Invest In Law has devised a PI Calculator to help solicitors compare how the main buyers would structure a deal for work in progress (WIP) at current market rates. Results are shown on a bar chart and graph, so you can quickly and easily compare how they structure their offers, how much you receive and over what timeframe.
The general principle is that the longer you can wait for payment, the more you can receive overall. All the buyers are reputable, well-funded firms and your interest in one or more of these offerings may depend on your immediate requirement for funding to further your own plans.
Invest In Law managing director Ben Holmes said: “We should be your first port of call to exit the PI sector, as we’ve helped countless firms do this already. For sellers our service is free. We don’t charge sellers, because we receive our fees from the acquirer’s end.”
The overwhelming movement in the personal injury (PI) sector is towards consolidation. Following the Jackson reforms, the need for scale has never been so prevalent. This has forced nearly all PI firms to assess whether they want to continue in the sector or re-focus their energies and capital into more profitable areas of law going forward. Reasons why firms are withdrawing from the PI sector have been due to the legislative changes, re-structuring to reduce overheads and liabilities, retirement, to free up working capital, cash-flow problems or pending insolvency.
Holmes commented: “You have an asset – namely your WIP. However, following the legislative changes this is a diminishing asset as the proportion of your post-Jackson WIP increases, the overall value decreases and these current market rates will inevitably change. Running files down yourself has its problems. The best staff leave first, and moral is dented by monthly redundancies leading to inefficiency.”
This file transfer can happen very quickly and efficiently, with industry-leading acquirers very familiar with the process. It can happen in a tax-efficient manner, so you should receive more overall than managing the run-off of the files yourselves, and saving yourselves the considerable hassle of doing so.
There are more subtle differences between the buyers, for example relating to TUPE issues, employee compromise agreements, professional indemnity insurance and paid disbursements, so Invest In Law would urge all firms undertaking PI work to give the PI Calculator a go, where they hope that PI firms will be pleasantly surprised by the results.