Claims Direct announced plans for radical restructuring, based on a far smaller business model, after losing £11.5m in the first six months of this year.
Chief executive Ronnie Henderson said the no win, no fee, personal injury specialist would be able to break even by taking on just 1,700 cases a month under a new business system which should be in place by March.
It currently needs 2,200 to break even, said Henderson.
Its operation has shrunk from accepting 30,388 cases in the first six months of 2000 to 9,337 in the same period this year.
The company now accepts about 1,750 cases per month.
It has slashed £5.5m from its marketing budget in a cost savings drive and plans to use more targeted marketing. The company is ready to sign a new insurance deal by the end of the year.
Underlying operating losses were £8.5m in the six month period, compared to an operating profit of £13.8m in the same period last year.
The company reported exceptional costs of £3.6m, which included £800,000 to defend a hostile takeover bid launched by co-founders Tony Sullman and Colin Poole and £1.8m to renegotiate franchise arrangements.
Henderson, who joined as chief executive in September, told Insurance Times it took him a fortnight to realise the trouble the company was in.
"I didn't realise it was as bad when I took the job but within two weeks I realised the extent of all the small problems ."
Henderson blamed the "costly" method of using franchise holders to sell the product for the company's difficulties.
He said: "I thought, `If I can resolve my differences with the franchisees, then we've got a fair chance. If I can't, it's a festering sore that will kill us.'"