Quarter of Firms Have Left Whiplash Market, with Many More to Follow, First4Lawyers’ Research Shows

Quarter of firms have left whiplash market, with many more to follow, First4Lawyers’ research shows

One in four law firms impacted by the whiplash reforms have already exited that market with more set to follow, according to research from First4Lawyers, the UK’s largest independent legal marketing collective.

At the same time, firms were focused on growing other areas of their personal injury (PI) practices through a combination of factors, from sales and marketing to mergers and acquisitions.

The introduction of fixed tariffs for lower-value RTA cases combined with a dramatic drop in the number of claims has made the work unsustainable for many. Just 19% of firms that previously dealt with it expect to do so in the future, with many predicting that the trend towards volume players handling the majority of claims will continue.

Critics blame the government’s Official Injury Claim (OIC) portal, which has been plagued with problems since its launch almost 18 months ago and which, contrary to the Ministry of Justice’s promise that it would allow people to pursue claims themselves, is still only used by fewer than one in 10 without the help of a lawyer.

Despite the uncertain outlook, and with more reforms on the horizon, the mood of the market is one of resilience, however, with one in five firms already diversifying into other areas of law.

The eighth annual White Paper from First4Lawyers – ‘Trust me, I’m a lawyer – Marketing legal services in 2023’ – commissioned IRN Research to interview 100 firms working in PI, some specialist and some with broader practices, and find out how they were looking to achieve growth.

First4Lawyers’ managing director Qamar Anwar says: “Growth may be the economic buzzword of the moment but it’s easier said than done across an economy in turmoil and still recovering from the impact of the pandemic. It became an even greater challenge with the introduction of the OIC portal. Some 70% of firms say it went live before it was ready and there are still problems now, evidenced by the low number of people using it without a lawyer.

“With the government seemingly intent on pushing through further reforms, the challenges look set to continue unfortunately. But if PI lawyers have proven nothing else since the waves of change that have hit them since 1999, it is that they are incredibly resilient.”

Encouragingly, all of the firms surveyed had a growth strategy to equip them for survival and were not planning to sell up or run off their business.

Sales and marketing remained the most popular tactic, with 58% of firms having increased their budget over the last 12 months and 60% expecting to increase it in the year ahead. Activity was largely focused on websites, content and SEO – namely where they appeared in Google’s rankings – and paid search and display, while there was a drop in more traditional methods such as print advertising.

The majority of firms said they measured return on investment, but 55% said spending decisions were made by management as opposed to a dedicated marketing resource, and fewer than half – 44% – used data analytics to inform their choices. This suggests that much of the activity may be ad hoc or reactionary and working on a hunch rather than meaningful insight, the White Paper says.

Almost half (43%) said they would be most likely to invest in technology to drive growth and 37% planned to build their business through lateral hires.

As many as three in 10 firms are considering a potential merger or acquisition over the next 18 months and half of those are currently in talks about a possible deal or are actively seeking one.

More than half of the firms interviewed believed that M&A activity would only increase in the future, while a pessimistic 28% predicted that insurer-owned alternative business structures would in time become the major players in the market.

Law firms have undoubtedly got better at engaging with prospective and existing clients, the White Paper shows, but there is still a long way to go. For example, just 21% of firms prioritised continued investment in their websites and 63% didn’t have or didn’t know if they had a mobile-first site.

Just over a third (37%) monitored online reviews, despite increasing numbers of consumers using sites like Trustpilot and ReviewSolicitors to rate their experience. This year’s tracker survey by the Legal Services Consumer Panel also found that record numbers (43%) now shopped around before engaging a lawyer.

Qamar Anwar adds: “The need to keep existing clients happy to prove to prospective clients that you are the lawyers for them has never been stronger. The PI market may be thinning out, but it remains highly competitive and differentiating yourself remains key.

“Similarly, failing to monitor or respond to reviews is missing an open goal. Being proactive both limits any damage from negative reviews and can actually boost your reputation by making you look like a modern, consumer-focused firm that values the views of its clients and is invested in improving their user experience.”

Find out why trust plays such an important role in the way consumers choose a law firm in our new White Paper, read more & download a copy here.