Industry observers have called on the government to reform its approach to the provision of legal aid following the collapse of The Accident Group (TAG).
Accountancy firm PKF said that the collapse proves the industry was unable to cope with the government's decision to transfer the burden of legal aid for personal injury claims to the private sector.
Philip Long, national head of corporate recovery at PKF, said: "We predict that there will be further turmoil in the market with members of the public possibly losing access to justice and the ability to make legal claims for personal injuries unless they have substantial wealth to fund such claims.
"Personal injury solicitors and medical legal agencies who are dependent on The Accident Group may find themselves in financial difficulties as their primary source of revenue fails, which may affect their ability to repay their bankers.
"In retrospect the government may regret the numerous uncertainties inherent in the legislation and the continuing uncertainty caused by the stream of litigation over the last few years."
Legal expenses firm Abbey Legal Protection blamed TAG's collapse on its marketing strategies.
Managing director Chris Ward said: "The collapse of TAG today demonstrates that the race by unregulated Claims Companies to make their fortunes out of massive TV advertising and commission driven sales teams funded through questionable business models at the ultimate expense of insurers is not the way to provide proper access to justice."
