Focus on the news: From insult to personal injury – a rapidly changing sector | New


Experts have predicted the death knell for the personal injury industry for a decade. Reports of his demise have so far been premature, but the current climate gives the impression that a different wind is blowing. The names that have become synonymous with the explosion in the claims industry have faded over the past two weeks, as established businesses that once relied on IP’s work have evolved.

Could we finally see the crisis? And if so, why now?

Hampson Hughes and Pure Legal, both based in Merseyside, have appointed trustees in the past fortnight after being unable to fend off creditors any longer. Hundreds of jobs are expected to be lost and new homes found for corporate clients.

Both companies had recently pulled out of PI work – Hampson Hughes specializing in clinical negligence, and Pure Legal tackling emerging markets with dilapidated housing and data breach claims – but their demise is another sign that the once vibrant claims industry is in dire straits. flow period.

Over the past decade, strict limits have been placed on cost recovery, culminating with the Civil Liability Act this year which denied court costs for any whiplash claim under £ 5,000. Due to lower fixed costs and tighter margins, experts agree that this latest piece of legislation has caused the current domino effect.

David Johnstone, managing director of Recovery First, which takes unwanted claims from creditworthy and troubled companies and reassigns them to its practice panel, says he’s seen a rush for work in the past three months. The firm was involved in the transfer of Pure Legal and Hampson claims Hughes and Johnstone expects much more to follow.

“A number of things have come together,” he said. “The pandemic has given people time to think. The May reforms acted as a catalyst for people to get stronger and there will be big law firms emerging, but many will think it is getting too difficult and that I don’t have the investment in IT. They make the strategic decision to exit the market.

“People really believe that there will be another extension of the fixed costs. Part of this is due to whiplash reforms, but there is more to come. In addition, the majority of people who entered this market in 2000 were perhaps between 35 and 45 years old and are now planning to retire. ‘

“The reforms acted as a catalyst for people to get stronger and big law firms will emerge, but many will think it is getting too difficult… They are making the strategic decision to exit the market”

David Johnstone, Recovery First

Johnstone said past reforms have encouraged contractors to enter the claims market more concerned with profit than providing a service. “A lot of the businesses were pretty disastrous, but because there was so much money, you could survive by settling three or four out of ten cases. It never lasted.

Perhaps the biggest recent development is that lenders have had enough. The administration of Pure Legal was preceded by legal finance provider Novitas which filed for bankruptcy. Johnstone said the market has hardened as lenders want to see evidence that mountains of claims will actually lead to settlements and profits.

Where does it all end? Johnstone predicted that eventually no more than 100 companies would serve 80% of the IP market. Viv Williams, a legal consultant, agreed that low-value injury work will end up “in the hands of a few.”

He added: “Many PI and clinical neglect practices have gotten their nails done during most of the pandemic and a number have practically found themselves in a position on the run – closing cases to pay off debt. banks and secondary lenders. “

Of course, the picture is not entirely bleak. Last month, one of the largest IP firms, North West firm Fletchers Solicitors, was bought by private investors, while Manchester-based Express Solicitors reported record financial results and said he was in a strong position to acquire more businesses and records.

Despite all the spotlight on failures, Johnstone said much of Recovery First’s work has come from creditworthy companies being proactive and looking for ways to exit the industry before it’s too late. National firm Irwin Mitchell is probably the best example of a firm that made the strategic decision to pull out, selling its existing 25,000 fast-track cases to Minster Law in September.

Consolidation in the claimant industry is still inevitable, although it will take longer than expected. All signs are now that the process is accelerating.

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