PI group’s strategy starting to pay off with fast-maturing law firm

Saralis: Confidence in National Accident Law

The strategy instigated some years ago by NAHL – the AIM-listed personal injury group – to set up its own law firm is really starting to pay off, its annual results showed yesterday.

Its alternative business structure, National Accident Law (NAL), is fast maturing and helping the business pay down its debt, from £21m in 2019 to £9.7m by the end of last year, down 27% on the year.

Revenue was only up 2% to £42m, with profit before tax of £600,000, as last year, which it attributed to continued investment in the law firm, which delivers less immediate benefit to the bottom line than passing claims to panel firms but should deliver more in the longer term.

The figures also reflected a reduction in revenue and operating profit from the group’s joint venture alternative business structures – we reported last September that it was winding down Your Law, run with NewLaw Solicitors – and the sale of its residential property arm Homeward Legal last April.

With 3,633 settlements, NAL almost doubled the number of cases it settled compared with 2022 and at £6m generated 73% more in cash from them than in the previous year, “a clear sign of its growing maturity”, investors were told.

Group chairman Tim Aspinall said NAL was “nearing an important inflection point, when the expected value of new claims started is broadly equal to the value of those settled. Investing more enquires into NAL, now that we can see the return, will increase its potential even further”.

The lead-generating National Accident Helpline brand generated 35,643 enquiries in the year, up 2% despite official figures showing a contraction in the overall number of claims. Road traffic accident (RTA) claims made up 25% of the enquiries, other personal injury 48% and ‘specialist enquiries’ 28%.

The group said its RTA market share had grown to 1.9% by the end of last year, and its share of the non-RTA market (excluding industrial disease) broadly level at 17%.

The announcement said: “Whilst our brand advertising on TV generated a positive return, subsequent analysis showed that given the prevailing market dynamics, we would generate a higher return by pivoting to social media advertising, which is what we successfully executed in the second half of the year.”

It placed 8,518 of new enquiries into NAL – slightly lower than the year before but “substantially” larger claims – and 24,500 into firms on its panel; this balance will continue to tilt towards NAL over the coming years but the panel remains important for the group’s cash flow.

A further 2,500 claims went to Law Together, its joint-venture law firm with Manchester and Birmingham practice Horwich Cohen Coghlan.

The two joint ventures delivered a combined £4.4m of cash after deducting drawings to the LLP members.

NAHL announced recently that it was exploring the possible sale of its critical care business, Bush & Company Rehabilitation – even though it recorded 11% growth in revenue to approaching £15m and improved its operating profit margin from 26% to 30%.

“In view of its strong performance, this could be an attractive opportunity for a buyer and generate immediate value for shareholders,” yesterday’s announcement said.

Group chief executive James Saralis said trading in the first quarter of 2024 continued to be strong, with 26% more claims settled than a year earlier and 67% more cash generated from them.

Speaking to Legal Futures, he acknowledged that it had been “quite a long journey” to reshape the group and he had been “frustrated” that the efforts were not reflected in the share price.

This is turning around too, however. The share price hit an all-time low of 28.5p in July 2022 but our annual review of listed legal businesses in January recorded a good 2023, jumping 77% to 62p. The shares reached 72.5p yesterday.

Mr Saralis said the possibility of selling Bush & Co was only now being contemplated because of the confidence the group had in NAL.

Mr Aspinall added: “The group is in a very different place to a few years ago, and even more strongly positioned as a result. Our strategy is producing substantive results, and I am confident that we are on track for further success.”

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