Market Round Up: September 2024
The idea of happy personal injury (PI) lawyers is oxymoronic, it appears. According to the annual review by IRN Legal Reports, any sustained recovery in the market “still seems a long way off” given that total claims numbers continue to fall and fixed fees weaken margins.
But equally we forget sometimes what a substantial market PI is, with IRN putting its value at £4.3bn in 2023, a revenue increase of 3.8% on the previous year. This will remain sluggish over the next couple of years, it predicted.
“There is now a clear market split into those low-value claims, predominantly RTA [road traffic accident] claims, that are being dealt with via high-volume, low-margin processes dealt with quickly, and higher-value claims where margins are better but cases can be prolonged, often taking years… As both of the above trends continue the decrease in the number of legally qualified professionals needed to service the market which is already underway will continue while cash flow difficulties will force more providers focusing on serious injury and clinical negligence claims to exit the market.
“The larger players dealing with high-value claims can probably cope with a wait for final payment that could take years. Some smaller firms are unlikely to be able to take a long-term view if they are under financial pressures.”
There are currently 3,637 firms undertaking PI work, a 4.3% fall since 2021, and 1,317 firms that offer clinical negligence advice, a 5% drop in three years. IRN suggested that the exodus from the market could have been worse had fixed costs for low-value clinical negligence claims come into force in April as had been originally planned.
Whether we will see them in October, as is the current plan, is increasingly doubtful. As I write at the start of September, there is no sign of any rules, noting too that the Civil Procedure Rule Committee has previously stressed the importance of the profession having as early sight of them as possible.
Further, minutes from the committee’s meeting in May stated that, if the new rules were not approved in June, they would not be included in this summer’s update, coming into force in October. They were not approved and not in the update.
Given that the delay from April was only announced in May, it is perhaps no surprise that we have not yet heard anything. The new government’s position on the extension – which applies to claims worth between £1,501 and £25,000 that settle pre-issue – is also not known at the moment. I’m not hearing suggestions that Labour will drop it, however, given that the move will reduce NHS costs.
Credit hire continues to be a major battleground, with a circuit judge recently making four non-party costs orders against Direct Accident Management Ltd (DAML), the credit hire arm of AIM-listed Anexo Group, whose customers have to use its law firm, Bond Turner, to recover its costs from insurers.
His Honour Judge Saunders in Central London County Court held that was the “real party” to litigation to recover the credit hire charges and should bear the risk of unsuccessful claims. He recognised the wider significance of the ruling to the credit hire market, “as such arrangements are common, and by no means confined to companies like DAML”.
He accepted that it was “often standard practice” for third parties to have a financial interest in cases like this “and that there will be many cases, on an interpretation of the facts, where the case will not be exceptional”.
The judge continued: “However, in my view, this case has several distinguishing features that set it apart from the norm, that is that make it exceptional.” These included that prosecution of the case was “directly linked to the hire of a vehicle on credit hire terms”.
“If one considers the practice, in cause and effect, the principal financial reward is for the credit hire company (accepting that the claimant must benefit as well) – I do not consider it beyond reason, that the real instigator of the proceedings is the credit hire company because, often impecunious, a claimant will simply not consider or launch such a claim without the CHC’s assistance. That, in my view, makes them the ‘real party’.”
Anexo said in a statement that, if the ruling was correct, then insurers themselves could also be liable for costs of litigation when they pursued repair costs, for example, while many others benefited from litigation, such as private health care providers that seek to recover treatment costs. “If control is not a pre-requisite for the making of an order, then they will also be liable for non-party costs merely by being the beneficiary of a head of loss in a litigated claim.”
The firm has not appealed as it was not a binding ruling and said it has since defeated similar applications in other courts.
Finally a bit of good news, with research into online reviews of 1,000 small and mid-sized law firms across the country finding that personal injury practices scored an average rating of 4.22 from reviews left on Google, Trustpilot and ReviewSolicitors, just behind criminal law (4.29) and motoring law (4.27).
According to Access Legal, law firms were rated highest on Google, with an average of 4.32, followed by ReviewSolicitors with 4.28 and Trustpilot with 3.69. Google was also the most-used review platform by clients.
When it came to the 50 towns and cities where the firms were, clients were most positive about law firms in Leicester, Leeds and Blackburn, and least positive about those in Wrexham, with an average rating of only 3.54, behind Hereford, Bristol, Swansea, Manchester and Birmingham.
Neil Rose is the Editor of Legal Futures
