Since Alternative Business Structure (ABS) licenses allowed non-legal businesses to branch out into legal services, a number of major businesses have taken advantage of the opportunity to enter the legal sector. A number of large corporations and household names continue to move into the law, most recently major insurer LV=. However, one of the first major businesses to enter the legal market under an ABS license – motoring organisation the AA – has now announced that it is withdrawing from the sector.
AA Law was first launched in December 2013, just weeks after the business first obtained its license with an initial focus on offering personal injury services. The creation of a legal arm for the motoring services firm was brought about through a partnership with national law firm Lyons Davidson. The goal of the new business was initially to offer legal services that would be of interest to its existing customers and a complement to its motoring services, notably personal injury and other kinds of litigation that might arise from traffic accidents. It was indicated that other services, such as contract services and employment law, would also likely be introduced in the future as a “natural evolution” of AA Law’s services.
At first, the AA’s move into legal services seemed to be a successful one. An annual report, covering the year to 31st May 2014, showed pre-tax profits of around £613,000 and turnover of nearly £2 million. However, while AA Law benefited from a rush of business in its early days, the influx of new work for the ABS has since slowed significantly and this seems to have led its parent business to question the value of continuing operations in the legal sector. It has now been confirmed that AA Law ceased accepting new clients in November.
The company said that: “Following a strategic review the AA decided that the level of customers it was introducing did not justify the maintenance of a standalone business.” The spokesperson delivering this statement went on to clarify that Lyons Davidson was continuing to work on existing cases that had been started with AA Law before the effective closure. It was also said that the firm would “[continue] to work with the AA and on a number of other initiatives for the provision of legal services to the AA and its customers.”
Following the early success of AA Law, a separate legal arm – AA Home Conveyancing – was launched. Whether this part of the AA’s legal operations is also going to cease operating is not currently clear.