Exclusive: Acquisition vehicle eyes PI firm deal rush

Hussain: Holistic solution

The law firm which bought private equity-owned Roberts Jackson out of administration is planning several more deals to help others exit the personal injury (PI) market, Legal Futures can reveal.

AWH Legal in Manchester was set up as an acquisition vehicle and has backing from an American private equity house.

Last October, AWH bought Roberts Jackson in a pre-pack arrangement; it later emerged that a dispute with its former after-the-event insurer was a major factor in the firm becoming insolvent.

The legal work is done by AWH Solicitors, and managing director Abdul Hussain said there has since been a substantial number of redundancies – around 100 Roberts Jackson staff moved over, but only 42 remain.

“The underlying business is good but the amount of work wasn’t enough for 100 people,” he said.

He pointed out that departed staff received full payment of the notice and redundancy, which would not have happened had Roberts Jackson been put into liquidation.

AWH Solicitors now has just under 100 staff in all, with a turnover of around £5m.

Mr Hussain said he launched the acquisitions business when the government first outlined its plan to raise the small claims limit for PI, with the impact this would have on both the volume of claims and the fees that firms would be able to make from them. He then spent 18 months researching the market.

He predicted that a tiny number of big firms would have the scale to survive the Civil Liability Act reforms – due to come into force in April 2020 – while very small firms may be nimble enough to diversify.

However, Mr Hussain said mid-sized firms – which he classed as those with a turnover of £1-15m – were often “overleveraged” and could not carry on if their main income stream disappeared.

“I’ve got a list of 150 firms that are definitely in trouble and will have disappeared in the next 18 months,” he said.

AWH offered a “holistic” solution for those looking to sell, whether it be firms or departments, with employment, regulatory and other advice available to help vendors. “We can take care of everything; we’re not just buying cases.”

Mr Hussain also claimed that, unlike other firms and businesses buying PI work in progress (WIP), he would make a payment upfront, and then offer a percentage of the recovery from the cases acquired. Other WIP deals are usually on the basis of the back-end payment alone.

AWH made an advance payment on account of £500,000 for Roberts Jackson – 10% of the WIP’s value. It is then paying 10% of all profit costs and success fees from settled cases, 50% of the recoverable value of disbursements, 90% of debtors and 60% of accrued income.

Mr Hussain has direct experience of firms going under, however. He set up Carter Law in 2010 at the age of 28 and within four years it was turning over £7.5m.

But in 2017 – several months after he resigned as a director – it went into administration and was sold to AWH Legal, with the joint administrators saying the deal delivered “value to creditors” and protected both jobs and client interests.

Mr Hussian said he saved around 50 jobs, while AWH has so far returned over £500,000 to creditors, with more to come.

He said Carter Law was a victim of his own inexperience as it grew at a huge rate, while there were “legacy issues that were too big to resolve given the way the market was going”.


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