Atkinson: Balanced portfolio
NAHL plc – the company that owns National Accident Helpline – has unveiled its third, and probably last, joint venture alternative business structure as it prepares for next year’s personal injury (PI) reforms.
Law Together opens next month with Horwich Cohen Coghlan – which employs more than 250 people in Manchester and Birmingham – handling the legal work.
It joins Your Law [1], in association with Cardiff-based NewLaw Solicitors, and National Law Partners [2], in partnership with Bristol-headquartered Lyons Davidson, which both started in 2017.
In addition, NAHL’s fully owned ABS, National Accident Law [3], opened in April this year.
NAHL chief executive Russell Atkinson said the launch of Law Together was “part of our ongoing strategy to make sure we’ve got a balanced portfolio of homes for our enquiries”.
As with the other two joint ventures, it is 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.
For all that, NAHL’s half-year results, which were published yesterday, said: “We are encouraged that panel demand has remained stable during the period and we have agreed a number of deals with panel firms that extend beyond the reform implementation date [of April 2020].”
Accidents will still happen regardless of the reforms and Mr Atkinson pledged that National Accident Helpline would continue to supply firms that wanted work, with the joint ventures ensuring there was a home for all the leads generated – having three meant NAHL could manage any capacity issues that arose.
Mr Atkinson said that although only 25% of leads arose from road traffic accidents – the area to be most severely hit by the reforms – he expected the damage the reforms would do to panel firms to reduce demand for the other 75% too.
The three joint ventures and its own ABS was “probably the right number”, and he said NAHL was unlikely to establish any more.
As of last month, the existing joint ventures – of which Your Law is by far the bigger – have processed 33,650 enquiries between them, and won 4,889 claims, recovering £19m in damages. They have 11,216 ongoing claims.
They have generated NAHL £300,000 of profit to date after deduction of acquisition and processing costs and minority interest.
However, yesterday’s results said profit attributable to the joint venture partners was £2.6m, up from £600,000 in the first half of 2018.
National Accident Law, meanwhile, was “scaling up and refining its processes”. It has processed 1,134 enquiries, with 1,010 claims underway. Just 21 have been won in the short time the firm has been going.
Mr Atkinson said he was confident that National Accident Law would make money through a largely automated system – the margin would be lower, but so would the cost of processing.
The ABS employs 30 people and though Mr Atkinson said this would increase over time – NAHL runs its own training academy – it would “not grow massively”.
He added that the business case for NAHL processing claims, rather than just referring them on has become “self-evident”, ensuring the company could “control the client experience” and extract more value from the claims as well: “We’ve just never had the reason to go down that route before.”
The half-year results were steady, with revenue up 4% to £25.8m and profit before tax down 13% to £4.6m.
This was in part due to £500,000 of planned start-up losses for National Accident Law and exceptional costs of £800,000 “incurred in preparing for small claims reforms”.
Personal injury accounted for most of the turnover – £16.2m, up 5%, with profits of £4.6m, up 3% – while the critical care division has had a strong six months, with turnover up 10% to £6.6m and profits up 13% to £2.3m.
The conveyancing division, however, saw income shrink 13% to £3m, with profits shrinking from £600,000 in the first half of 2018 to £100,000 in 2019. Mr Atkinson said this reflected the “headwinds” of the residential property market.
The impact of the Civil Liability Act reforms will be debated at PI Futures [4] next Wednesday, 25 September, in Manchester. A few tickets are still available.