Figures released this month make grim reading for small-to-medium personal injury firms. More than a 1,000 have disappeared from the market in the rolling 12 months from Q3 2012 to Q3 2013.
The firm belief is that the cumulative effect of the Jackson Reforms coupled with injury solicitors changing to ABSs accounts for the loss of so many practices.
Demise of Personal Injury Firms to ramp up, not slow down
The firms that have disappeared are not isolated cases. More than a quarter (26%) of those remaining are in “financial distress”. A further 495 are classed as “at risk”, according to the SRA, with 55 identified as “high risk”.
These figures suggest that small-to-medium personal injury firms will disappear from our High Streets and online at a greater rate this year, rather than seeing the ship steady.
Perhaps now the legal sector’s collective voice will be heard when they say that cuts to Legal Aid and the effects of the Jackson Reforms have gone too far.
It’s not only the firms themselves that have complained. Judges’ voices have joined the many groups who suggest that the current cycle will transfer more cost to the legal system.
Rather than save the £220M the cuts were designed for, denying Legal Aid to those that need it most and capping fees for injury lawyers has seen more people choose to represent themselves in personal injury cases.
This ‘litigation in person’ will see cases take a lot longer to filter through the system, both with preparation and the due process.
That’s only the financial argument
The greater worry for victims of personal injury is the reduced number of firms that can represent them and how much the changes to the legal system will now cost to have their case heard.
The £220M saving hit both the civil litigation and Family Law sectors hard. With no funding available for many of the types of cases Legal Aid used to support coupled with certain groups of individuals being denied access to funds altogether, it’s easy to see how people need personal injury solicitors to fight their legal corner more than ever.
Yet with the Jackson Reforms capping the amount PI solicitors can earn from small cases, the cost they need to pass on to make it viable is deterring many from engaging a proper brief.
It’s this ever-decreasing circle that many believe will cause the backlog forecast.
The government has done its best to ‘create’ the ‘spurious claims’ myth and paint the UK as the world’s ‘compensation capital’.
With the first of the ABS structures floundering and the number of personal injury firms operating as viable businesses diminishing, it won’t be a surprise when the claims courts collapse under the weight of a cycle the government has created.