Accidental success

The Accident Group (TAG) became number one bête noire for many personal injury (PI) lawyers by default this month, as the reviled Claims Direct slipped quietly out of receivership and into history. TAG looks unassailable, having conquered one-quarter of the PI market as well as having overcome some apparently life-threatening test cases and a damaging exposé on the BBC’s Watchdog recently.

So how does it feel to be the new pantomime villain of the Access to Justice era? “We don’t see ourselves as an enemy of the profession,” says Mark Langford, solicitor-founder of TAG. “We refer all the claims to solicitors to handle and it’s not as though we’re taking away business from the profession.”

Fair point and, no doubt, one that is warmly appreciated by the 700-odd law firms on the company’s panel. The Manchester businessman acknowledges a “traditionalist element” at work within the profession. “You quite often find spokesmen for the Law Society expressing views that the lawyers are the good guys and the claims management companies aren’t, on the basis that they aren’t regulated, which is itself somewhat misleading,” he says. “The reality is that we’re pushing 120,000-180,000 cases into the hands of solicitors and the courts every year.” Compare that with the entire trade union movement, which generates around 60,000 cases a year for a small number of firms.

The implicit suggestion is that the lawyer-critics should be more grateful to the pioneering claims giant. The traditionalist argument is that Claims Direct, TAG and their ilk are doing for PI what the estate agents did for conveyancing. That is, reducing a specialist area of work to a low-margin, high-volume advice area.

The factory conveyancing analogy suggests that quality is driven down, together with price. As far as price is concerned, Langford says that lawyers operate in a free market and the only restraint on the price of work is the say-so of the taxing master. As for quality, he says: “We strongly believe that we enhance quality as the interface between the client and the solicitors. Our business ethos is to drive up quality.”

Langford also takes issue with the notion that claims companies are the unregulated cowboys of the new world of litigation funding. He says that they have more than enough regulation, pointing to the consumer credit rules as well as the Financial Services Authority. “But hang on a minute, we don’t get involved in the legal process anyway, we leave that to the experts,” he adds.

TAG is a remarkable success story. Langford’s background was in PI work with Manchester trade union firm Rowley Dickinson, before he set up a company specialising in motor legal expenses insurance in 1996 which signed up 1.8 million policyholders within a couple of years. The present after-the-event insurance scheme was launched after the Access to Justice legislation in April 2000 and has already seized a chunk of the market. “We must be doing something right if the legal profession has been around for many hundreds of years and we have come along and within two years have a 25 per cent share,” says Langford.

As for the secret of TAG’s success, Langford believes it is a consumer-friendly approach. “We speak to the clients at a time they like, at the location that suits them, and in an open and transparent manner,” he says. “Our clients don’t have to pick up the phone, make an appointment, put on a suit and come to an office at our convenience and then be worried by ‘no win, no fee’.”

TAG is one of the fastest-growing UK companies, with a turnover that increased 179 per cent last year to £243m. The tycoon has amassed a huge personal fortune en route, so much so that he pledged £6m with his wife Debbie to the NSPCC for a call centre for children when he shared a platform with Bill Clinton at a fundraiser at the end of last year. Before there is any suggestion of profiteering from the TAG model, he quickly adds that they make, on average, £100 per case – which is apparently “dead-on the industry standard”, and profits are generated through volume.

Bad press and dangerous challenges by liability insurers in the courts have dogged, but clearly not slowed down, TAG’s ascendancy. But while the past 12 months look good on paper, there have been more than a few rocky moments. In November, the claims giant was subject to the unwelcome attentions of the BBC’s Watchdog programme. It told the story of Lee Loughman – “an ordinary man, living in an ordinary street” with “some extraordinary powers”. Watchdog claimed: “He can be in two places at once for a start, he can fall off kerbs while watching television, he can even be in bus crashes without leaving the house.” It transpired that a TAG salesman had been caught on hidden camera cold calling following a bus crash that morning and exhorting Loughman to put in a claim.

Langford says that TAG does “not condone fraud” and has “co-operated with the police”. He adds: “We’ve stressed time and time again to our staff that we’re only interested in dealing with legitimate claims.”

One former TAG employee told Watchdog, they were “targeted” to generate four-and-a-half claims a day, but TAG says it goes to great pains to police such antics, for example, it ensures that its bonus and commission arrangements do not ‘incentivise’ bogus claims. They also deploy mystery shoppers both to follow up clients to check what they have been told and to pose as customers.

But when you are the kings of compensation, it is easy to be misunderstood. The Daily Mail accused the “Ferrari-driving Mark Langford” of profiteering when TAG sent sales teams to Birkenhead, Merseyside, (so the paper alleged) after an explosion at a BASF chemical factory in 2001. The paper reported that TAG signed up 1,000 residents. Langford says: “Any individual who did that was acting directly contrary to the stated company policy.” In fact, TAG did not bus-in staff to deal with the fire because they were there anyway. “It wasn’t as though we were chasing after an ambulance, people were just doing their normal job, speaking to people on their door step,” he says. “It was a coincidence.” And for the record, he now drives a Range Rover.

There have been more than a few hair-raising moments in the courts as well. Not least in last year’s English v Clipson case, which cut right to the heart of its business model. TAG signs up its clients to a conditional fee agreement (CFA) before sending them to the lawyer and the court considered whether there was a breach of the regulations requiring a ‘legal representative’ to advise before the CFA is made. According to one district judge, the CFA was unenforceable, its premiums unrecoverable and effectively its 700 panel firms had no right to payment. The ruling led to a logjam of 250,000 cases as well as a potential windfall of at least £1bn for the liability insurers. At the end of last year, senior costs judge Master Hurst kicked the argument into touch, ruling that mere delegation to the agent did not amount to a breach.

Last week, the Court of Appeal handed down its judgment in the first tranche of the Claims Direct test cases, and it is a judgment which appears to bolster TAG’s premium. The appeal judges extended the judicial thinking in Callery v Gray and appeared to settle on a reasonable notional premium of £979. Langford says: “This is interesting, bearing in mind that our premium varies between £800 and £980 and our position is that our premium is innately justifiable.”

As TAG sees it, its one-size-fits-all policy is key to honouring its Access to Justice commitments. It claims not to ‘cherry-pick’ the dead-cert cases, like its competitors, but takes on all cases with more than a 50 per cent chance of success, thus providing a proper replacement for legal aid. It loses 30 per cent of its cases.

If there is an adversary in this new world, Langford believes it is the liability insurers. Antipathy flows both ways. TAG was dubbed “the company insurers love to hate” by insurance magazine Post. However, Langford also came in at number 47 in the magazine’s ‘Power List’.

But are the insurers deliberately clogging up the courts with pointless challenges? “We will allow others to draw their own conclusions,” is the typically diplomatic TAG line. But Langford quickly adds that the issues at stake appear to be “exceedingly artificial”.

Langford dismisses talk of ‘compensation culture’ as an invention of the insurers to justify increasing premiums. He points to the recent Datamonitor report which revealed that out of a potential 1.8 million personal injury claims per year, only 614,000 were made to insurers in 2001-02. The research also predicted that this would rise only 2.1 per cent by 2007 – hardly evidence of a country besieged by a US-style litigation culture, Langford argues.
Mark Langford
The Accident Group (TAG)