Stewart McCulloch: Online ADR is ‘saving the day’ following pandemic-induced court backlogs

Online alternative dispute resolution (ADR) practices are “saving the day” when it comes to tackling the “logjam” of claims-related court cases that are continuing to pile up in the wake of the Covid-19 pandemic, according to Stewart McCulloch, managing director of Handl Group-owned digital ADR business Claimspace.

Speaking exclusively to Insurance Times, McCulloch explains that court delays arising from the pandemic fallout has given online ADR processes “a bit of a leg up”.

He says: “Just like the way in which Microsoft Teams is used and abused by many people that wouldn’t have used it prior to the pandemic, ADR is in the same category. But digital ADR is the thing that’s saving the day.”

Former solicitor and qualified mediator McCulloch emphasises that ADR is “not really alternative anymore” due to lengthy and consistent “backlogs in court”.

“We are waiting 70 weeks for trial at the moment, despite being clear of the pandemic so far as the court system is concerned,” he adds.

“Cases are not being processed at the right speed. What we would like to do is to see whether or not we can use ADR to clear out the logjam.”

Big year ahead

Enter McCulloch’s firm Claimspace, which currently deals with disputed personal injury claims that fall outside of the current Ministry of Justice and Official Injury Claim processes.

The business was able to get off the ground thanks to investment from claims specialist firm Handl Group back in early 2019.

The company then teamed up with analytics business Verisk to build Claimspace’s underlying technology – this work completed in 2020 and Claimspace was able to launch to market at the beginning of 2021.

From March 2022, Claimspace has even had exclusive rights to licence the ADR software that it developed with Verisk.

So far, the business has partnered with around eight insurers, as well as six law firms – including Slater and Gordon.

For McCulloch, the digital ADR proposition that Claimspace offers is “very new”.

He explains: “We’ve had it working since March 2019. We did the testing during 2019 we started running it in January 2020.

“There are other forms of ADR out there where barristers’ chambers will look at papers which are delivered by email. Court bundles are created, converted into PDF documents and sent by email to a barrister to look at, who [then] emails back.

“They’re not digital systems. That’s just mechanising the old way of doing things and making the barrister the arbitrator. I’ve taken [ADR] much, much further than that old way.

“We all live in a digital environment where everything happens online and that’s exactly what we’re doing - we’re simply following the way in which people live their lives.

“I don’t think there is any place in the future for having a complex, disproportionate process which just complicates things unnecessarily and causes stress and anxiety unnecessarily.”

McCulloch has his eye on expanding Claimspace’s remit to also tackle employment liability and public liability claims too.

“I’m very excited about what we are doing. 2022 looks like a very big year for us,” he adds.

Cost efficiency and collaboration

Although McCulloch cites quicker turnaround times as a key benefit of the online ADR provided by Claimspace, he adds that better cost efficiency is also a plus point for all parties involved in the process.

For example, “advocacy costs and court fees” typically amount to £900, he says, while Claimspace charges a £220 fee at the end of every case. This is despite the fact that the “damages that are awarded are exactly the same as you would get at court”.

He continues: “We’ve been assessing the amount of damages and liabilities [that] have been agreed - we’ve been saving an average of £550 per case for each insurer, which comes out at about 28% of what they normally spend on legal fees. So very significant.”

Reduced legal fees has not dampened the appetite of law firms to get involved with online ADR however, as they will instead reap cashflow rewards, McCulloch continues.

He says: “The fees they may recover may be slightly lower, but they’ll get that money coming in much faster, so the speed at which the cashflow is accelerated more than compensates for the slightly lower fee they will get.”

McCulloch believes the collaboration between insurers and law firms through the online ADR process creates a customer journey that “is so much better than it had been before”.

“It removes the stress,” he says.