The joint venture between NAHL plc – which owns marketing network National Accident Helpline – and Bristol-based law firm Lyons Davidson has collapsed, it emerged today.
The pair launched the personal injury alternative business structure (ABS), National Law Partners (NLP), in October 2017, but NAHL told the stock exchange that they have agreed to terminate their relationship with effect from 2 January 2020.
The announcement said: “As part of this agreement, the group will receive £5m over the next three years in payment for historic panel enquiries while registering a one-off provision amounting to £1.16m in the current financial year.
“This settlement avoids a protracted dispute and the prospect of complex and time-consuming litigation between the parties.”
An NAHL spokesman declined to elaborate on what had happened, but more detail is likely to emerge in future company reports. Lyons Davidson had no further comment either.
However, commentary from NAHL’s City broker, finnCap, said the performance of NLP was “disappointing”. As a result, “management stopped putting volumes through this ABS at the beginning of 2019 and an agreement has been reached to terminate it”.
NLP was unveiled in October 2017, and initially created 35 new jobs in Kettering, the home of NAHL, and Lyons Davidson’s Cardiff office.
In May 2017, NAHL’s first and biggest ABS joint venture – Your Law – opened in association with NewLaw Solicitors, and it said told that it “continues to perform well”.
The announcement added that “management are encouraged by the early results from its wholly owned ABS, National Accident Law”. This launched in April.
NAHL also entered into a third and probably final joint venture ABS, Law Together, in September with Manchester firm Horwich Cohen Coghlan.
The joint ventures are a recognition that NAHL’s traditional model of generating enquiries and passing them on to panel firms will decline as next year’s Civil Liability Act reforms are expected to force many PI firms out of the market – and even if firms survive, there is unlikely to be enough margin to buy in cases and still make a profit.
While panel firms will still be able to receive such cases as they can handle, the various ABSs ensure that all enquiries will have a home.
The announcement also said that underlying trading in the personal injury division in the current financial year “is expected to perform marginally ahead of board expectations”.
However, in the second half of 2019, the residential property market has deteriorated further “and we now expect the division to make a modest loss in 2019”.
As a result, underlying earnings for the year were anticipated to be between 5% and 10% below board expectations.