The roundtable heard how the impact of the Jackson reforms on personal injury firms has been slower than anticipated, but the next year could see the long-expected shake-out of the market.
Derrick Smethurst, head of PI at north-west firm Russell & Russell, told the roundtable that having expected pre-Jackson work to last 12-18 months, they are still working through pre-Jackson cases and indeed are still receiving instructions where the accident date predates 31 July 2013, meaning the fees are dealt with under the previous regime.
It was the same story for Andrew Simcott, head of business development at Merseyside firm Michael W Halsall, but he added: “Historic WIP will not last for ever and the vast majority will probably be depleted within the next 12 months, so it is essential that firms are able to make their diversification strategies work within in the next 12-18 months in order to avoid failure.”
“The carnage is yet to happen,” agreed Ian Pryer, founder of York firm Pryers Solicitors. “A lot of people had thought that the WIP would have disappeared more quickly.” He suggested that fee-earners in some firms may have been deliberately slower in turning around cases than they would otherwise have done out of fear of what would happen after.
“I think it will be two years on from Jackson that firms start falling off, unless their business models have moved on,” Mr Pryer predicted.
The roundtable was told that there was evidence of some lead providers trying to increase the cost of RTA work, but to levels that made profitability a challenge. There was considerable debate about the mix of a PI practice between RTA cases and other types of PI. Simon Shaw, partner at Liverpool firm SGI Legal, said it was a matter of balancing cash against profit. “RTAs will generate cash quicker, whereas your non-RTA work will generate a more significant profit. But you need cash to reinvest.”
Richard Powell, joint head of personal injury at Manchester firm JMW, said about 30% of his department’s caseload was RTA: “It is valuable in terms of a quick turnaround and the quick cash flow you can get from it. I am starting to hear about some firms that are now turning away EL/PL in favour of RTA because they are actually getting so tight on the finances that they prefer that fast turnaround – it’s their bailout option at the moment.”
First4Lawyers director Qamar Anwar says: “The roundtable was a valuable exercise in taking the temperature of the PI market at the moment. It helped confirm our strategy of focusing more on other areas of personal injury than RTA – around a quarter of the cases we pass on are road traffic accidents – and that we have been right to be choosy when selecting firms for our new clinical negligence panel.”
A White Paper has been produced following the event and is available here.