8 October 2013Print This Post

Law Society policy chief: mega-firms could dominate PI claims in three years

Stobbs: incentives to make claims built into the system

There could be just five or six giant claimant personal injury law firms in three years’ time after a major consolidation of the market, a senior Law Society official has predicted.

Addressing the Expert Witness Institute annual conference in London last week, Mark Stobbs, the society’s director of legal policy, said the Jackson reforms had inadvertently incentivised the mega-firms to drive up the number of claims.

The intentions of the insurance industry to reduce margins could backfire once consolidation in the solicitors’ market had taken place, he suggested.

“It would not surprise me if in three or four years’ time there were five or six major claimant firms, highly mechanised, employing significant quantities of paralegals, and aiming to get the claims through as quickly as possible,” he said.

There would be “every incentive” to increase the number of cases. He continued: “Insurers, in trying to reduce margins significantly, have managed to be providing an incentive to the large firms – those backed by substantial capital – to get as many [cases] in as they can.”

In personal injury, qualified one-way costs shifting “takes out a major disincentive for people to bring claims”. He asked: “I wonder how that fits with the policy objectives of the Jackson reforms and LASPO?”

Mr Stobbs said he was concerned the interests of claimants would suffer. “If there is less money to get qualified people to do the work and if there is an incentive to get cases through as quickly as possible, to settle as quickly as possible because that is where you will make your money, what’s the outcome going to be in terms of people getting the actual damages that they are entitled to?”

The Jackson changes were placing a “huge tension” on solicitors, he reported to the assembled experts, predicting that one outcome might be that “potentially [we will] see a significant reduction in the amount of experts that are needed – and a reduction for the wrong reasons”.

In his inaugural address as the institute's new chairman of governors, former Court of Appeal judge Sir Anthony Hooper criticised the reasoning behind the government’s slashing of experts’ fees on the basis of supposed supply and demand. “There must come a time where people say ‘sorry we’re not going to work at that price’,” he said.

Sir Anthony said he wanted the institute to introduce accreditation for its members. It would be open to experts who had attended a set number of EWI courses and could include a one-day assessment, he suggested.

By Dan Bindman

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2 Responses to “Law Society policy chief: mega-firms could dominate PI claims in three years”

  1. The point about large firms standardising and reducing compensation is interesting, if oft stated, but how serious a problem is it? The vast majority of claims are sub £5k. From a public policy perspective it is sensible to ask the question how much cost should be expended on getting the level of compensation payments in such cases ‘just so’. There are other possibilities, a more systemised and specialised approach might lead to better outcomes. There are invade times on firms to get better outcomes too! though perhaps quite weak ones. The arguments a re not all one way.

    There’s only one way to find out, and that’s to benchmark case outcomes before and after Jackson! see if case mix changes and levels of compensation go up or down within case types. The Law Society likes to argue for the small firms for obvious reasons, but it needs to take a more neutral and evidence based approach if it I s to better influence debate?

  2. Richard moorhead on October 9th, 2013 at 8:00 am
  3. There is another aspect to this, which was perfectly expressed by an anonymous commentator whose response to the news that yet another PI firm was to picked up by one of the 5 or 6 mega firms of the future was “Let’s hope the staff at (the smaller firm) are prepared for low pay, astronomical targets and poor prospects”.

    Economies of scale lead to economies in all senses. We wait to see whether claimants will suffer, but it appears beyond doubt that legal staff will.

  4. Julie Carlisle on October 10th, 2013 at 4:53 pm