Listed PI business winding down joint venture ABS

Saralis: NAL demonstrating growing maturity

NAHL – the listed business that owns National Accident Helpline – is winding down another of its joint venture alternative business structures (ABSs) as its own law firm goes from strength to strength.

In announcing its first-half 2023 results yesterday, NAHL said it did not intend to place any new enquiries into Your Law LLP, a firm run together with NewLaw Solicitors.

Your Law was set up in 2017, the first of three joint venture ABSs NAHL created to give it an alternative to placing claims with its panel.

The others were National Law Partners with Lyons Davidson, which closed suddenly at the start of 2020, and Law Together, with Horwich Cohen Coghlan, which continues to process claims.

Yesterday’s announcement said: “The [consumer legal services] division made good use of its flexible placement model during the period and benefitted from consistent demand from its panel of third-party law firms, providing us with good options for short-term profit and cash generation.

“We also placed a modest allocation of enquiries into Law Together LLP… which performed well in the period. We do not intend to place any new enquiries into our other joint venture, Your Law LLP, which is making good progress in settling its historical book of claims.”

The joint ventures were “returning strong levels of cash flow which is helping us to manage the investment in growing” the group’s fully owned ABS, National Accident Law (NAL). In the first six months of the year, they generated £2m of cash after deducting the joint venture partners’ drawings, compared to £1.8m last year.

NAHL’s 2022 annual results said it did not place any enquiries into Your Law that year but this is the first confirmation that no more would be added.

Chief executive James Saralis told Legal Futures that the company maintained a strong relationship with NewLaw and the joint venture was “performing well” in settling claims.

He went on: “The rationale for the change was twofold. Firstly, we wanted to grow NAL in order to create a more profitable business by processing more enquiries ourselves. As we also wanted to maintain the panel in order to generate short-term cash and profit, the only place we could redirect enquiries from was the joint ventures.

“Secondly, the Your Law book comprises a mix of RTA and non-RTA claims, largely pre-reform work. This is in contrast to Law Together which is all non-RTA (EL, PL, OL). As we wanted NAL to process largely RTA work, putting Your Law into run off and redirecting the enquiries into NAL was the logical choice.”

NAHL’s results for the first six months of 2023 showed a slight increase in revenue to £21m and broadly breakeven profit before tax, both in line with expectations.

Operating profit fell 19% to £1.8m, made up of a 39% increase in its critical care division and 48% fall in consumer legal services, “due to a combination of a change in the mix of personal injury enquiries generated in the first half, our investment [of £500,000] in TV advertising to enhance the National Accident Helpline brand, and a reduction in profits from the division’s residential property businesses”.

The latter was due to the disposal in April of its Homeward Legal business, which generates leads and instructions for panel law firms and surveyors. NAHL still owns property search company Searches UK.

NAHL was able to further reduce its net debt, by £1.8m to £11.5m.

NAL settled 178% more claims (1,738) than in the same period last year, “demonstrating the rapid scale-up of operations within the firm”.

Some 4,555 new enquiries were placed into NAL at a cost of £1.4m in marketing spend, about the same as last year, and it had a book of 10,611 ongoing claims at 30 June 2023, 7% more than a year before.

These claims are expected to convert over coming years into £9.9m of revenue and £8.6m of gross profit, although a review of previous years indicates that NAHL is conservative in its estimates – its 2019 book had been expected to generate income of £2.3m but looks set to deliver £3.1m, for example.

This upgrade in the value of the ongoing book of claims was “mitigating the stagnation in the personal injury market”, investors were told.

National Accident Helpline generated 17,559 new enquiries in the six months, in line with 2022, of which 25% were road traffic accident enquiries, an increase from 22% last year.

NAHL said the prospects for the rest of the year were looking solid, with National Accident Helpline delivering 9% growth in enquiries in July and August.

Mr Saralis said the accelerating rate of settlements by NAL “clearly illustrate the growing maturity of the firm and are materially contributing to the significant progress we have made on reducing our net debt”.

He told Legal Futures that National Accident Helpline would be looking to expand the channels through which it engaged with potential clients by exploring social media beyond Facebook, such as TikTok.

“A lot of what we do is a bit of a balancing act,” he added. “We’re focused on bringing down our net debt as well as growing the law firm.”

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