Surviving The New Personal Injury Fixed Costs Regime

I find the proposed changes to personal injury claims quite astounding. As a former personal injury solicitor and knowing the industry as well as I do, it now seems apparent that the Government makes some of its decisions and policies based on who contributes the most to their party coffers and not what matters to their constituents.

Until now I had some idealistic notion that they might actually make decisions based on evidence, but sadly that is clearly not the case.

When you look at the history of personal injury claims, it is quite a fascinating journey.

First, the Government decided to save some money on Legal Aid, so it introduced Conditional Fee Agreements so that solicitors would run all of the risk of presenting a claim. The ‘trade-off’ for the solicitor was the allowance of a success fee for those claims that they won, knowing that others they would lose and receive no payment for so it should provide a balance in the new non-legally aided system.

The most important part was that the claimant would have easy access to justice when he was wronged through no fault of his own.

The beginning of the end started almost immediately, with Claims Direct first, then a whole tranche of personal injury claims lead generators entering the fray. Why? Mainly for the simple reason that solicitors would rather pay someone to find the leads for them than do the marketing themselves. I know this from my own experience of trying to persuade personal injury solicitors who I knew very well from my legal practice days to let me generate leads for them from their own marketing initiatives and being rejected. They wanted the certainty of leads for a fixed price as opposed to the uncertainty of leads from their own marketing (which of course would have produced much cheaper leads for them in time).

Fast forward through referral fees continuing to rise as the insurance industry drives the highest referral prices by capturing every claimant at source immediately after an accident, then bemoans the fact that solicitors can afford to pay this, leading the Government to ban referral fees and reduce fixed costs because clearly solicitors are making too much profit.

I can’t think of any other industry where the Government determines how much a business can spend on marketing and also how much they should be paid for every aspect of their work.

So what do you do now if you operate a personal injury practice? Many people I speak with are suggesting that they will simply not undertake personal injury claims any more, particularly with the scheme being extended to EL and PL claims very soon.

The alternative is to do what you have to do with every other legal service which you provide; that is to charge a reasonable fee for your service to the client. I think this will have to happen for every firm that is not paralegal heavy or insurance company based to be able to carry on providing a high level service that some clients will need.

We know that many £10,000 claims are not simple and straightforward. We know that insurers will use dirty tactics to try and make the claimant accept derisory offers. These claimants need protection; they need your expertise and your help. I cannot see how you can provide that without asking the client to contribute financially when you settle their claim for £10,000 even though the insurer advised them that their claim was only worth £750 initially.

You will need to run each case as efficiently as possible to ensure your fees are still reasonable in proportion to the whole claim, and I know there will be some challenges in ensuring that paying you a fee is the best advice for your client, but I think those problems need to be overcome so that you can still provide a good service to people in need of your help.

Obviously your marketing will have to be of a necessary high quality to win instructions when others around you are not making a charge to clients, but it will be achievable. It will become the Will Writer v Solicitor battle that you currently fight and win, so I don’t see it as impossible.

In your armoury you will need all of the things I generally advise you to have (‘bang on relentlessly about’ if you prefer). This will include:

  • Proof of your expertise (Personal Injury Panel membership, press coverage, membership of relevant organisations etc);
  • Hundreds, or preferably thousands of testimonials endorsing your expertise, and more importantly many of them confirming how you obtained a settlement of £X,000 for a client when he or she was initially advised by the insurance company/non-specialist solicitor to accept £X,000 less 75%

You will need to be easily found on the internet when someone is looking for a specialist personal injury solicitor. You will need to build relationships with local accident charities and local groups to build a network around you which promotes and supports your services.

You will need to make sure all of your clients know about your expertise in personal injury claims, and that they recommend you. You will of course need to keep in touch with all of your clients before, during and after any instructions. You will need to actively seek and request referrals from your clients and prospects, for the right reason that you are the best firm for the job as opposed to the amount paid to receive the work.

The Possible Benefit Of The Changes
There may well of course be some surprise benefits, although you might find that hard to believe at the moment. If claims companies do disappear, and insurers lose interest in running the claims now because the fees are not so profitable having driven the costs into the ground, more claimants will have the freedom of choice to find the right solicitor to help them. They might not be hard sold with four or five calls from their insurer now, as they only did this because to make everyone claim for whiplash so the Government could have the evidence they needed to make the decisions the insurers wanted (demanded) them to make.

If you take away the hundreds of thousands of clients captured at source by the insurers and allow them to find you online or locally, charging them a fair fee for your services, you may still be able to run a profitable personal injury practice.

We just won’t hold our breath for insurance premiums to reduce, as we know better.

Author: Nick Jervis

What do you think?
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