State of the Market 2022: The Results

The outlook for personal injury may look a little gloomy at present, but the overall mood was one of resilience among firms that took part in our annual ‘State of the Market’ survey.

Now in its sixth year, the survey aims to highlight the big issues affecting our sector by speaking to personal injury and clinical negligence lawyers.

Sixty-six firms took part, sharing how they have survived a turbulent 12 months and, with further reforms on the horizon, their thoughts on the year ahead.

Unsurprisingly the hot topic was the Official Injury Claim portal, which celebrated its first anniversary last month. While the Ministry of Justice has hailed it a “cautious success”, claims volumes remain significantly down and the majority of those who use the portal are still seeking a lawyer to help.

The fact that 50% of the firms we surveyed have stopped handling low value RTA work paints a telling picture. A further 33% say they are still taking on cases, but they are not profitable, suggesting they too will ditch them further down the line.

Just 16% say the impact of the portal has been business critical, however, and only one practice was looking to sell or run-off as a result. Half (50%) described the impact as “major but manageable”, with one in four (25%) reporting a minimal impact and 5% saying there had been none at all.

More than half of firms (52%) have sought to rebalance the books by diversifying into other areas, with clinical negligence the most popular followed by employers’, occupiers’ and public liability, and private client, family matters and conveyancing close behind.

The same number (53%) believe the market will be increasingly dominated by volume players in the future, with most predicting low value claims will be largely automated. 

But even with the extension of fixed recoverable costs in cases worth up to £100k – now expected to be rolled out next April – just 11% say personal injury will no longer be worth it, with three-quarters (72%) confident they will be able to adapt. Half of firms (50%) expect to see their turnover increase over the next 12 months.

Few firms handling clinical negligence work have experienced a fall in volumes over the last year, with 43% actually reporting an increase in claims. While they expect the cost of doing business to continue to climb, the majority predict a positive year ahead.

However, there are serious concerns about the government’s plan to impose fixed recoverable costs on clinical negligence cases worth up to £25k.

Almost half (48%) say it is “wrong in principle”, with 44% blasting the “unfair” fee levels proposed for claimants. Furthermore, 65% claim the move is simply a staging post to fixed fees for higher value cases which they say would be much more dangerous.

Qamar Anwar, managing director of First4Lawyers, said:

“It is unfathomable that the Ministry of Justice can describe the first year of the Official Injury Claim portal as a success.

“Motor claims are at a record low, which we believe is, at least in part, because the system is overly complicated, and people don’t understand how it works. This is borne out by the fact that around 90% of users are still instructing a lawyer to help them; the very thing the portal aimed to stop.   

“With half of firms ditching low value RTA work, the knock-on effect is that genuine claimants seeking a lawyer now find their choice is severely restricted. This at a time when the Competition and Markets Authority is advocating more choice for consumers of legal services, not less.

“The government is also now proposing radical changes to the way clinical negligence claims are handled in a bid to cut rising legal costs. It fails to mention that it is NHS Resolution’s own costs that have risen as opposed to those of claimant lawyers, which actually fell in 2020/2021 according to the body’s own accounts.

“Claimant lawyers do an enormous amount of due diligence to filter out spurious claims at the outset and ensure that NHS Resolution is only presented with those which have merit. They also drive learnings, so mistakes are not repeated.

“It is encouraging for the market that most of the firms we spoke to believed they would weather the storm of reform, but at what price to the public and access to justice?

“Perhaps, rather than pointing the finger at claimant lawyers, the government should instead look at why so many people feel litigation is their only option and seek to change that instead.”