AA confirms effective closure of legal business
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.
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’.