The new reforms, especially the small claims limit increase, has cast doubt on a lot of law firms’ future
After the government announced that the controversial whiplash reforms will come into effect in April 2019, figures released by the Solicitors Regulation Authority (SRA) suggest that nearly 800 law firms could be at risk of going bust.
According to SRA in its board paper released on 31 January, out of the 10,506 law firms operating in England and Wales, 768 are considered to specialise in personal injury work.
These are companies who have reported that more than half their turnover for the past year was generated by personal injury work.
The new reforms will include an increase in the small claims limit (from £1000 to £5000) for road traffic accidents, meaning personal injury claimants will not be allowed to claim back legal fees for cases worth less than £5000.
Lawyers have already voiced their concerns and outrage at the new reforms, labelling it “unfair and unnecessary.”
Law Society president, Joe Egan says the reforms will have a huge impact on the claims process:
“A five-fold increase in the small claims will remove solicitors from the claimant side of the process and prevent people who have been injured through no fault of their own from recovering legal costs.
“This means many people will not be able to obtain legal representation for claims when they have been injured, forcing them to fight through the courts on their own without access to legal help.”
This throws up the question of whether these law firms can survive without the work.
Director of Carpenters, Donna Scully believes it is down to the firm whether they survive or not:
“It will probably have an adverse effect on law firms, but they must keep an eye out for change.
“If you are strong enough, you will survive. But if you aren’t organised and not ready for the change, you could be in trouble.”
Scully also says the reason personal injury lawyers get into their line of work will see them through:
“Good PI lawyers get into this business because they want to look after people, so they will continue to operate. They will have to adapt, but they will find a way.
They don’t want to see an injured person unrepresented in their case, lining up against a wall of the insurance lawyers.”
She also dreaded the thought of claims companies being in charge of a claimant’s case:
“Claims farmers are driven by money. They want to see how much money they can bleed out of the case and the claimant.
“As a PI lawyer, you don’t want to see a claimant unrepresented, but you don’t want to see them represented by someone who just wants to get as much money as possible.
“That passion is what will keep some of these PI lawyers going.”