D-day has arrived for PI claims and many PI lawyers would say that means disaster day. It’s certainly clear that the good times are over for the many personal injury specialist law firms but does this mean there’s no future in being a personal injury lawyer ?
The answer, we suspect is, it depends. Certainly there will be a lot of competition for jobs in a market that will shrink very fast, and there are a lot of PI lawyers. We know from it’s website that there are 4,5000 members of the Association of Personal Injury Lawyers (APIL) but not every injury lawyer is a member which means the number of solicitors working in injury firms is considerably higher, so there will be pressure on jobs. Most personal injury lawyers have not directly benefited from the very lucrative market in the last 20 years, with most of the high profits going to a small number of partners (most PI firms have only a few equity partners) so the model is quite different to most traditional legal practices, and perhaps more efficient for it in many ways.
Obviously, some firms will close, and a recent article in the Guardian suggested that 20% of firms in the North West may opt to close. A personal injury solicitor and owner of 1 firm we spoke top said that his firm would simply run off it’s current caseload and would then close. The partner has a property portfolio from investing profits made over the last decades so he’s really not that bothered.
We also know that whilst there will undoubtedly be far less volumes of cases, many personal injury cases will still be above the small claims limit with some high value claims, especially for areas like medical negligence.
Consequently, it is likely that a large number of firms will completely abandon marketing for claims of low value where the public may not be prepared or able to pay legal fees out of damages. The main area which is likely to be impacted is whiplash claims. It therefore seems likely that there will be increased competition in niche areas such as medical negligence.
In the PI sector, law firms generally do have a keen understanding of the importance of marketing, which is quite unlike other areas of law, so the surviving firms are likely to invest heavily in marketing and this may result in the smaller firms, with smaller budgets, struggling to compete. This is especially the case since some law firms are being bought by insurance companies or claims management companies, who in some cases have bigger budgets than even the stronger PI law firms. To an extent, the lawyers themselves have created this problem, which started several decades ago with Claims Direct, by buying cases from claims companies, ultimately only making the Claims Management companies stronger and ceding control of the market to such companies.
Another possibility for the smaller firms is to find creative ways to co0mpete – with the changes to the PI market, it may be that, initially, some of the bigger and stronger law firms may still offer 100% guaranteed compensation, but many will not be able to do that, so there is likely to be some scope for different types of fee structuring for clients. Differentiation may also come in the form of genuine expertise – one of the features of many types of PI claims, typically RTA claims and sometime Employers Liability, is that because of predictability in outcome and the lucrative nature of the fees available including success fees, the way personal injury has been marketed is that it doesn’t matter which firm you go to or which lawyer or even non-qualified lawyer that represents you. This is likely to change in the new landscape.
Other possibilities may include how quickly a claim may be assessed and different models of dealing with the more specialised claims.
In summary, difficult times in the personal injury market, but as with any such circumstances, adaptability is likely to be key for those firms that decide to tough it out.
Evolved Legal are a specialist legal marketing consultancy which works with clients including Lloyd Green Solicitors. This firm already has a strategy in place for the changes one part of which is a new specialised cosmetic surgery solicitor website.
