Under cover

Following the demise of SIF, Aon Claims Solutions decided to second private practice lawyers rather than have its own in-house team. Fiona Callister finds out how the scheme is going

The in-house dep-artment at Aon Claims Solutions was set up just over a year ago in the immediate run-up to the demise of the Solicitors’ In-demnity Fund. Claims Solutions was about to start brokering policies for the solicitors’ professional in-demnity market. Unusually, maybe uniquely, the original idea was to staff the department solely through seconded lawyers from the outfit’s panel firms.

One year on, the department has diverted slightly from its original plan and employs four in-house lawyers while seconding a further eight.

The panel was founded with the recruitment of Andrew Carruthers, former managing partner of Rowe & Maw, to head up the team.

Carruthers is still paid by Rowe & Maw, where he retains partnership status, and Aon in return agreed to compensate the firm for lost earnings. He came over to the team because, having been head of litigation and managing partner, he was heading back into fulltime professional negligence work and would have missed the management side of his previous jobs. Carruthers expects to be with Aon for at least another two years.

According to Martin Thomas, managing director of Claims Solutions, the original idea of how to staff the department came about on that most traditional of thinktanks – the golfing away-day.

The golf team made up of lawyers from the different panel firms beat those from within Aon soundly.

“Someone said in the bar in the evening, ‘Wouldn’t they [the golfing team] make a great law firm’?,” explains Thomas. “Outside the office most of the lawyers were probably at each other’s throats but came together for that day.”

When the decision to scrap SIF was made, Thomas started to think about how Aon could provide a similar service.
The outfit now provides cover for sole practitioners and firms of between two and 10 partners and Thomas claims a market share of between 20 and 25 per cent for those markets.

“We were very keen when we launched not to bite off more than we could chew. If any opportunity comes up then we will look to expand into other areas where the need arises,” explains Thomas.

So why did the operation opt for a seconded department? Cynics might suggest that cost had something to do with it but Thomas denies this, describing the set-up as a joint venture.

He explains: “We decided that we would use a heavily seconded element as we wanted to get quality. There has been criticism of in-house operations, that they become a bit stale and not quite as innovative as private practice. We looked at ways of bringing a fast, efficient and creative solution for clients.

“The best way for us was to use some of the quality experience that we found in law firms that we partnered.
“Andrew [Carruthers] has done a great job in selecting great individuals and we are very pleased with how it has gone.”

Thomas says it is a two-way process, with the secondees coming with skill-sets from their individual private practices and then gaining experience at running their own caseload at Aon.

“All the lawyers have sign off ability on the claims, not just a recommendation role,” explains Thomas. All those who come on board have a commitment to stay for a year, although Carruthers says that he has just extended some tenures at the request of the lawyers.

Thomas shrugs off suggestions that the private practice firms asked to provide manpower in the form of secondees might have thought the move was a bit cheeky, stating that all the law firms asked, namely Barlow Lyde & Gilbert, Beachcroft Wansbroughs, CMS Cameron McKenna, Davies Arnold Cooper, Eversheds, Reynolds Porter Chamberlain and Rowe & Maw, have all provided lawyers for the department – with most providing two.

“This is a business for all of us,” says Thomas. “We are in this to make profit – it is not a loss leader for anybody. How the law firms benefit is that there are returns on every level. The quality of people going back will be much more client focused and the insurance market is a strange one which is making different demands on service providers. This way the lawyers sent on secondment get closer to a very large broker.”

Thomas and Carruthers started the secondment programme by bringing in senior lawyers at partner level, but now are able to consider using more junior lawyers.
The original line-up included a retired partner from CMS Cameron McKenna and the youngest was a four-year qualified. The original figure given for staffing the department was 30 secondees, but one year on the figure is a lot lower. However, Thomas stresses that he does not view this as being a failure.

“We could have easily got 30 but it wouldn’t have made huge economic sense for us. Part of the reason is that we have not had that many claims to handle this year. It could be that we attracted clients without frequent claims problems. No one knew at the time of the [launch].”

Most of the workload at the moment is dealt with in-house, with work outsourced only if it is particularly arduous litigation or workload demands mean that the team is unable to cope. As the scheme is still very young, Thomas is unable to give any percentages of how much is dealt with in-house.

Thomas says that this makes for a much faster response time. “We try to accelerate the pace of the cases we handle and Lord Woolf would no doubt be very proud of us. We want to get hold of the claims quickly and where there is a good claim we want to kill it and keep the cost down,” he says.

If the work is outsourced then the seconded lawyers tend not to manage that work. Explains Carruthers: “Our function is to focus on the claims that we can handle. The management of that process is handled by our [non-lawyer] colleagues [in the claims department].”

Thomas adds: “We talk to the outside firms as to what our objective should be and we monitor the progress hoping that the firms will deliver. It’s project managed here and we don’t send bits of claims out. Other [insurers] do that and some of the comment back is that it’s very difficult to advise on only part of a case. We would rather that the lawyers could see the totality of the case.”

The original panel of law firms was drawn up after a beauty parade which, says Thomas, was aimed at making sure that the company did not end up with a “SIF Mark II” panel and expanded its horizons when it came to choosing the firms. The whole process took around 10 months with firms knowing who they were competing against only after the half-way point.

And those firms that were selected and have subsequently lent out lawyers have to prepare them to cope with one unexpected requirement of the job – the ability to work in an open-plan environment.

“Lawyers are very stuffy about this kind of thing,” laughs Carruthers. “We are in a different environment and we are working in an environment which is not just lawyers.” But it was found that as long as there were quiet spaces in which to speak to clients, the lawyers found it easier working in open-plan because they could bounce ideas off others in the department.
Andrew Carruthers
Head of legal
AON Claims Solutions

Organisation AON Claims Solutions
Sector Insurance
Legal Capability Four employed lawyers, eight secondees
Head of legal Andrew Carruthers
Reporting to Martin Thomas, managing director of Claims Solutions
Employees 14 (9,000 in AON UK as a whole)
Main law firms Barlow Lyde & Gilbert, Beachcroft Wansbroughs, CMS Cameron McKenna, Davies Arnold Cooper, Eversheds, Reynolds Porter Chamberlain and Rowe & Maw