Today, there are hundreds of law firms that are at risk of PI reform. You might be wondering “What is PI reform?” or “Why does it matter?”
Well, as it happens, tons of law firms depend heavily on the personal injury market. However, with many government reforms becoming more and more imminent, this business for law firms is expected to largely and significantly diminish. In England and Wales, there are 10,506 law firms – and 768 of them claim to specialise in personal injury type of work. These firms have reported that a minimum of half of their firm’s turnover had been generated from work over the course of the past 12 months.
Further analysis has revealed that these firms tend to be bigger than other firms. In fact, nearly half of specialist practices enjoy an annual turnover of over £500,000, while only 34% of non-PI firms enjoy the same level of income.
Why PI Reform?
The information stated above was released as a portion of the SRA’s response to the January 2016 Insurance Fraud Taskforce. This had set out a number of recommendations intended to reduce the amount of fraudulent behaviour happening in the claims industry.
While law firms helping their clients get the compensation that they are due for their personal injuries is a worthwhile and necessary endeavour, the fact remains that the industry is prone to fraudulent practices – something many groups in the UK have wanted to put a stop to. The result of the PI reform that many law firms are going to be seeing the effects of in the coming months.
What Will PI Reform Look Like?
With this data, the Ministry of Justice has confirmed its intentions to implement reforms in this sector. The reforms are intended to be implemented by April 2019. These reforms would include a tariff system regarding soft tissue injury compensation, and it would also put into effect a £5,000 small claims limit in the case of RTA claims. This is expected to effectively exclude solicitors from the greater share of cases.
It’s not only the Ministry of Justice getting involved in the law firm industry and PI reform, either. The Department of Health and Social Care also announced that it will establish a group that will work to implement caps on the costs of clinical negligence cases. While the SRA has no intention of requesting firms to review their plans to deal with these upcoming changes, they will be closely monitoring the sector to ensure their changes are properly observed.
The SRA also confirmed that the claims management regulator from the government has passed along information regarding 31 law firms that are under suspicion for incorrect referral arrangements in terms of securing cases regarding holiday sickness. Several of these 31 firms are already undergoing investigation, and more are likely to follow.
The Effects of This PI Reform
It’s difficult to know what this PI reform will have in store for the hundreds of law firms that will be affected by it. However, those that are already following ethical and proper practices will likely not find themselves under too much scrutiny and should be able to adapt well to the changes. At the end of the day, what matters most is helping clients get the compensation they are due for their personal injury cases.
Once it is clearer what the reform will entail, law firms that specialise in personal injury will be able to find the best way to continue helping their patients while still following the new regulations in place.
Written by Jones Whyte Law