19 April 2013Print This Post

Making up for lower fixed fees in PI: don’t mess around – just issue

Kightley: firms need to “flex” the fixed-fee regime

“Litigate, don’t procrastinate” was the message yesterday to claimant solicitors as one way to ameliorate the financial loss they will suffer from the new portal and fast-track fixed fees.

Speaking at the Association of Personal Injury Lawyers (APIL) annual conference at Celtic Manor, Stuart Kightley of north London firm Osbornes, said that taking the maximum success fee from all claimants’ damages would not be enough to make up for the impact of the new fees.

Instead firms need to “flex” the fixed-fee regime by being more ready to issue proceedings in cases that fall out of the road traffic accident, employer’s liability and public liability (RTA/EL/PL) portal schemes. “Don’t mess around – just issue,” he said.

He modelled how this would work, and more generally the impact of the new fees, by taking a basket of 300 successful cases at average damages levels – 100 in each category – where the current fee levels (using the figures produced by Professor Paul Fenn) were put up against the new fixed fees with a success fee charged to the client to the maximum level.

Mr Kightley – APIL’s new secretary – then assumed that half of the RTA cases would settle inside the portal, 35% would settle outside the portal and 15% would conclude after proceedings have been issued.

On this basis RTA cases currently generate average costs of £1,750 per case. Under the new fees, it falls by 16% to £1,470 per case. However, by issuing more readily – with 25% of cases concluding after issue – average costs would be £1,720, a fall of just 2% on the present level.

In EL – assuming 80% settling pre-issue – he put averge current revenue at £3,550 per case. Modelling 24% of cases settling within the new portal, and 56% pre-issue, fees would fall 16% to £2,960 per case. But issuing in 30% of cases, rather than 20%, would take it to £3,230, a more modest fall of 9%.

The figures were worst in PL. Average current fees – based on 75% settling pre-issue – are £4,330 per case. Under the new regime, with 19% settling in the portal and 56% pre-issue, it sinks to £3,140. Issuing in 35% of cases, rather than 25%, improves things a bit to £3,410, still a 22% fall.

Put all together, the 300 cases in the basket currently generate £963,000. Even with the maximum success fee, the effect of fixed fees will reduce that revenue by 21% to £757,000, Mr Kightley said.

By Neil Rose


One Response to “Making up for lower fixed fees in PI: don’t mess around – just issue”

  1. Again APIL bring some sensibility to the table, great analysis of the new costs regime. The key to success in the new regime has to be quality of marketing and low acquisition costs right through then to efficiency in service to the client. As the market moves forward and new opportunities arise the clouds of change will start to shift.

    The reforms were meant to reduce so many things including court time, it is clear for the foreseeable future however that litigation will be in the forefront of every solicitors mind. Could this be our down fall also? More litigation gives more weight to the proposal of raising the small claims track limit! Catch 22 situation???

  2. Matthew Waterfield Simply Lawyers on May 4th, 2013 at 10:14 am