AXA Portugal is reducing the number of lawyers and firms on its panel because its legal spend has been cut dramatically in recent years, says general counsel Luciana Silva
How does AXA Portugal measure the success of its external legal advisers? The approach is clear and simple. "Our [external] lawyers work mostly in claims and when we go through an assessment we have success rates," says AXA Portugal general counsel Luciana Silva.
She adds that AXA Portugal retains external lawyers that have good success rates for claims and litigation. In practice this means those that secure the biggest percentage of reimbursements or those that ensure the company pays only what is owed in claims damages. However, when it comes to consultancy work, AXA Portugal looks for firms that have "specific expertise", according to Silva.
In general, AXA Portugal only outsources litigation. It handles real estate, HR, products and marketing-related matters, for example, in house. That said, the company will go to external firms for advice on specific issues such as complex matters relating to real estate and tax. AXA Portugal has a panel of 19 law firms and lawyers that it uses for litigious matters.
However, the panel is shrinking in size as the number of external law firms and lawyers the company uses has diminished as a result of the economic climate. "We're not hiring new lawyers, in fact we're letting some go because litigation has diminished," Silva says. She adds that the bulk of the litigation AXA is involved in relates to disputes in which a client or a third party objects to the company's decision to decline a claim - as a result of the economic crisis and, consequently, the reduction in demand for insurance in certain lines, there are fewer claims-related disputes that have to be dealt with. That said, there are some types of litigation which are on the rise. "Debt actions and criminal actions relating to fraud are increasing," Silva says.
Less car use means fewer claims
To illustrate the point, Silva points out that 60 per cent of AXA Portugal's business is car insurance, adding that, due to the economic conditions, car use has decreased, which has resulted in a decline in the number of claims that the company handles. Another impact of the wider economic situation has been a cut in AXA Portugal's legal spend. "In the last two years, our legal spend has reduced by two-thirds," she says.
AXA Portugal's legal department, which consists of nine...