Incentives: often clients facing exceptional hardship request them, says firm
High-profile personal injury law firm Hampson Hughes has defied widespread concern about the use of inducements to attract clients by upping the amount it offers from £1,500 to £2,000.
The Liverpool firm launched its new television advertising campaign last week (see below), running for the next three months on ITV North West, ITV London, ITV Central and Sky nationally.
Last June, the Solicitors Regulation Authority (SRA) controversially announced that it would not be following the Claims Management Regulator in banning inducement advertising, saying there was no evidence that it has any “adverse effect” on clients.
Both the Association of Personal Injury Lawyers and Motor Accident Solicitors Society came out strongly against the decision, expressing concern that inducements could distract injured people from choosing the best solicitor for them, and that they could encourage a ‘have a go’ culture.
In an interview withLegal Futures last month, justice minister Shailesh Vara also indicated his opposition to inducements and said he would be talking to the SRA about its position.
Paul Hampson, Hampson Hughes’ joint managing partner, told Legal Futures that he supported the SRA. “There is no evidence to suggest that incentives have an adverse effect on clients or encourage spurious claims to be made. Firms that offer incentives have strict terms and conditions that must be met before incentives are given. This means that they are only offered to victims of genuine accidents.”
He said Hampson Hughes offers an advance of damages to clients who request it. In order to qualify, clients must have attended a medical with a doctor, liability must have been admitted by the third-party insurer and the solicitor must be happy with the claim overall, having assessed liability, causation and quantum.
Mr Hampson continued: “It’s worth noting that it is often clients facing exceptional hardship that request incentives. This can assist with anything from funding for private medical treatment to aid their recovery to covering the cost of essentials such as rent, utilities and food if they have had to take time off work and suffered loss of earnings as a result of the accident.
“In order to meet these needs we’ve increased our incentive to £2,000, which we feel is enough to cover most initial expenses.
“It is easy for some to disregard up-front payments as not being needed but it takes time for claims to be settled by insurers, leaving a large period of time when the client is at a financial disadvantage. It’s our belief that such payments massively assist clients and help restore them to their pre-accident position more quickly.
“This is especially true of catastrophic injuries, where specialist treatment can be arranged as an advance on damages, resulting in a significantly shorter rehabilitation period.” Hampson Hughes will advance greater sums in such cases where the damages are valued in excess of £25,000.
Mr Hampson said there are also commercial reasons for offering incentives as it helped differentiate firms. “Those that offer incentives are usually the larger firms who have a long and proven track record of securing maximum compensation for hundreds of thousands of clients. It is difficult for smaller firms to offer incentives as it causes a significant drain on cash flow…
“The profession needs to realise that given the changing nature of legal services post LASPO, more non-legal bodies will enter the profession and introduce a more commercial element to personal injury law. ABS firms with big marketing budgets entering the market will sadly see smaller practices cease trading. Commercialism is here to stay.”
The Hampson Hughes website also states that the £2,000 advance will not be made if the value of the injuries contained within the medical report is less than £3,000, or if an interim payment is made by the third party insurer. “In this instance, a reduced cash advancement may be offered, or Hampson Hughes Solicitors would recommend the client takes advantage of the iPad 2 or cash alternative incentive.”
Cash advances are also not issued on clinical negligence cases, industrial disease cases, if the accident occurred at low speed or if the accident was over 18 months old and the client did not attend the GP/hospital.
According to the firm, “the uplifting advert features an individual that has benefited from a positive resolution to a personal injury claim. Beginning in Northumberland, his journey takes him to the firm’s headquarters Liverpool where he meets staff at the Albert Dock’s Edward Pavilion building”.
If the recent furore about McKenzie Friend Marketplace shows anything, it is that the profession remains acutely sensitive to the apparent threat of competition by unregulated entrants into the legal landscape. But for an outside observer, the whole McKenzie Friend debate remains curiously overblown: if not a storm in a teacup, a storm at least in a teapot. For all the characteristic sturm und drang of the Law Society’s response to last year’s senior judiciary consultation, there was pretty widespread agreement among most respondents that McKenzie Friends are here to stay.