Saralis: Law firm growing in maturity
The boss of NAHL plc – which owns National Accident Helpline – has urged more personal injury brands to return to television advertising after it began to reap the benefits of a new campaign.
Its wholly owned law firm, National Accident Law (NAL), is also set to take on an ever-greater proportion of the cases its marketing work generates.
Chief executive James Saralis spoke after the AIM-listed company unveiled positive results for the first half of 2022, with revenue up 6% to £21m, two-thirds from its consumer legal services division and the rest from its critical care division.
While operating profit fell 8% to £2.3m, the company said this reflected planned investment in scaling NAL.
Profit before tax was just £100,000, albeit in line with expectations, £500,000 down on the same period last year, while net debt was further reduced by £1m to £15m over the six months.
Mr Saralis said the TV campaign that began in June was National Accident Helpline’s first since the pandemic hit and had delivered encouraging results, with more volume, more organic searches, a reduced cost of acquisition and better conversion across all of its marketing channels.
Not many other personal injury businesses were on TV at the moment and Mr Saralis said he hoped more would return “because it stimulates the market as a whole”.
He added that “we hope to grow that investment as we go into next year”.
National Accident Helpline generated nearly 18,000 new enquiries in the six months, an increase of 27% on the first half of 2021.
The group estimated that National Accident Helpline has a 19% share of the non-road traffic accident (RTA) market, comprising employers’, public and occupier liability claims.
The group placed 4,531 new enquiries into NAL, a 61% increase compared to a year earlier. In all, NAL had 9,884 ongoing claims as at 30 June 2022, 132% more than a year before.
Cash received from settled claims increased by 50% to £1.5m, while ongoing claims are expected to convert over the next few years into £9.8m of cash, £7.5m of revenue and £6.5m of gross profit.
A quarter of enquiries generated by National Accident Helpline are currently being handled by NAL but a company note published yesterday by broker Allenby Capital predicted this figure would rise to 37% in 2025. Mr Saralis said this was a “reasonable” expectation.
The rest go to the group’s panel (68%) and its two joint venture alternative business structures, Your Law and Law Together (7%).
Mr Saralis said NAL’s metrics “clearly illustrate the growing maturity of our law firm and give us confidence that we are on track to build a more sustainable and profitable business in the medium-term”.
Earlier this year, NAL stopped handling tariff-only whiplash claims that go through the Official Injury Claim portal. Its focus is on growing its non-RTA capability – nearly half of cases that come through National Accident Helpline fall into that category – although Mr Saralis said the number of such cases had been “stubbornly flat” since start of the year.
The stock exchange announcement explained that Covid-related changes in consumer behaviour and the whiplash reforms that came in last year “have fundamentally reset the size of the market in the past 24 months”.
“Unfortunately, these changes have also resulted in a lack of stimulation of the market as the largest law firms and claims management companies reduce their marketing spend to manage their profits.
“We estimate this market to now be worth £1.1bn annually. We continue to believe that consumer behaviour will change, investment levels will increase, and consequentially the number of new claims will increase from current levels.”
NAHL also owns conveyancing marketing brand Homeward Legal and property search firm Searches UK, while its critical care division provides a range of specialist services in the catastrophic and serious injury market through Bush & Co.
Allenby Capital said the interim results “demonstrated substantial progress in building a successful cash generative and profitable platform for sustainable growth”.
It continued: “Targeted investment in both divisions has resulted in market share gains in markets that otherwise remain subdued. The board’s strategy continues to be focused on medium and long-term profitability, cash generation and debt reduction and remains on track to deliver against these aspirations.
“Results for the year are expected by the board to be in line with market expectations and we continue to see NAHL as an increasingly attractive investment over the forecast period.”
As a result, Allenby forecast that adjusted profit before tax would double next year, more than double in 2024 and to rise by close to two-thirds in 2025 “as the NAL claims book reaches a plateau when it will become self-funding”.
NAHL’s shares closed up 6% at 34.5p yesterday.
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