National Accident Helpline is set to invest in personal injury (PI) cases for the first time through alternative business structures (ABSs), it revealed today.
In an announcement to the stock exchange this morning, its AIM-listed parent company NAHL plc said the government’s PI reforms and new small claims limits would catch “less than” 30% of the enquiries it generated for firms.
“Our approach to processing these particular claims will require further refinement and a pricing adjustment for those claims that will be subject to lower settlements,” it said.
NAHL revealed last year that it was trialling different commercial and structural arrangements so that it could take “a more proactive role in the entire conduct and financing of a PI case” and said today that the success of these had been “very encouraging”.
“We are progressing these arrangements, which are being conducted with a number of the larger law firms in the PI market, into longer term agreements.”
The changes give NAHL three ways to handle enquiries: the traditional panel method; offering deferred enquiry payment terms to selected panel law firms to support “incremental volumes”; and investing in cases using ABSs.
An ABS “enables the group to enter into a form of joint venture arrangement with a law firm to fund that venture and take a share of profit from work processed”, it told investors.
Chief executive Russell Atkinson told Legal Futures that it was likely to have more than one ABS, but declined to say how many.
He stressed that the panel firms would remain the primary channel for leads, and there would be no cherry picking of cases for the other channels – firms on deferred terms or the ABSs would be plugged into the normal case distribution rota.
NAHL will continue to accept cases that fall within the new small claims limits if and when they are introduced, but whether it would be the panel firms or ABSs that deal with them would depend on demand.
Mr Atkinson said he could foresee a time when these claims would be processed by clients on a DIY basis via technology, although with the option of speaking to a lawyer if needed. At the end of last year, NAHL introduced a system that allows customers to input a lot of the detail online before actually speaking to a lawyer.
However, NAHL warned that this all meant “a deferment of profit and cash flow, which will be realised in the future as cases settle… Along with a short-term impact on operating profit, cash generation is likely to significantly reduce in 2017 and 2018 before returning to levels previously achieved.” But it committed to maintaining dividend levels.
The announcement concluded: “The group has been planning for these changes since the initial proposals were announced.
“Whilst there is no doubt there will be some uncertainty in the short to medium term as all market participants reflect on the proposals, we are committed to maintaining both our market-leading position and our relationship with our panel law firms.
“The board remains encouraged about the medium and long-term opportunity that the new regulatory environment will present to our PI division.”