Quindell snaps up claims networker to sidestep referral fee ban
One of the biggest new entrants to the legal market has invested in a networking business that brings together claims management companies (CMCs).
AIM-listed Quindell Portfolio, which already owns a law firm and has applied to become an alternative business structure, said the move was designed to respond to the banning of referral fees from next April.
It today announced the acquisition of Intelligent Claims Management Network (ICM), a virtual network of CMCs which gives leads to services providers such as solicitors, credit hire companies and medical agents.
The platform connects everyone involved in the claims process to the same online space, saving time and money.
In a statement to the London Stock Exchange, Quindell said the deal was intended to allow businesses to act in a ‘more controlled and regulated ethical environment’ after referral fees are banned.
Karl O'Hare, chief executive of ICM, said: ‘We see great benefit to combining our technology-enabled, cloud-based network of claims providers with Quindell's business model, collectively helping to drive down costs for the insurance industry and ensuring the survival of professional claims management organisations after the referral fee ban.’
The takeover involves the issue of around 27,000 Quindell shares, valued at almost £140,000. Quindell said it expects ICM to generate £500,000 profits after tax in the year ending 31 May 2013. Shares will be locked in for between 12 and 36 months from the date of issue.
ICM reported turnover of around £1.2m for 2011 and profit before tax of £300,000 – an increase of 200% on 2010 revenues.
In January, Quindell became the first listed company to create an alternative business structure when it bought Liverpool-based personal injury firm Silverbeck Rymer in a £19.3m deal. Formal ABS status is still awaiting approval from the Solicitors Regulation Authority.
The company had previously specialised in outsourcing software, consultancy and technology.
Earlier this week, an SRA discussion paper outlined potential difficulties in regulating the referral fee ban if law firms and claims management companies combined to form ABSs and circumvent prohibition.