Posted by Michael Lewis, CEO of Legal Futures Associate Claim Technology 
There are a lot of changes happening in the personal injury sector right now, with many people wondering what the landscape will look like a year down the road.
The relationship between law firms and claims management companies (CMCs) has never been without its challenges, and the Civil Liability Bill might make this even more complex. But how much is scaremongering, and what should solicitors be on the look out for?
Does the Civil Liability Bill open the door for CMCs?
There are more than 750 CMCs in the UK dealing with personal injury claims, and together they make almost £200m annually. Most people are aware that they don’t have a great reputation, often known as the cowboys of the industry. Many prey on individuals through cold-calls, and they are severely under-regulated.
Even then, in the past year, more than 69 licenses have been cancelled by the Claims Management Regulator, due to poor practice.
It’s no wonder that law firms and solicitors are worried, with the Civil Liability Bill looking to be in force by April 2019. As the small claims court thresholds rise to £5,000 for RTA and to £2,000 for other personal injury claims, many law firms will choose to withdraw from the low-value market, or choose not to take on small claims, leaving individuals without legal support.
This is likely to increase the presence of CMCs in lower-value claims, and could even drive the number of claims up, as the companies see a vulnerable gap in the market.
With the right regulation in place, some believe this could be a positive change. Justice minister Lord Keen has been vocal about how CMCs may be able to take care of some claimants who were historically managed end to end by law firms, providing a substitute for before the event motor legal expenses insurance.
Brushing over the knowledge that some CMCs might go ‘rogue’, he continued : “Good CMCs look after their customers and if the claims management companies move into this market, that can be extremely beneficial.”
Concerns for regulation
While of course, these ‘good’ CMCs exist, many law firms and insurers struggle with insufficient regulation of the industry, allowing the negativity and bad conduct to rise to the top. In the past decade, there have been close to 100,000  enquiries or complaints raised against CMCs, and many changes are beyond the scope of the Regulatory Board.
For example, in Carol Brady’s independent review  of the current regulation, she found that despite a ban being placed in 2013 on the payment or receipt of referral fees between CMCs and law firms, this was still happening, due to the lack of regulation around disclosure of referral source.
The Financial Guidance and Claims Bill is currently going through Parliament, working towards forcing better regulation on CMCs. This should see regulation passed from the current unit to the Financial Conduct Authority, but the authority’s plan to proactively reauthorise  each and every CMC will take time.
A smart alternative
Perhaps more interesting, then, is Lord Keen’s second prediction about the opportunities the Civil Liability Bill will present. He believes that litigants in person will be able to navigate the small claims process themselves, escaping the risks of CMCs while they remain under regulated, while at the same time taking advantage of new user-friendly technology.
Giving individuals a smarter way to process their claims with the option to self-serve is exactly what Lord Keen is suggesting, and a gap we want to fill. With Claim Technology, you can white label our solution and provide your customers with an automated journey to making a personal injury claim.
As the new regulations in the industry make it impossible for law firms to continue as usual, and encourage insurers and CMCs to take a closer look at their service offerings to make sure they are offering value for money, automation is the way forward.