Manjit Katoara: Letsure

Letsure has an in-house legal department with a difference. It does not advise on corporate issues. It is not in charge of its legal panel. The department does, however, do a whole heap of litigation for clients outside the company. Granted, this sounds more like a litigation boutique than an in-house department, but stick with it. All will be explained.

Although not before things get even stranger. Letsure only recruited its first lawyer in November 2002 but established the legal team in 1999. Manjit Katoara joined Letsure 14 months ago from the private client department at Reading-based firm Field Seymour Parkes. His practice area hints at the nature of the legal group’s work.

Before Katoara joined as head of legal, there were two legal executives, whose work was limited to pre-litigation notices. As neither are qualified solicitors, the litigation was outsourced to the panel firms. The recruitment of Katoara was the final piece in the jigsaw that allowed Letsure to conduct litigation in-house.

Confused? Okay, a quick history lesson. Letsure was launched in 1987 by Lumley Ltd, which is owned through various trusts by the Lumley family. You will find the family on every rich list going. It has been a player in the insurance market for many years, with a particularly high profile in Australia and New Zealand. At the tail end of 2003, the Lumley family sold its Australian operations to focus on Letsure and “other lifestyle products”, according to a Letsure PR man, who would divulge no more.

The company provides risk solutions for the residential lettings industry. In layman’s terms, this means the company provides insurance to landlords and tenants.
It works with 5,300 agents in the UK, deals with more than 100,000 tenant references each year and manages insured properties worth in excess of £1bn on behalf of insurers.

Landlord-tenant relations have a tendency to break down and will often result in legal action if tenants do not pay or do not move out when notice has been served. Traditionally, that work was outsourced to panel law firms.

“Panel firms were very efficient, but a cost analysis, which is taken periodically, found that they were costing the underwriters quite some bucks,” says Katoara.

The board conducted a series of feasibility studies to see if it could reduce that outlay by having an in-house team.

There was a problem, though. Law Society rules do not allow in-house lawyers to act for people other than their employers. But in April 1999, the Law Society granted Letsure a waiver that allows the company to act for insureds.

The policyholders or the insureds are landlords. “Now and again, these landlords have problems with their tenants,” explains Katoara. “That’s where we take over. The classic situation is where the tenant won’t pay rent arrears and the landlord wants to turf the tenant out.”

And this work keeps him and his team very busy.
Katoara admits to “an extraordinarily busy” January. At any one time they have around 1,000 live cases. To help deal with this workload, the team relies on a case-management system that has been modified in-house. “The benefits are that we can conduct large amounts of litigation on a relatively standardised basis,” says Katoara.

Letsure does have a legal panel, on which the company spends £500,000 a year. These firms are needed for the rare occasions when Katoara and his team are unable to cope with the workload, or if there is a conflict of interest.

The panel comprises three firms, although this may be cut to two following a review that is being conducted currently. Kerr & Co is used in Scotland, with Dutton Gregory and Shoosmiths the firms of choice in England. The claims department and the underwriting team are in charge of the panel and they consult Katoara on whether the firms are providing sound advice. Kerr, Dutton Gregory and Shoosmiths will need to keep their wits about them. Peterborough firm Greenwoods was axed last year.

Katoara describes the formation of the
in-house team as an “experiment” that began in 1999, but which was found by the management to be saving money for underwriters. The Law Society is continuing to study how it can regulate in-house lawyers to allow them to work for people other than their employers.

“You can envisage any number of situations where an in-house lawyer can produce a cost-effective service to anyone, were they allowed to do so,” states Katoara. “If they exploit their specialities, one expects that they would be competitive with high street practices.

“The work that’s going to be attractive to people out on the street is going to be the low-level and less complex work, rather than that done by a City law firm,” Katoara continues. “You’re not talking about corporate matters, you’re talking about commoditised work like injury claims or conveyancing services, or processes that can be standardised down to a really efficient model. That is the kind of work that’s going to appeal to the man on the street. It’s down to what the company can offer and what they can offer at a price that the man in the street will find attractive.”

Katoara keeps a close eye on regulatory matters and is particularly interested in two specific reports. The Office of Fair Trading’s (OFT) report ‘Competition in Professions’ threw the spotlight on the potentially anticompetitive restrictions in Law Society rules which stop employed solicitors from acting for anyone other than their employer.

Katoara is also awaiting with baited breath the publication of David Clementi’s Government report on the regulation of lawyers. “It’s clear to me that, with the right regulatory structure, organisations like ours could really benefit the public, since we can provide greater choice in the legal services in which we specialise,” says Katoara.

While most of the team’s work is now taken up by litigation, the department also advises on property issues for Letsure and for the insureds. “We also advise on various policy and indemnity issues, assist in policy rewording and contribute legal updates to Letsure’s own publication newsletter,” says Katoara.
“However, I’m not a corporate lawyer and don’t pretend to be, so corporate work is done by Beachcroft Wansbroughs.”

Katoara is a real advocate for his new business model. “We’re ahead of the game,” he claims. “We’re a working model of how the profession could be.”
Manjit Katoara
Head of Legal

Organisation Letsure
Sector Insurance
Legal spend £500,000
Employees 120
Legal capability Three
Head of legal Manjit Katoara
Reporting to Managing director Brian Turney
Main law firms Beachcroft Wansbroughs, Dutton Gregory, Kerr & Co and Shoosmiths