AA confirms effective closure of legal business

Topics: Personal injury & clinical negligence,Alternative business structures

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One of the biggest consumer brands to move into legal services provision has dropped out of the market, it admitted today. 

AA Law, which was launched in December 2013 to provide personal injury services, has confirmed it stopped taking on new work in November last year.

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The alternative business structure, a joint venture with national firm Lyons Davidson, seemed to have made a strong start: the annual report for the year ending 31 May 2014 showed almost £2m turnover and £613,000 profits before tax.

But the AA appears to have opted to take a different direction after seeing business slow down and it has effectively begun the process of shutting down its legal business.

A spokesman for the company said: ‘Following a strategic review the AA decided that the level of customers it was introducing did not justify the maintenance of a standalone business and therefore moved to a different personal injury service solution for new claimants with effect from 6 November 2015.  

‘Lyons Davidson continues to manage existing claims within the current structure and continues to work with the AA and on a number of other initiatives for the provision of legal services to the AA and its customers.’

It is unclear what has happened to AA Home Conveyancing, a service created in 2014 provided through a panel of specialist law firms and available for both members and non-members.

At the time of starting AA Law, the company was at the vanguard of non-lawyers moving into the sector following the Legal Services Act opening up the market.

The ABS licence was granted to AA Law by the Solicitors Regulation Authority following a year-long application process.

AA Law said it would initially handle personal injury and other litigation associated with car accidents suffered by its members and customers, thus reducing reliance on a panel of law firms. Employment and contract services were likely to be added as a ‘natural evolution’ of the new business.

According to the Find a Solicitor website, the company employed just three solicitors in two offices, as well as five other members of staff.

AA Law is one of a string of much-touted legal brands with ambitious plans to shake up the market that have either bowed out or encountered major difficulties since the market liberalised.

These include the Co-operative Legal Services, hit by heavy losses and now rebuilding; private-equity-backed Parabis, which collapsed last year; the listed Slater and Gordon, whose shares have lost 90% of their value in recent months; and the defunct Stobart Barristers, a direct access offshoot of the haulage group, whose legal director once described traditional law firms as ‘wounded animals waiting to die’. 

Readers' comments (27)

  • Another Game Changer.

    How is the insolvency of the 'lawyers' at Slater and Gordon going?

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  • Interesting, although it makes perfect sense to close something down if the volume going through didn't justify it staying open.

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  • Just shows you that an ABS is not neccessarily the answer and 'other arrangements' are posssible. Does anyone know what non ABS arrangemnet they have now then and who with?

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  • It is difficult to see how businesses dropping into the market then dropping out again is beneficial to consumers of professional services in which the development of relationships of trust is so important.

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  • Its nothing to do with it failing as an ABS, its pre-empting the bottom falling out of the PI market for RTA's as the government are trying to give the Insurance companies a monopoly by moving the small claim limit up as there is no money in RTA claims anymore.

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  • Getting out while it can...

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  • Presumably the AA saw a way to make buck then decided to jump ship before the changes. They have after all been spewing the ABI's propaganda as well as any insurer for the last few years.

    Question of course is how is the AA can seriously be considered a "consumer brand"? They've hardly been fighting for the consumer when it comes to the Ministry of Insurance's BS.

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  • Gone are those days when insurance companies just sold cases to Lawyers and pocketed the money to add to the bottom line. Seems like their rush to corner the market and accuse lawyers of being money grabbers etc. has somewhat killed off their golden goose

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  • This would be good news for High Street firms although the obvious sting in the tail is presumably to do with volume low value personal injury work.

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  • I think commentators are calling this right namely that the AA are firmly of the view that the SCT is raising and low value whiplash claims are going to be kicked into the long grass. I imagine the same conversations are going on up and down the land. They certainly are in my firm. I am still astonished at the lack of detail coming out of the MOJ on the issue. The responses to the APIL questions were vacuous. Surely it is now unreasonable to tell us when it will be implemented and to what claims eg accidents after a certain date or date of entry into portal. Will it only apply to RTA claims or are PL and EL / OL claims affected. The situation is nothing short preposterous

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