BT joins ABS revolution

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With the creation of BT Law, British Telecom (BT) has taken a step into the alternative business structures (ABS) market, providing business-to-business legal advice.

The company announced the launch of BT Law on 4 March 2013, to provide legal services to corporate customers, initially in the motor claims market, but with a view to adding public liability litigation and employment law services in future.

Previously known as BT Claims, the company was awarded a licence to operate from the Solicitors Regulatory Authority (SRA). It is known for handling claims from more than 35,000 corporate fleet vehicles.

BT Law will have offices in three locations in the UK: London, Bletchley and Sheffield, and will be headed by solicitor Miles Jobling, Director of BT Law, Head of Litigation and Employment law for BT Group.

According to the Law Society Gazette, the business has handled around 4,000 at-fault accident damage and personal injury claims annually, with an average liability value exceeding £5m, and around 3,000 non-fault loss recovery claims with an annual recovered value of over £2.5m.

The company is one of the first corporates to be awarded an ABS licence, effective from March 2013, which, following the Legal Services Act 2007, allows for non-lawyer ownership and management of law firms and legal services organisations. 

Samantha Barrass, executive director at the SRA said: ‘BT Law is a welcome addition to the legal services market. The SRA has now licensed more than 100 ABSs and this number continues to grow, which means more choice for customers.’

Most ABS licences have been issued to ‘high street’ consumer-led firms, but corporate interest has been shown with Co-operative Legal Services, Countrywide Property Services, Saga, the AA, Direct Line, LawVest and Eddie Stobart all applying for ABS licences.

That development has attracted strong interest from barristers seeking to provide direct access to legal services, including to business clients.

LawVest, by contrast, an ABS partly owned by investors from commercial law firm, DLA Piper, has invested in Riverview Law, which aims to provide fixed-fee legal advice to general counsel and has targeted both SME businesses and large corporates seeking to outsource advisory work.

Both have met strong demand in the UK, according to legal press.

Profit centres

With the ABS licence, BT Law aims to offer an ‘in-house end-to-end motor claims solution for businesses from incident notification, through investigation and resolution and full litigation management’, it said in a statement.

The move into legal services mirrors other developments by corporate counsel to transform their operations into a profit centre, the subject of a 2010 report on ‘The Profitable Legal Department’ commissioned by LexisNexis.

That report argued that, by acting as stakeholders, in-house counsel could develop litigation recovery programmes to turn the legal team into a profit centre, citing case studies from DuPont, Tyco and Standard Life, each of which generated additional revenue for their business.

The move into ABS may not just generate income from BT’s own litigation management, but potentially also generate profits and efficiencies replicable to other clients.

It acts as what IHP columnist, Eduardo Reyes, compares to a ‘lean back office, supply-chain arrangement that has transformed other areas of business across the world’, which, he said, if adopted successfully could ‘lead to a competitive edge.’

Reyes noted ‘other parts of BT already use the joint venture and total outsourcing models that are relevant here’. Indeed, BT Law said it planned to work closely with BT Fleet, which provides fleet management, vehicle maintenance and accident management to corporate customers.

The parallel, Jobling said, would be with partnerships in other parts of BT’s business, where the company bids for external work on behalf of or with joint parties or through sub-contractors.

He added: ‘In other parts of BT, they are always looking at opportunities to provide business-to-business solutions ... BT Law is not a consumer offering. We are about business-to-business service.’

Reacting to the launch, Jobling said: ‘With our experience and market credibility we had already built a team with significant legal and claims handling expertise. This licence now gives us the perfect platform to take this much further forward and means we can deliver whole new areas of support for our existing clients as well as hopefully developing many new relationships.’

He added: ‘As we carry the BT name we understand just how important it is to best represent and protect our clients’ brands, which will remain as a main component of our service strategy.’

Speaking to Legal Week, Jobling said he would approach BT’s panel law firms to assist with the development, noting: ‘the answer across the board has been a resounding “yes’.’ Jobling said the work offered by panel firms would sit alongside the volume legal services offered by BT Law.