A new leaf

Minster Law managing director Michael Warren has pledged to provide a low-cost, efficient service for clients as he rides out the firm’s post-LASPO losses in the face of “inevitable” future uncertainty.

With the Civil Liability Bill posing the latest threat to the firm’s business model, Warren cites “PI reforms and the uncertainty that brings” as foremost in all claimant firms’ minds. However, the former finance director of BGL Group remains pragmatic. “Our view on that is full steam ahead and business as usual,” he says. “We’ll continue to make the journey as low-touch, low-cost, and efficient as possible for those straightforward claims. We’re seeing uncertainty in every sector and that’s the best way to address the reforms that will inevitably come our way at some point.”

Warren has been at the helm of the Yorkshire-based insurance law firm since October 2014, following a six-month stint within its former parent company BGL Group. In March last year, the stark issues faced by the firm in the wake of LASPO were revealed as a £28m loss for the year ending 30 June 2015. The firm was transferred to BGL Group’s South African umbrella company BHL Holdings just months later, receiving an £11m cash injection and having a £39.8m loan written off in the process.

Slate more or less wiped clean, in April Minster Law reported post-tax profits of £2.02m in the 12 months up to 30 June 2016. Its turnover rose 50 per cent to £55.8m and sales costs fell 12 per cent to £38.4m. The promising numbers were partly due to settling cases more quickly, and a change in accounting policy, with Minster only valuing cases where liability has been admitted in its work in progress.

Minster’s main sources of business are the brokers BGL Group and Bennetts, which have insurance panels behind them. Warren says the contractual risk is low due to having long-term contracts in place with each of them; however, he admits, “the risk of being at the mercy of their performance is very real”.

The change in ownership structure has also given the firm an opportunity to grow its business, he adds. “Having multiple sources or the right distribution keeps the business on its toes and encourages you to be more efficient and provide a better service, so that’s what we’ll be looking to do over the medium term.”

Forefront of change

Warren is focused on continuing to maximise profitability by finding new ways to increase efficiency and reduce costs. “In the current financial year, we’ve used a lot of that cost saving to reinvest in technology development. We’re pushing ahead on that,” he says.

Part of that efficiency drive is the technological revolution currently being spearheaded by HM Courts and Tribunals Service. Warren sees the potential for the insurance world to build on the technological evolution he has witnessed in his 20 years in the sector, and cites the positive impact it has had on loss adjusters as an example.“

Loss adjusters used to come to your house with a clipboard and piece of paper, assess the damage, then go back to the office and write a report,” he explains. “Nowadays, the policy holder can do this themselves while the loss adjuster sits in the office and saves on travel expenses. It’s far quicker and the assessment is far more objective because the damages are visually recorded and the whole process is far better for the customer.”

It’s “a great parallel” for what the currently paper-based PI claim could become, Warren says. “Every organisation has a case management system and there’s a portal for Ministry of Justice claims, but there’s a lot of paper, human interaction, and processing around it. Link that together with the government’s objective for digital courts and you could see a real seismic shift over the next five years. We could be operating in a way that we simply don’t recognise today. That’s where I want Minster to be, at the forefront of that change.”

What about artificial intelligence? Warren says it can play a role and that he is having preliminary discussions with several providers. Among the potential applications for AI, he flags the collation of data from medical reports. A similar process could be used for valuing or pricing special damages, he adds, with data from past cases being used to propose a sum. If the figure is agreed by both the client and the insurer, then the process becomes smoother. “There’s no reason why a greater proportion of the process can’t be driven by technology, enabling us to reassign the human skill that we have in managing complex claims more effectively,” he explains.

Relocation, relocation

Meanwhile, Minster is yet to complete its restructure, having announced earlier this year that it would be closing its York office in 2018. The move will bring all 620 employees under one roof in the firm’s Wakefield office.

“The decision as to which we closed was a difficult one to make,” Warren says. However, the changes to the firm’s distribution over the past two to three years meant that it was no longer viable to keep both bases open. “We knew that we only needed to be in one of them because as we’ve been through the transformation at Minster over two to three years, we’ve stopped some of the distribution that we had previously.”

Warren says it was always clear that consolidation would happen and the decision to move everyone into the Wakefield office came down to two factors: first, the ability to recruit people (Wakefield has a far greater catchment area), and second, the accessibility of the office in comparison to a congested York city centre.

Although the firm may experience some staff attrition as part of the consolidation of the two offices, Warren says the announcement has been positively received across the business. “In York there is a feeling of people wanting to make it work for themselves rather than resist it. It’s a really positive reaction and we’re just going through the quotations for the team-by-team transition.”

After a turbulent period, Minster Law appears to be on the straight and narrow. As an ABS, Warren says it has found a “formulaic way” of working with its partners, and with no competition for work and a soon-to-be settled workforce working out of a single office, the future looks promising. If the firm can ride out the PI reform storm and harness the benefits of technology, it may be ready to get off the roller coaster and begin a smoother journey to organic growth. 

Michael Warren is managing director at Minster Law