Legal
“There was a report about a road haulier who had been fined £5,000 by an industrial tribunal, which seemed both excessive and harsh.” Brian remembers. “The Labour government of the day wanted to keep the unions happy and so enshrined a number of employment rights into law, and that is where SME’s like our road haulier came a cropper.
“I read this, and wondered if it would have been possible for this business to insure itself against such tribunal claims.”
Intrigued by the possibilities, he did some research into the Donaldson report that established industrial tribunals and found the magic phrase he had been looking for. Donaldson had deliberately characterised any awards made at tribunals as “compensation” rather than “damages”, with the explicit intent that an employer may wish to insure against them.
“I was astonished,” he recalls, “it was there in black and white for all to see, but nobody picked it up.”
The more he investigated, the more Raincock realised he was onto something. Also, he realised the traditional matrix of advisors available to small businesses comprised a lawyer, accountant and banker, with nobody capable of providing specialist personnel advice such as the road haulier would have required.
Enlisting the help of his brother Graham, an accountant with good contacts in the financial services industry, Brian negotiated Employers Protection Group, offering employment protection insurance and personnel advice. He also established a 24 hour advice line for employers who found themselves on the wrong side of employment laws, a remarkable level of service in the days before call centres and round the clock access to advice became the norm.
“We worked from my brother’s breakfast table in Cheam and swiftly prospered,” he says. “We had very little difficulty selling the insurance product, so competition very quickly hove over the horizon, but we carried on giving increasing numbers of small businesses the help they needed. We even got a call in the middle of the night from the manager of the Playboy Club who was about to sack a Bunny!”
And inevitably the business was called upon to protect employers from the consequences of their own bad behaviour. “I remember one morning we got a call from a jeweller in South London who explained in hushed tones that he had been having an affair with a female employee and his wife had found out and demanded she be sacked. We told him of course she had to go, but it had to be done fairly, which meant a sensible payoff!”
Living on the leading edge of a revolution in the legal and insurance businesses proved endlessly fascinating.
“The unions really resented our intrusion into the fray and in many ways we were instrumental in starting to break their monopoly over the tribunal business and give employers a fair crack of the whip. ACAS had always been there as a mediation service, but employers didn’t entirely trust an organisation set up by the government, they were far more willing to deal with a commercial outfit like ours that genuinely understood their needs.”
Sales kept growing, the Lloyds’ underwriters were deeply impressed with this new market and soon the business moved to new offices in Sutton. In 1980 he developed directors and officers liability insurance, which had until then only been commonplace in the USA, and created a new company, Directors and Officers Ltd. to provide it.
Growth continued unabated. The 24 hour advice line was supplemented with a roadside recovery and travel repatriation service. With turnover reaching £8 million and 400 staff on board, yet more new offices were needed – and so was more capital if the business was to grow further, so Brian sold the business, now called The Legal Protection Group, to Sun Alliance.
“It all went very well and we soon became the foremost legal expenses and assistance operation in the UK, though with hindsight the integration of a highly entrepreneurial entity like LPG with a staid, conservative company like Sun Alliance was never going to be completely harmonious.”
That much became evident when Brian suggested to Sun Alliance, which happened also to own 50% of LPG’s rival, the German company DAS, that they buy out DAS and create a true market leader. The plan backfired. Sun Alliance’s offer encouraged DAS to think that they’d be better off doing the deal in reverse by buying out Sun Alliance for £7 million. It all happened without Raincock’s input or knowledge…“the beginning of the end for our harmonious relationship!” And so came the parting of the ways.
The break with Sun Alliance brought back into focus the imperative that had driven Brian Raincock from the start, his belief in the right of everyone large or small to have access to justice.
“My philosophy was originally formed by my concerns for sailors at sea and their inability to get any kind of help for any problems they had, either at home or at work. This is what led me to create the 24 hour advice service. Outside the Navy, I saw that in a truly democratic society, access to justice is crucially important, otherwise people will take their own measures. The justice system must allow people to resolve disputes.”
And so began the next phase of Brian Raincock’s mission to open up the justice system to all. Through a new company, Litigation Protection Ltd. he introduced After The Event (ATE) insurance, which allowed plaintiffs to insure themselves against their case going against them. Then in 1995, the era of No Win No Fee was ushered in by the introduction of the conditional fee regime, followed shortly thereafter by the introduction of success fees. Litigation Protection was the first to introduce insurance funding for conditional fee agreements (CFA), so when the market finally woke up to the potential of what the Lord Chancellor’s department had created, namely a vehicle for universal access to justice, Litigation Protection was in the driving seat.
Two companies, The Accident Group (TAG) and Claims Direct aggressively started selling the idea that the man/woman-in-the-street could seek recompense for real or imagined wrongs, backed by Litigation Protection underwriting. It was massively successful, to the horror of the government which decried the advent of the compensation culture that they created in the first place.
Everyone involved did well; too well.
“The trouble was, both companies got greedy and thought they could handle the insurance side of the business themselves,” Brian says. “We had the expertise in insurance and acted as a brake on their ambition. Without that brake, it all went horribly wrong.”
Claims Direct – or Shames Direct as the tabloids dubbed it – got some terrible publicity over claims that went awry and its hasty flotation was a disastrous flop. Within a couple of years, both it and TAG were out of business. Who can forget the famous dismissal by text message that TAG employees endured?
“These jokers ruined the entire market for everyone,” Brian says. “Whatever money they made was thanks to me, and they went and ruined it all.”
It was a serious setback, but there was another surprise around the corner. Raincock’s old competitor DAS, now backed by Munich Re, hove back into view and teamed up with Litigation Protection to offer ATE insurance. Eventually Brian was to sell that part of the business to DAS, to concentrate on his current focus, Litigation Funding.
“Third party funding of litigation has been around for centuries but was severely constrained by laws preventing champety, maintenance, barratry and wife scolding…basically making it illegal for robber barons to buy justice.”
But a series of judgments in 2006, here and in Australia, opened the door to a new approach to 3rd party funding and again, Brian Raincock was in the vanguard of this new wave. Today, Commercial Litigation Funding Ltd. is supplemented by a new service aimed at funding and managing class or group actions. Brian’s team arranges the funding of the cases and the ATE insurance, leaving the lawyers to focus on what they do best – running the cases.
It has been a wild, adventurous ride, at the very leading edge of a new era in the way law is administered and funded – and it isn’t over yet, with the impending introduction of legal services being offered by entities other than firms of solicitors, so-called Tesco law.
Does Brian ever reflect that as a champion and pioneer of opening the justice to all he is partly responsible for the compensation culture and the phenomenon of ambulance-chasing lawyers in its wake?
“So what if ambulance chasers arise? Yes, of course the system needs proper policing and commercial discipline, but at least people now have access to justice!”
Source: Brian Raincock Litigation Protection Ltd. www.litigationprotection.co.uk
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