New ABS targets joint ventures with insurers

Dicken: profit-sharing model

A law firm that aims to offer a white-label personal injury service to insurers and brokers yesterday became the Solicitors Regulation Authority’s fourth alternative business structure (ABS), and first in Wales.

NewLaw Legal Ltd, based in Cardiff, has 260 staff and eight partners, two of whom are non-lawyers. It is the first legal disciplinary practice (LDP) to become an ABS.

It handles 20,000 personal injury claims a year, and offers some complementary private client services.

NewLaw chief executive Helen Molyneux said the firm had been founded in 2004 – at the time of the Clementi report – in anticipation of the legal services market being opened up to non-lawyer ownership.

She said: “Since then we have shaped the business to take on a corporate structure in anticipation of this moment. Our ABS status will give added momentum to the joint venture business strategies that we have been evolving for some time.”

Philip Dicken, the firm’s strategic partnership director, explained to Legal Futures that while some insurers may choose to take legal work in-house, an “outsourcing joint venture model… helping insurers and brokers to deliver legal services under their own brand”, would give them the chance to get used to what it is involved in offering legal services.

He said NewLaw has been in talks with insurers and brokers about the benefits of a profit-sharing model for some time, predating the government’s decision to ban referral fees, on the basis that it was a more sensible model anyway.

“There is a perception that ABS is a way of avoiding the referral fee ban, but that’s not the way we see it,” Mr Dicken said.

Nonetheless, insurers that currently receive significant income from referral fees, such as Admiral, are considering the ABS option.

SRA chief executive Antony Townsend said: “We’re delighted to have licensed our first LDP as an ABS, and the first ABS in Wales. NewLaw joins the Co-op, John Welsh and Stammers, and Lawbridge Solicitors in the first wave of ABSs, with a number of further applications nearing approval.

“The arrival of ABSs should foster a more flexible and innovative market, stimulating competition, encouraging innovation and boosting consumers’ experiences.”

Law Society president John Wotton said: “This is a historic day for Wales as it enters the new era of legal services. While NewLaw is the first legal practice in Wales to become an alternative business structure under the reforms to the way law firms are owned, I expect others will follow.

“It is encouraging to see that a firm with the Law Society’s Lexcel practice management standard and has been highly commended at the Law Society Excellence Awards is leading the way.”

The SRA said that 74 stage 2 forms have been submitted so far after initial interest from more than 200 applicants.



    Readers Comments

  • Bradley Wright says:

    Mr. Wotton, you and every other person in the UK, other than the tiny few raking in obscene profits from the hideous blunder of ABS, will bitterly rue the day you ever allowed the scourge of ABS into the UK. It will lead inevitably to anti-competitive corporate concentration, already well under way and worsening, higher prices, not lower, for the public, and a badly compromised independence of the independence of the legal profession. Magna Carta began the long slow rise of that independence. History will judge the document that allowed ABS as Pusillanimous Carta. The Australians bought the worst idea to hit the profession in centuries, probably from having stood out in the sun too long, and the English and Welsh have copied it, probably from standing out in the rain too long. For England, birthplace of modern democracy and the idea of an independent bar, to have done this will be among your greatest shames in your long and often glorious history.

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