business structure (ABS), AA Law, to new clients, it has emerged.

One of the big brands to enter the law since liberalisation, the AA formed a joint venture ABS with national law firm Lyons Davidson in December 2013 initially to handle personal injury and other litigation associated with car accidents suffered by AA members and customers, work which previously went to panel firms.

In a statement, the motoring giant said: “Following a strategic review the AA decided that the level of customers it was introducing did not justify the maintenance of a standalone business and therefore moved to a different personal injury service solution for new claimants with effect from November 6th 2015.

“Lyons Davidson continues to manage existing claims within the current structure and continues to work with the AA and on a number of other initiatives for the provision of legal services to the AA and its customers.”

AA Law’s most recently filed annual report, for the year to 31 May 2014, showed turnover of £1.94m and profit after tax of £475,000 – Lyons Davidson charged £805,000 for its services to the company. The report said all of AA Law’s work was referred by AA Insurance Services.

The AA website continues to offer online documents powered by Epoq.

Meanwhile, NAHL Group – the AIM-listed company that owns National Accident Helpline (NAH) – told investors yesterday that it expects 2015 revenues to be up 15.7% to £50.7m, with underlying operating profits of around £15.5m, in line with market expectations.

A trading update said NAH had seen revenue fall but gross margins increase during the second half of 2015, which it attributed to a focus on “sourcing higher quality, lower volume enquiries for its panel law firms”.

The group has net debt of £8.5m – in part due to its £25m acquisition of rehabilitation business Bush and Company last year.

Group CEO Russell Atkinson said: “We continue to grow while also capitalising on what remains a fragmented legal services market through the delivery of earnings enhancing acquisitions. Our flexible business model and focus on quality continues to allow us to adapt our mix to meet market demands whilst growing profitability.

“Following the Chancellor’s Autumn Statement and the Insurance Fraud Taskforce report, we do not expect the government’s proposed changes regarding personal injury claims to impact management expectations in the short term and it is important to point out that there is no certainty as to the nature of the changes that will be introduced.

“The government’s proposals are subject to a detailed period of consultation to be undertaken prior to any decision being implemented. Regardless of the outcome, the Group’s strong balance sheet, combined with its marketing expertise and market leading brand strength leave it well placed to respond to and benefit from regulatory changes as it has done so in the past 20 years when faced with such change.

“Furthermore, the successful integration of Fitzalan Partners into the existing business along with the recent acquisitions of Bush and Company and Searches UK, demonstrate the delivery of our strategy to grow in aligned business sectors and to diversify the group’s model. The Board remains confident of further progress in 2016.”

Finally, Slater & Gordon has announced a new outsourcing contract with top 20 broker Brightside Insurance Group.

The five-year contract sees Slater Gordon Solutions – the part of the firm bought from Quindell last year – handle Brightside’s fault and non-fault insurance claims.

Mark Cliff, executive chairman of Brightside said: “We are delighted to announce this partnership with Slater Gordon Solutions, which will ensure our customers receive the best service when they need it most.

“As Slater & Gordon provide a wider range of services in the legal arena, we will be working with them to develop further legal services offerings over the coming months.”

The news has not helped the Australian-listed firm’s share price, however, which continues to plunge to new lows – falling nearly 10% yesterday to A$0.565 on the back of problems announced by personal injury specialists Shine Lawyers, the only other listed law firm in Australia.

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