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When alternative business structures were introduced by the Legal Services Act 2007, new opportunities opened up for the innovative provision of legal services. Sophie Gould talks to Archana Makol, Chief Counsel at BT and Director of BT Law Ltd, about her experience of setting up and running an ABS alongside an established global in-house legal team.
Tell us a bit about your background and career to date …
I qualified as a lawyer in 1992 and started off in private practice. I joined BT in 1998 as an accident at work defendant litigator and worked in that area for a number of years. Around 10 years ago, I moved into heading up the Insurance team in Sheffield,
as it was then known. It was an opportunity to broaden my experience beyond just doing personal injury work, work with other parts of the business and be involved with more commercial litigation.
I am also now a Director of BT Law Ltd, an ABS and wholly owned BT subsidiary. BT Law involves a small section of the overall legal community at BT and only deals with liability and claims matters.
The BT Legal team is a worldwide in-house function comprising around 400 people. My team – now known as the Liability claims team – sits within the litigation part of that function and is made up of 73 people. It’s from
my team that we draw the BT Law function.
How does the claims function at BT work?
BT is unusual in that it manages its own claims function. Many corporates outsource this area, be that to a third party administrator or panel lawyers, or leave it to their insurers to manage any claims. At BT the legal team has always worked closely
with its internal insurance and finance teams to help manage these risks.
Over 15 years, we have gradually pulled all the high volume risk into one place here in Sheffield. We do all network damage recovery for the business and deal with all the public liability claims, for example trips and slips, or property damage that we’ve
inflicted on others. We also handle all our employee claims to do with injury, accidents on duty or disease. We have a very large fleet of more than 30,000 vehicles and we look after all claims that come with the risk of managing that.
Bringing all this work into one place wasn’t about making steps towards an ABS, it was about being more efficient and offering best value. What could we do as a team to bring value? Offering an end-to-end service makes repeated risk more visible
and allows you to collect management information to help the business understand and prevent risk. It also helps manage costs in the most efficient way because the claims process is streamlined and claim are not unnecessarily passed back and forth
between multiple internal and external units. We had a lot of support from our internal customers and we were able to demonstrate a lot of benefits from centralising in this way.
It’s really important for us to remember that we work for a large customer facing business and to support them as a partner. When some of the claims handling process was outsourced, the business was concerned that the process wasn’t given
the right focus by the service providers. Some of it was how they managed the claims and the speed, but some of it was that they were not always being mindful of the brand. For me, it is a key part of what makes us different. If you’re dealing
with claims, you are the front end of a brand response to somebody. The way you handle that situation absolutely matters. People are very quick to email the CEO if they don’t like our tone so we have to get it right. That doesn’t
mean you settle claims that have no merit or over pay, but it does mean you do the right thing and do it quickly.
How did BT Law Ltd evolve?
We looked at the changes that were happening in the late 90s and early 2000s, including the Legal Services Act 2007, and considered whether we could take what we’d built internally and offer it as an external service. We’ve regularly been
audited by external insurance companies, even as part of our internal activity, and have always received great feedback.
Before ABS licensing was available, we were approached by an insurance company to assist with claims. Lawyers couldn’t be directly involved at that point, so Terry Pullen in my team– a senior claims manager rather than a lawyer – set
up and managed BT Claims. It was a test bed and the response was good. This prompted us to apply for an ABS licence in 2012, making it a proper regulated law firm within an in-house function.
BT Law is a company with its own board and it draws upon the resource of BT Legal to do transactional work for its external customers. We saw an ABS licence as an opportunity. There was a gap in the market for a claims service that provided an end-to-end
service, included a legal function and did so business to business. We saw the possibility of a move from a classic cost centre to potential profit centre – we already had the infrastructure and the economies of scale and the systems set up,
so why not ?
It took a year to go through the ABS application process. The team were overwhelmingly supportive. They saw it as a positive and innovative move and a way of securing the team. Making yourself even more valuable can only be a good thing. Acting for another
company also gives you a great insight and helps bring more learning back into the business.
As BT Law is within the in-house legal function, when we bid for external work we need to ensure we’re properly resourced to do it. We have always worked efficiently and the purpose was not to pile more work on and overstretch the workforce. New
work will go through a tender process and we always ask: how are we going to deal with the work? Do we need more resource? What’s the cost benefit of any new resource? It forces you to analyse the turnover of claims and the associated risk and
resource across the whole unit. Ultimately I believe that makes us more efficient as a business.
Do you think you’ll ever be in the situation where it becomes more profitable to manage work through BT Law rather than within the BT in-house claims team?
Our primary purpose is to serve all our customers as efficiently as we can. At the moment we manage the internal BT work as an in-house team, and everything that goes through BT Law is external work. We don’t know yet whether we’d want to
change that. It may be a while before anybody else will be as big a customer for us as our employer. We have around 20,000 claims per year going through the team and the majority of that is still internal BT work.
We launched BT Law thinking that it was a really interesting idea with great potential. The exciting part is seeing where having a vehicle like this can take you in terms of how you manage your own infrastructure and legal spend. It’s all a question
of imagination: how big an imagination have you got and where can you take it?
How would another legal team go about setting up a similar structure? What are the first things they should think about to see whether it would work for them?
If you want an ABS licence, the starting point is to think about which part of your business you want to license. Functionally, how are you going to separate that aspect from the rest of your legal work? It was a real challenge for us to explain to the
SRA that we didn’t want the whole of the BT legal community regulated, only a part of it. Understandably, the SRA wanted to know how that would actually work. How would we separate ourselves physically from the in-house team? Would we have separate
systems so that only people who are authorised through BT Law could see the data? How are we going to manage conflict when it arises? You need to think carefully about how you will manage these things.
You also need to look at what your area of expertise is and understand the market. For us, there were particular areas that were marketable and had potential. We were a bit naive in the early stages and got caught up in the principle without spending
enough time on the initial research. It’s easy for that to happen when you have an innovative idea with great support.
If you’re an in-house team that relies significantly on panel support, that probably isn’t the right starting point to be at. You need to have managed the area of specialism yourselves, including both the grotty and the glamorous end of it.
That’s where you can bring value to another business.
Is there anything that you wish you’d known at the start of the process?
I wish I’d known more about the finance side and how to really interpret balance sheets and forecasts. As part of an in-house team, you learn to manage internal budgets, but learning how to manage a business is very different. You need people with
finance and sales skills in the team from the outset. They don’t need to be lawyers (and probably shouldn’t be!), but they should be able to drive those sides of the business. They need to be able to convert interest and excitement into
A real benefit of going through this process is the amount we’ve all learnt. In terms of people’s development, the insight has been fantastic. At the moment we’re still on an organic journey, rather than trying to grow by acquisition.
It’s a steep learning curve, but we get a lot of interest and excitement from it.
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Sophie is Head of Learning & Development at F-LEX Legal - an award winning legal tech startup helping law firms and organisations manage a flexible work force and supporting lawyers to make smarter life/work choices.
As part of her portfolio career Sophie runs various learning and development and networking forums for in-house lawyers and mentors junior lawyers. These include Flying Solo for small and solo legal teams and Aspire for junior in-house lawyers which she runs for LexisNexis UK. She also works with schools and organisations to promote social mobility within the legal profession, working with The Social Mobility Business Partnership and Aspiring Solicitors.
She trained as a lawyer in the City and worked as an in-house lawyer for 10 years including as Head of Legal for Virgin Radio and Ginger Media Group.
Outside of work she is happily married with three sons and enjoys morning walks along the beach with her two dogs.
0330 161 1234