Personal injury (PI) lawyers generally think the market is working well, but there are continuing concerns over claimant firms bringing ‘frivolous’ cases, as well as the use of low-level staff, research commissioned by the Solicitors Regulation Authority (SRA) has found.
It also described a market polarising between big and small firms, with alternative business structures (ABSs) playing a more prominent role.
The assessment – which was conducted by ICF Consulting Services – forms part of the SRA’s thematic review of the PI market and considered solicitor competence, behaviours and practices, as well as changes to the infrastructure of the market.
It was compiled with an online survey of 255 firms – of which 87% were on the claimant side – 34 in-depth interviews that in part sought to redress the balance of defendant firms’ views, interviews with 15 non-solicitor stakeholders (such as representative bodies, insurers and judges), and desk research.
It said the PI market, including clinical negligence, is worth an estimated £3bn per annum and constitutes the second largest segment of the UK legal services market.
At the time of conducting the research, approximately 8% of SRA-regulated firms (833) were specialist PI firms (where more than 50% of their turnover is derived from PI), with a further 2,000 involved to a lesser extent, and also in PI-related services, such as claims management and medical reporting. Ninety-three specialist PI firms were operating as ABSs.
It found the PI market to be the “most heavily concentrated market in consumer law”, with the largest 10 personal injury law firms accounting for a quarter of the market in 2013.
Nearly half (45%) of respondents said their practice would diversify into different areas of law in the next two years, whilst 30% of firms planned to diversify within the PI market – both figures were higher for specialist PI firms.
ICF reported a “general acceptance among survey and interview respondents that frivolous cases were being accepted by solicitors, but at a declining rate since the reforms”.
Some 12% of survey respondents this was prevalent in the market. While defendant solicitors were more likely to say this, half selected it as being only an occasional to very infrequent practice.
Even fewer respondents felt the progression of fraudulent cases was prevalent (8%). Three-quarters of defendant solicitors believed this was infrequent.
A higher number of respondents (27%) believed that the practice of receiving referrals that did not comply with the ban contained in LASPO was prevalent. But the report said: “There is no evidence in the report suggesting that firm and solicitor practices aimed at circumventing the ban has led to a reduction in quality of service or access to legal services for consumers.”
On competence, “claimant solicitors view fixed fees as too small a reward for the time needed to prepare ‘a good-quality case’”, the research said.
As a result, firms were using less experienced solicitors and paralegals to triage and prepare cases in order to make cost savings, potentially leading to cases being inadequately assessed and incorrectly valued. “This is most clearly evident among firms diversifying into other areas of PI, such as clinical negligence, occupational disease and noise-induced hearing loss.”
The research recorded that since 2012, fewer than one-fifth of the 200,000 claims for noise-induced hearing loss have been eligible for compensation.
This de-skilling was also being noticed by the judiciary, ICF said. “According to judicial representatives, the standard of preparation of cases for trial has generally deteriorated over the last 10 years or so, with inadequate statements often being filed, poor-quality photographs being relied upon and a large trial bundle being filed containing much irrelevant material.
“Much of the difficulty is often the fact that the litigation is being conducted by distant solicitors who never meet their client, and deal with everything over the telephone or by post/ email. There is also a suspicion that the work is not being undertaken by a solicitor but by a clerk or assistant who is not properly trained.”
Defendant lawyers did not get away scot-free from the research, with claimant respondents expressing concerns that they were making pre-med offers of settlement when the claimant was not in a position to ‘value’ the injuries. Almost half of all survey respondents viewed delay in payment as a common practice.
Two-thirds of respondents from both sides thought that the reputation of the claimant firm had an impact on the type of response by the defendant firm. Only 5% of respondents believed that letters of response were always well drafted, unambiguous, and showed a good understanding of the case.
Some 82% of respondents felt that defendant solicitors frequently defended cases where the evidence suggested the only way forward was for the defendant to admit liability, but 56% of defendants disagreed with this.
Crispin Passmore, the SRA’s executive director of policy, said: “It is important that the PI market is working in the public interest. That means making sure solicitors work to high standards within a competitive sector where people can easily access legal services.
“This survey suggests that in many instances claims are legitimate cases that are well handled. Yet people still have concerns about some poor practice. We are now carrying out a more in-depth review to fully understand the nature, extent and impact of any concerns. We can then take appropriate steps to help manage any risks and raise standards.”