The RAC is dramatically slashing its Bristol-based Legal Services division in a move that affects 90 lawyers and staff.
An ongoing review has resulted in the decision to outsource the division's solicitors' practice, which employs 46 lawyers and staff, as well as the 34-strong Uninsured Loss Recovery team.
The employees concerned, who were informed of the decision last week (9 May), could face the prospect of compulsory redundancies.
The move follows Aviva's takeover of RAC a year ago, following which Legal Services head Jonathan Gulliford and managing director Eddie Ryan left the company. The pair are now involved in setting up the Cooperative's new Legal Services division.
Prior to the takeover, RAC Legal Services was leading the fight for the liberalisation of the legal sector in the run-up to the publication of the Clementi report.
Alan Sanderson, director of RAC Legal Services, said: "The decision to outsource the Uninsured Loss Recovery and Practice work was made out of a need to be more competitive as customers continue to seek lower costs while also demanding excellent service for the products and services they buy."
In addition, work carried out by the Notification of Loss team is transferring to Manchester, affecting a further 10 people.
Prior to the Aviva takeover, RAC Legal Services employed 200 people and had a turnover of £15m. It had a 24-law firm panel, dealing with 110,000 personal injury claims from RAC members.