Direct Line Group (DLG) looks set to become the next major insurance group to launch a new legal services venture, in partnership with Parabis Law, after applying to the Solicitors Regulation Authority to form an alternative business structure (ABS).
The retail general insurer has also added an interesting dimension to the debate over cuts to legal aid by announcing it plans to launch ‘competitive’ law firm DLG Legal Services at a time when most Britons are struggling to afford legal services.
DLG already provides customers of its insurance companies Direct Line, Churchill and Privilege with in-house legal services and outsourcing agreements with a panel of law firms. The aim is for DLG Legal Services to provide an extended menu of services including legal advice and management of their personal injury and non-injury claims as well as debt recovery, employment and contract issues.
Parabis has a longstanding relationship with Direct Line and staff from Parabis – owner of defendant law group Plexus Law – will be subcontracted to work with Direct Line’s in-house legal team.
Customers of Direct Line’s insurance arms Churchill and Privilege who have already purchased legal coverage with their motor or home coverage can choose to be represented in their claim by DLG Legal Services and will be awarded 100% of any damages awarded. Customers who have not purchased legal coverage will have access to DLG Legal Services, paying a standalone fee to be deducted from any damages awarded, with the rate proportionate to the risk taken by DLG Legal Services.
The new legal arm is not expected to make a material contribution to the group’s profits.
‘We’ve decided to launch a law firm to extend the legal services we provide to our insurance customers. We have the opportunity to protect our customers from excessive legal costs, especially in the event of a personal injury claim,’ said Paul Geddes, DLG’s chief executive officer.
‘It will also help our customers to have affordable access to justice, should they need it. This is a key concern of the government at a time when fewer and fewer Britons are eligible for legal aid as a result of tougher means testing. For all these reasons, we think the time is right to launch a competitive legal services business.’
Tim Roberts, senior partner at Parabis Law, added: ‘This is a very significant development in a period of major change in the delivery of insurance and legal services.’
Plexus Law announced in May that it was to merge with insurance disputes practice Greenwoods, creating a £90m defendant insurance litigation business.
The move comes after comparethemarket.com owners BGL Group in June announced the acquisition of leading personal injury firm Minster Law, after Minster was awarded ABS status.
Other new entrants include Admiral, Ageas and RAC, which were granted ABS licences to provide legal services in April this year. Ageas tied up with Cardiff-based NewLaw Solicitors; Admiral entered two separate joint ventures with Lyons Davidson and Cordner Lewis; and RAC agreed a five-year deal with Quindell Portfolio.