Probably both….and here’s why.

The MoJ has confirmed its intention to push on with increasing the small claims limit to £5000 in England and Wales. (https://www.lawgazette.co.uk/law/breaking-news-moj-will-press-on-with-5k-small-claims-limit/5058818.article).
For context, I’ve been in and around the personal injury legal sector for over twenty years. I qualified in 1993, finishing my ‘articles’ at a ‘Plaintiff’ department (ask your grandad) and then joined a very large defendant law firm. There’s no doubt looking back that the seeds of what is happening now were planted all those years ago. At that time the insurance sector was not as well organised, and the costs charged by both sides bore little resemblance to the sort of costs paid on straightforward RTA cases today.

We probably need the music from the Hovis advert playing in the background at this point… when I were a lad, there was no fixed fee for personal injury, there was no portal, there was no real restriction on use and choice of medical expert. It was pretty common that each side’s costs were higher than the agreed compensation for the injured party. In the end, something had to give and the last twenty years has seen the steady erosion of a legal sector that the insurance industry felt was a gravy train, backed by increasingly tight regulation around costs and processes.

I was at the Modern Law Claims conference this year, and for most of those in attendance that day, today’s announcement will not have come as a surprise. The key note speaker that day was Jack Straw and he received a less than warm welcome as he put forth his strongly held views against in particular the claimant RTA sector. Many of the lawyers at the event said to me that they thought the small claims increase was inevitable. However, many were defiant about the future of the claimant legal sector.

The firms and people that I admire in the personal injury sector have always been those who push at the boundaries. The ones who innovate and react with agility and commerciality to challenges such as this one. Already we are seeing firms whose bread and butter has traditionally been the RTA sector using their highly trained staff and high quality case management systems to seek out and process other less threatened types of claim. It is often quite rightly coupled with a broader review of their business strategy, spend and efficiency (which is how we often end up talking to them), but the key is that they have realised that standing still at the moment is simply not an option.
There are some incredibly bright and driven individuals in and around the low end personal injury sector, and those bright minds are turning to new markets and new business practices.

There is little doubt that many law firms will suffer as a result of the proposed changes, and indeed the defendant sector will feel that bite too due to its symbiotic relationship with the claimant world, however I’m sure that over the next year, structural changes and identification of new markets will see many firms evolve and thrive in the new world.

Alex Holt
Director of Business Development at The Cashroom

 

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