Manchester firm Pannone may spin off its white label legal services arm when alternative business structures are permitted and allow companies using the service to invest and share profits in the business.

Pannone launched Affinity Solutions in May, providing a ‘seamless’ consumer law service to non-legal brands seeking to offer legal services to customers. The firm has not disclosed with which companies it is working.

Andrew Morton, who heads the division, said spinning off the business could potentially allow insurance companies, claims managers and others not only to use Affinity to provide a consumer legal service under their own brand, but also take a share of the profits by investing in Affinity.

Morton said the government’s planned ban on referral fees would make this option even more attractive to insurers and claims managers, which will otherwise lose a significant income stream. While companies would no longer be able to charge law firms for the claimant legal work they pass on to them, they would instead be able invest in a vehicle that provides claimant services and share its profits.

Morton said: ‘Insurance companies and CMCs won’t want to say goodbye to referral fee income, and this may be the way for them to resolve the issue. I can’t see CMCs, especially the big ones, wanting to shut up shop.’

Pannone is also considering advising companies wishing to enter the legal services market.

Morton said: ‘We can offer companies advice and expertise on how to set up a legal business that’s going to work for them, and we could then also deal with their conflict work, or complex matters that they do not want to get involved in.’This could include accidents abroad or catastrophic injuries.

‘It’s not for us as solicitors’ firms to sit around and wait for [companies] to decide they are going to muscle their way in. It is for us to approach them,’ he said.

Morton added that the firm was also considering using private equity investment to fund the growth of its white label division, or more traditional means such as a bank loan or retaining partner profits.

He predicted that existing ‘white label’ services linking law firms and other organisations may involve ‘a much closer relationship than previously, where solicitors have been panel members, because there may be a sharing of investment or profit.’