Alternative business structures (ABSs) in the personal injury (PI) market will do little to improve injured people’s access to justice but will benefit larger law firms at the expense of smaller ones, a new survey has found.
The poll also found firms split over whether their business models can withstand the impact of the Jackson reforms and government’s proposed RTA portal fees.
The survey of 101 people – mainly solicitors – by well-known claimant PI practice Bott & Co, which is an ABS itself, reported near unanimous opposition to the suggested portal fees. The vast majority said the 60% cut in fee levels was excessive and would reduce access to justice for injured people.
Some 96% said claimant firms will find it difficult to operate under the new regime, with most believing that non-insurers will find it tougher to generate cases under the proposed changes.
Donna Scully, immediate past chairman of the Motor Accident Solicitors Society and a partner at Carpenters, told the survey: “We will see lots of very good firms go to the wall, causing unemployment and suffering. We will see huge consolidation and only a few big players doing all the work. [There will be] less freedom of choice for accident victims and more conflict[s].”
Only 16% of respondents believed the referral fee ban would benefit injured people with 77% agreeing that it would benefit insurers. There was widespread scepticism that it would lead to insurance premiums falling.
While 29% said their business models could withstand the effects of the Jackson reforms, 34% said they could not, with the rest undecided. ABS conversion is one option, but 48% disagreed with the statement that ABSs will improve the quality of legal services provided to injured people (23% agreed). Just 16% thought ABSs will improve injured people’s access to justice, with 45% disagreeing.
Three-quarters of respondents agreed that ABSs will benefit larger firms at the expense of smaller ones.
Craig Jenkins of Graham Evans & Partners told the survey: “Local specialists within high street firms will be forced out of business. Will a call-centre operation facilitate a solicitor visit for an elderly client to review their documents, policies and take instructions?…
“Larger firms that link with insurers or larger claims management companies will [be] the only ones able to access clients and process the work at a profit.”
Bott & Co managing partner David Bott said that although the results survey may not surprise those working in PI, “they do show the strength of feeling around how injured people may be affected when the reforms are implemented”.
Mr Bott – former president of the Association of Personal Injury Lawyers and one of the claimant representatives on the company that runs the RTA Portal – said the results indicated that those injured people still prepared to stand up for their rights after April 2013 may find it more difficult to find specialised solicitors to represent them.
“Law firms will have to become more efficient, and it is my sincere hope that this doesn’t impact on the quality of service delivered to the injured person who is in need of legal services through no fault of their own.”
Mr Bott told Legal Futures that the proposed portal fees are at such a low level that “everyone will have no choice” but to take the maximum 25% success fee out of clients’ damages, rendering Lord Justice Jackson and the government’s intention to create competition among firms over success fees irrelevant. Though he acknowledged some firms may try to undercut the market, he questioned whether they will be able to provide a proper service for their clients.
He added that ABS conversion can help by allowing firms to deal with the changes in different ways, but said it is not an answer in itself: “An inefficient law firm with an ABS licence would not be better off.”